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Key highlights

5,345.7 2,211.3 3,446.7Gross revenue (AED million)

Net operating profit (AED million)

Net profit for the year (AED million)

1.39 0.125 98.2Basic Earnings per share (AED per share)

Dividend per share (AED per share)

Safe hours achieved (hours in million)

15,803.9 7,130.4 16,032.5Investment properties under development (AED million)

Development work in progress (AED million)

Net assets value (AED million)

e

Contents

Group overview Transforming strategy into action 02 Chairman’s statement 14 Chief Executive’s statement 15

Operating review ALDAR overview 18 Objectives and strategy 18 Land bank 18 Projects 19

Financial review Financial highlights 36 Financial review 36 Finance and capital structure 39 Cash flow 39 Financing 40 Risk Management 41

Corporate social responsibility Corporate Social responsibility statement 48 Health, Safety and Environment 49 Community 51

Governance Board of Directors 52 Directors’ report 54 Corporate governance 58 Independent auditors’ report 61

Financial statements Consolidated balance sheet 62 Consolidated income statement 64 Consolidated statement of changes in equity 65 Consolidated cash flow statement 66 Notes to the accounts 68

Company information Corporate directory 99

185mm 210 mm 210 mm 185 mm17 mm

Our strategy in actionGenerating value through investment, development and management of real estate

ALDAR PROPERTIES PJSC Report and Accounts 2008

eA

LDA

R PROPERTIES PJSC Report and A

ccounts 2008

تطبيقاستراتيجيتنا

قيمة توليد استثمار خالل من

العقارات وإدارة وتطوير

الدار العقارية ش.م.ع التقرير واحلسابات 2008

سابات 2008ش.م.ع التقرير واحل

الدار العقارية

احملتويات

2 حتويل االستراتيجية إلى أعمال حملة عامة عن املجموعة 14 كلمة رئيس مجلس اإلدارة 15 كلمة الرئيس التنفيذي

18 حملة عامة عن الدار املراجعة التشغيلية 18 األهداف واالستراتيجية 18 رصيد األراضي 19 املشاريع

36 مقتطفات مالية املراجعة املالية 36 املراجعة املالية 39 التمويل والهيكلة الرأسمالية 39 التدفقات النقدية 40 التمويل 41 إدارة املخاطر

48 بيان مسؤولية الشركة مسؤولية الشركة االجتماعية 49 الصحة والسالمة والبيئة 51 املجتمع

52 مجلس اإلدارة احلوكمة 54 تقرير أعضاء مجلس اإلدارة 58 حوكمة الشركة

61 تقرير مدقق احلسابات املستقل

62 امليزانية العمومية املوحدة البيانات املالية 64 بيان الدخل املوحد 65 بيان التغيرات في حقوق امللكية املوحد 66 بيان التدفقات النقدية املوحد 68 إيضاحات احلسابات

99 دليل الشركة معلومات عن الشركة

مقتطفات رئيسية

5.345/72.211/33.446/7العائد اإلجمالي

)مليون درهم(صافي أرباح العمليات

)مليون درهم(صافي ربح السنة

)مليون درهم(

1.390.12598.2العائد األساسي على السهم

)درهم للسهم(ربحية السهم الواحد

)درهم للسهم(ساعات العمل بدون إصابات

)مليون ساعة(

15.803/97.130/416.032/5استثمارات عقارية قيد التطوير

)مليون درهم(أعمال تطوير قيد اإلجناز

)مليون درهم(صافي قيمة املوجودات


Key highlights

5,345.7 2,211.3 3,446.7Gross revenue (AED million)

Net operating profit (AED million)

Net profit for the year (AED million)

1.39 0.125 98.2Basic Earnings per share (AED per share)

Dividend per share (AED per share)

Safe hours achieved (hours in million)

15,803.9 7,130.4 16,032.5Investment properties under development (AED million)

Development work in progress (AED million)

Net assets value (AED million)

e

Contents

Group overview Transforming strategy into action 02 Chairman’s statement 14 Chief Executive’s statement 15

Operating review ALDAR overview 18 Objectives and strategy 18 Land bank 18 Projects 19

Financial review Financial highlights 36 Financial review 36 Finance and capital structure 39 Cash flow 39 Financing 40 Risk Management 41

Corporate social responsibility Corporate Social responsibility statement 48 Health, Safety and Environment 49 Community 51

Governance Board of Directors 52 Directors’ report 54 Corporate governance 58 Independent auditors’ report 61

Financial statements Consolidated balance sheet 62 Consolidated income statement 64 Consolidated statement of changes in equity 65 Consolidated cash flow statement 66 Notes to the accounts 68

Company information Corporate directory 99

185mm 210 mm 210 mm 185 mm17 mm

Our strategy in actionGenerating value through investment, development and management of real estate

ALDAR PROPERTIES PJSC Report and Accounts 2008

e

ALD

AR PRO

PERTIES PJSC Report and Accounts 2008

تطبيقاستراتيجيتنا

قيمة توليد استثمار خالل من

العقارات وإدارة وتطوير

الدار العقارية ش.م.ع التقرير واحلسابات 2008

سابات 2008ش.م.ع التقرير واحل

الدار العقارية

احملتويات

2 حتويل االستراتيجية إلى أعمال حملة عامة عن املجموعة 14 كلمة رئيس مجلس اإلدارة 15 كلمة الرئيس التنفيذي

18 حملة عامة عن الدار املراجعة التشغيلية 18 األهداف واالستراتيجية 18 رصيد األراضي 19 املشاريع

36 مقتطفات مالية املراجعة املالية 36 املراجعة املالية 39 التمويل والهيكلة الرأسمالية 39 التدفقات النقدية 40 التمويل 41 إدارة املخاطر

48 بيان مسؤولية الشركة مسؤولية الشركة االجتماعية 49 الصحة والسالمة والبيئة 51 املجتمع

52 مجلس اإلدارة احلوكمة 54 تقرير أعضاء مجلس اإلدارة 58 حوكمة الشركة

61 تقرير مدقق احلسابات املستقل

62 امليزانية العمومية املوحدة البيانات املالية 64 بيان الدخل املوحد 65 بيان التغيرات في حقوق امللكية املوحد 66 بيان التدفقات النقدية املوحد 68 إيضاحات احلسابات

99 دليل الشركة معلومات عن الشركة

مقتطفات رئيسية

5.345/72.211/33.446/7العائد اإلجمالي

)مليون درهم(صافي أرباح العمليات

)مليون درهم(صافي ربح السنة


1.390.12598.2العائد األساسي على السهم

)درهم للسهم(ربحية السهم الواحد

)درهم للسهم(ساعات العمل بدون إصابات

)مليون ساعة(

15.803/97.130/416.032/5استثمارات عقارية قيد التطوير

)مليون درهم(أعمال تطوير قيد اإلجناز

)مليون درهم(صافي قيمة املوجودات


1ALDAR PROPERTIES PJSC Report and Accounts 2008

Introduction

ALDAR is a premier, progressive, integrated property development, investment and management company. ALDAR owns over 50 million square metres of land at strategic locations throughout Abu Dhabi and has already announced more than US$ 72 billion worth of developments. Our strategy’s principal objective is the generation of shareholder value through investment, development and management of real estate. This is demonstrated over the next few pages.

q

185mm 210 mm 210 mm 185 mm17 mm

Group overview

ALDAR Properties PJSC is a leading real estate development, management and investment company establishing world-class real estate developments for Abu Dhabi, while providing stable and profitable investment portfolio for all of its investors and stakeholders.

ALDAR is spearheading the development of Abu Dhabi. ALDAR’s development projects are master planned with optimal mix of residential, retail, office and leisure. ALDAR’s vision is to establish Abu Dhabi as UAE’s most dynamic real estate market by creating unique and prestigious developments that can be used as a benchmark of quality, whilst adhering to the culture and natural heritage of the Abu Dhabi.

ALDAR is committed to deliver stable and lucrative investment return for shareholders. The company is owned by over 18,000 shareholders including leading Abu Dhabi and international institutions.

Aldar employs around 800 multi-disciplinary staff to provide expertise and knowledge from around the globe.

Strategic development projects

The Group is in the process of building a portfolio of real estate assets distinguished by their standards and prestige. Up to the end of 2008, the Group has launched more than 40 major developments and re-developments across the Emirate of Abu Dhabi.

The following tables give a synopsis of the progress of the projects:

Abraj Towers

Location: Abu DhabiSegment: Mixed use (Residential and retail)Land area: 47,100 square metres

Al Falah Location: Abu DhabiSegment: Mixed use (Leisure, residential, offices and retail)Land area: 12.8 million square metres

Al Raha Beach

Location: Abu DhabiSegment: Mixed use (Residential, offices and retail)Land area: 6.4 million square metresWebsite: www.alrahabeach.ae

Al Yasmina School

Location: Abu DhabiSegment: Schools (ALDAR Academies)Website: www.aldaracademies.com

Central Market

Location: Abu DhabiSegment: Mixed use (Residential, offices and retail)Land area: 643,000 square metresWebsite: www.centralmarket.ae

Injazat Data Centre

Location: Abu DhabiSegment: Mixed use (Offices and data centre)Office capacity: 1,000 workstations

The Pearl School

Location: Abu DhabiSegment: Schools (ALDAR Academies)Website: www.ALDARacademies.com

Al Bateen Location: Abu DhabiSegment: Mixed use (Leisure, residential, offices and retail)Land area: 103,200 square metres

Al Gurm Location: Abu DhabiSegment: Mixed use (Leisure and residential)Land area: 1.8 million square metresWebsite: www.algurmresort.com

Al Jimi Mall

Location: Abu DhabiSegment: Shopping MallLand area: 177,000 square metres

Al Mamoura Location: Abu DhabiSegment: Mixed use (Offices and retail)Net lettable area: 69,000 square metresWebsite: www.almamoura.ae

Al Raha Gardens

Location: Abu DhabiSegment: Mixed use (Residential and retail)Land area: 1.06 million square metresWebsite: www.alrahagardens.com

Baniyas Towers

Location: Abu DhabiSegment: OfficesNet lettable area: 40,600 square metresWebsite: ww.baniyastowers.com

Imperial College London Diabetes Centre

Location: Abu DhabiLand area: 5,000 square metresWebsite: www.icldc.ae

Motor World

Location: Abu DhabiSegment: Mixed use (Residential, offices and retail)Land area: 3.0 million square metresWebsite: www.motorworld.ae

Noor Al Ain Location: Abu DhabiSegment: Mixed use (Leisure, residential and retail)Land area: 177,900 square metresWebsite: www.nooralain.ae

Al Ruwais Shopping Centre

Location: Abu DhabiSegment: Mixed use (Offices and retail)Land area: 504,000 square metres

Yas Island Location: Abu DhabiSegment: Mixed use (Leisure, residential, offices and retail)Land area: 24.8 million square metresWebsite: www.yasisland.ae

tDetails of our Strategic Development projects

t حملة عامة عن املجموعة

الدار العقارية ش.م.ع هي شركة رائدة في تطوير وإدارة واستثمار العقارات تقوم بتطوير عقارات على مستوى عاملي في أبوظبي في حني حتافظ على توفير محفظة استثمارية

مستقرة ومربحة جلميع مستثمريها ومساهميها.

تقود الدار عملية التطوير في أبوظبي. يتم وضع اخلطط األساسية ملشاريع الدار بحيث يتم حتقيق احلد األقصى من اجلمع بني اإلسكان والبيع بالتجزئة والرفاهية. تتمثل رؤية الدار بجعل أبوظبي أكثر أسواق دولة اإلمارات العربية املتحدة ديناميكيًة عن طريق إنشاء مشاريع تطوير فريدة من نوعها وعلى درجة عالية من

الرقي ميكن اعتبارها مقاييس للجودة، مع احملافظة على اإلرث الثقافي والبيئي ألبوظبي.

إن الدار ملتزمة بتقدمي عائدات استثمار مستقرة ومجزية ملساهميها. إن الشركة مملوكة من قبل ما يزيد على 18.000 مستثمر مبا في ذلك مؤسسات رائدة في أبوظبي والعالم.

توظف الدار حوالي 800 موظف من تخصصات متعددة لتوفير اخلبرة واملعرفة من جميع أقطاب العالم.أبوظبيأبراج تاورز املوقع:

تقسيم املساحة: متعددة االستخدامات )سكنية ومحالت جتارية(47.1 ألف متر مربع مساحة األرض:

أبوظبيالفالح املوقع: تقسيم املساحة: متعددة االستخدامات )ترفيهية، سكنية، مكاتب ومحالت جتارية(

12.8 مليون متر مربع مساحة األرض:

شاطئالراحة

أبوظبي املوقع: تقسيم املساحة: متعددة االستخدامات )سكنية، مكاتب، ومحالت جتارية(

6.4 مليون متر مربع مساحة األرض: www.alrahabeach.ae املوقع اإللكتروني:

مدرسة الياسمينة

أبوظبي املوقع: تقسيم املساحة: مدارس )أكادميات الدار(

www.aldaracademies.com املوقع اإللكتروني:

السوقاملركزي

أبوظبي املوقع: تقسيم املساحة: متعددة االستخدامات )سكنية، مكاتب، ومحالت جتارية(

64.3 ألف متر مربع مساحة األرض: www.centralmarket.ae املوقع اإللكتروني:

مركزاجنازات لنظم

البيانات

أبوظبي املوقع: تقسيم املساحة: متعددة االستخدامات )مكاتب ومركز نظم بيانات(

1.000 محطة عمل الطاقة االستيعابية للمكتب:

مدرسةاللؤلؤة

أبوظبي املوقع: تقسيم املساحة: مدارس )أكادميات الدار(

www.aldaracademies.com املوقع اإللكتروني:

أبوظبيالبطني املوقع: تقسيم املساحة: متعددة االستخدامات )ترفيهية، سكنية، مكاتب ومحالت جتارية(

103.2 ألف متر مربع مساحة األرض:

أبوظبيالقرم املوقع: تقسيم املساحة: متعددة االستخدامات )ترفيهية وسكنية(

1.8 مليون متر مربع مساحة األرض: www.algurmresort.com املوقع اإللكتروني:

أبوظبياجليمي مول املوقع: مركز تسوق تقسيم املساحة:

177.000 متر مربع مساحة األرض:

أبوظبياملعمورة املوقع: تقسيم املساحة: متعددة االستخدامات )مكاتب ومحالت جتارية(

69.0 ألف متر مربع مساحة األرض: www.almamoura.ae املوقع اإللكتروني:

حدائقالراحة

أبوظبي املوقع: تقسيم املساحة: متعددة االستخدامات )سكنية، ومحالت جتارية(

1.06 مليون متر مربع مساحة األرض: www.alrahagardens.com املوقع اإللكتروني:

أبراجبني ياس

أبوظبي املوقع: تقسيم املساحة: متعددة االستخدامات )ترفيهية، سكنية، مكاتب ومحالت جتارية(

40.6000 متر مربع مساحة األرض: www.baniyastowers.com املوقع اإللكتروني:

مركز إمبريال كوليدج لندن

للسكري

أبوظبي املوقع: 5.000 متر مربع مساحة األرض:

www.icldc.ae املوقع اإللكتروني:

أبوظبينور العني املوقع: تقسيم املساحة: متعددة االستخدامات )سكنية، ترفيهية، ومحالت جتارية(

177.9 ألف متر مربع مساحة األرض: www.nooralain.ae املوقع اإللكتروني:

أبوظبيموتور ورلد املوقع: تقسيم املساحة: متعددة االستخدامات )سكنية، مكاتب، ومحالت جتارية(

3.0 ماليني متر مربع مساحة األرض: www.motorworld.ae املوقع اإللكتروني:

مركزالرويس للتسوق

أبوظبي املوقع: تقسيم املساحة: متعددة االستخدامات )مكاتب ومحالت جتارية(

504.000 متر مربع مساحة األرض:

أبوظبيجزيرة ياس املوقع: تقسيم املساحة: متعددة االستخدامات )ترفهية، سكنية، مكاتب، ومحالت جتارية(

24.8 مليون متر مربع مساحة األرض: www.yasisland.ae املوقع اإللكتروني:

تفاصيل عن مشاريع

تطويراستراتيجية

مشاريع تطوير استراتيجية

تعمل املجموعة على إنشاء محفظة موجودات عقارية تتميز باملعايير التي تقوم عليها ورقي مستواها. وحتى نهاية العام 2008، اطلقت املجموعة أكثر من 40 مشروع تطوير وإعادة تطوير رئيسي في إمارة أبوظبي.

توفر اجلداول التالية حملًة عن التقدم في إجناز املشاريع:

2 ALDAR PROPERTIES PJSC Report and Accounts 2008

Strategy in action

Transforming strategy into action

Our aim is to be the leading developer, owner and operator of real estate in Abu Dhabi. We believe that our strategy to invest in development projects, hold strategic assets as investment property and operate completed assets will best deliver our objective. Our significant progress this year, however, marks only the start of a process. With the inherent potential of our strong asset base, an exceptionally skilled team and a strategy which is designed to produce superior returns, we anticipate substantial progress in the years ahead. We have moved from the planning and development to the delivery phase of our projects bringing our strategy in action.


Strategy in action

555

Land development Master developer

The development of land and infrastructure is a vital element for adding value to our projects. The infrastructure development takes in consideration the use of land, density, built up area, elevations and timeline for completion of the project.

As master developer, we are involved in the planning and development (through sub-contractors) of any infrastructure required in relation to the project, such as roads, bridges, tunnels and utilities (power, water, sewerage and telecom) networks. The master plan sets out, amongst other things, the use, density, built up area, elevations and timeline for completion of a project. Once the master plan is agreed with the relevant authorities, we sell part of the development land and develop the rest in our role as developer.

We create value for our projects through the development of our land bank strategically located throughout the Emirate of Abu Dhabi. Significant land development works are being carried out at Al Raha Beach and Yas Island. By developing land at the most strategic location in Abu Dhabi catering modern real estate requirements, we use our property skills and financial strength to target incremental returns for our shareholders.

Infrastructure developments at Phase I of Yas Island comprise freeway crossings including nine bridges, 582 metre long tunnel, a bridge to Marina Hotel, around 24 kilometres of roads, over 20 LRT stations, sewerage treatment plant, two major underground water tanks, and electric substations. As at 31 December 2008, construction works in the Central Park Area have commenced. Landscaping is in mobilisation stage and Marina Hotel Bridge piling is complete. Construction works on underpasses are progressing well and southern tunnel bulk earthworks and formation are nearing completion.

Model projects: Yas Islandt


Strategy in action

Al Raha Beach is probably the best example of ALDAR’s inimitable developments. Different precincts have their unique structures and schemes. Al Bandar is an island development connected to the mainland by a bridge. Al Muneera is located on the eastern side of Al Raha Beach development partly on the mainland and partly on a reclaimed island. Al Dana includes Abu Dhabi World Trade Centre located in a prime position within the precinct and has water views on three sides. Al Seef is a mixed-use development located centrally within the eastern part of Al Raha Beach, between Al Dana and Al Bandar.

ALDAR is executing the construction of above project through various contractors including ALDAR Laing O’ Rourke joint venture. The above projects comprise state-of-the-art residential, commercial, retail and office spaces to ensure ideal and sustainable premises to its customers (for further details of other developments projects please refer to “projects under development” section).

Land development Construction

Construction works are performed by the eminent contractors who are very well reputed. To ensure proper execution of the construction and fit-out phases, the Group has formed strategic alliances in the form of jointly controlled entities with its key contractors, such as Laing O’Rourke, Besix and Readymix Abu Dhabi.

Underpinned by unique architecture coupled with modern infrastructure facilities, there is always greater demand for quality housing, retail outlets and office spaces in a quest for better living and working environments. In order to meet the evolving market demand and ensure efficient use of land resources, ALDAR’s developments are regularly evaluated for improvements. Emphasis is also placed on working with talented professionals to create well designed and sustainable structures to meet our customers’ expectations.

Model projects: Al Raha Beachq

In addition to the infrastructure development, the Group is involved in construction of its strategic development projects.


Strategy in action

Investment manager

ALDAR applies the strictest criteria of quality, yields and investment profiles in all their developments. All projects are undertaken after stringent feasibility studies and once infrastructure is in place to ensure sustainable development. In addition to launching new projects, we also redevelop existing properties, provided that these are capable of adding value to the Company’s portfolio of assets.

In our role as investment manager, our strategy is to hold most of our commercial property developments including office, retail, hotels, leisure, schools and part residential. The objective is to offer our investors attractive income distributions and the potential for capital growth over the medium to long-term through a stable and diversified property portfolio in Abu Dhabi.

We are fully dedicated to provide high quality real estate to the people of Abu Dhabi, whilst generating attractive returns on capital invested by our shareholders. This will be achieved not just by good selection of properties followed by experienced property management, but also through understanding our customer’s changing needs and expectations.

Our main investment properties include, Al Jimi Mall, Al Mamoura building, Al Bateen, various projects at Al Raha Beach, Central Market and Motor World. Al Jimi Mall is fully let and there are currently 130 tenants. The first Al Mamoura building with over 46,000 square metres was completed and fully let in 2007. The second building is under construction and is due to be completed in first half of 2009.

Active development is in progress at various other projects where we will hold most of our commercial property portfolio for investment purposes.

Model projects: Varioust


Strategy in action

Asset management servicesWe offer co-ordinated and comprehensive services such as facility management and maintenance services. We plan to continuously provide active asset management services to our completed projects to facilitate our customers, enhance occupancy and rental growth. Our specialised property management team is focused to provide high quality services by ensuring maximum customer satisfaction as well as ensuring higher returns for the business.

Our intention is to be a long-term owner of real estate, thus enabling us to procure long-term income streams from such projects. While we intend to retain the freehold or long leasehold of these sites, capital might be recycled through the sales or grant of leasehold interests at a later stage as well as by bringing in joint venture partners.

Our specialised property and management team performs complete operational review of the scheme designs, focusing in particular on the environment impact, and developing property management strategy documents. In addition, they provide property mobilisation and management services including occupier liaison, property accounting and all facility management services.

ALDAR’s assets management team is currently managing all the completed projects including Al Jimi Mall, Abraj Towers, Al Mamoura and Al Raha Gardens.

ALDAR Marinas offers world-class, sustainable environments to ensure a wide variety and range of access to regional waters. ALDAR Marinas will be managing marinas at Yas Island, Al Bandar, Al Dana and Al Gurm resorts as well as the Marina at Nareel Island.

ALDAR has formed a specialised company; ALDAR Hotels and Hospitality, for managing its upcoming hotel projects. ALDAR Hotels and Hospitality will be delivering the best hospitality brands and operators available to Abu Dhabi. This will not only enhance the amenities available on ALDAR’s many superb mixed use developments but will also improve both product and service levels in the nation’s capital.

e Model projects: Various


Al Gurm Resort

Nareel Island

Mina Zayed

Al Mamoura

Central Market

Imperial College London Diabetes Centre

Saadiyat Island


Strategy in action

13

Strengthening position in Abu DhabiOur business is closely aligned with the Government’s vision to enhance, amongst other things, urban planning in Abu Dhabi. During the year, we announced three new projects namely Al Falah, Motorworld and Al Ruwais, strengthening our position as the leading real estate developer in Abu Dhabi.During the recent years bold and deliberate steps have been taken to obtain the highest quality standards and to ensure that investments are undertaken wisely resulting in a flourishing modern capital city with a first-class infrastructure.

There are major plans at the macroeconomic level to develop the capital city as an ideal place to live and work as well as a tourist attraction over the next decade. This includes a new international airport to take 20 million passengers a year and up to 40 new hotels by 2011.

Since its formation in 2005, the Group has built a reputation as one of the foremost developers in the UAE, managing complex mixed use community developments and forging strong links with the Government of Abu Dhabi. The Group’s current real estate construction projects will create opportunities for both investors and those seeking an ideal place to live. Great care has been taken to protect the setting of Abu Dhabi’s natural scenic beauty which includes over 200 natural Islands and 1,300 kilometres of coastline along the Arabian Gulf.

During 2008, we moved from the planning stage to the execution stage in all of our significant projects. This phase inevitably means we will need to commit more resources ensuring timely delivery. With full concentration on delivery of high-quality assets and focus on areas where we have or can build competitive advantage and strong integrated risk management skills by combining development, leasing, sales, and asset management into a single venture for our shareholders, we strongly believe that the Group is very well positioned within Abu Dhabi. We are undertaking several large-scale, market-driven projects at the most strategic sites in Abu Dhabi including areas around the airport, city centre and water fronts of Abu Dhabi. The displayed map depicts the approximate location of ALDAR’s projects.

ALDAR holds a vast land bank of over 50 million square metres which was granted by the Government (excluding Al Jimi Mall). Also, it holds land for Al Mamoura and Imperial College London Diabetes Centre on short-term leases from Mubadala. Due to their short-term nature, the Group does not consider these to form a part of its land bank.

e Model projects: Various

Motor World

Abraj Towers

Al Raha Beach

Yas Island

Al Falah

Abu Dhabi Airport

e

Ahmed Ali Al SayeghChairman


Strategy in action

Chairman’s statement2008 was an important year for ALDAR, a year that witnessed completion and delivery of several projects. It was one in which the business continued to grow consistently and profitably following our clear strategy. The improvement in our sales, profitability and net asset value is testament to the fact that our strategy is working and the business is building an ever greater momentum.

The three key performance indicators for the business are the net asset value, progress on projects and the net operating profit. The net asset value grew by 108.5% from AED 7.7 billion to AED 16.0 billion, developments under construction increased from AED 8.3 billion to AED 22.9 billion and net operating profit for the year increased to AED 2.2 billion from AED 0.1 billion compared to the last year. Since its inception, ALDAR has consistently delivered value to its shareholders and outperformed the sector. Based on these strong results, the Board is recommending a final dividend of AED 0.125 per share, an increase of 25% on last year.

Notwithstanding the financial and economic uncertainty in the world, we believe ALDAR can continue to grow consistently, profitably and competitively in 2009 and beyond. The solid foundations put in place in recent years have made the business more resilient and well placed to prosper in this rapidly changing environment.

We have taken proactive measures to adapt ALDAR to the new economic environment to ensure we can successfully meet any challenges and take advantage of any opportunities resulting from the ongoing international financial turmoil. We are confident in the future of Abu Dhabi and ALDAR and over the coming years, ALDAR will build out an unparalleled footprint in the United Arab Emirates, developing a number of sustainable communities and attracting ever greater numbers to the region. Our extensive knowledge of local customers is coupled with a range of unmatched developments to meet the real needs of a population growing in size, wealth and aspiration. ALDAR is proud to be a cornerstone of the Abu Dhabi government’s Economic Vision 2030 and to be allowed to contribute to its realisation and success.

Furthermore our new leadership team has added dynamism to the structure and has rapidly taken decisions to adapt the Group to the prevailing market conditions. All shareholders will benefit from their foresight. We have an increasingly robust investment portfolio that will withstand the passage of time and which will deliver high quality results on a consistent basis. There are interesting times ahead with programmes of innovations and new developments that will be launched at the opportune moment. For all of these reasons, we remain cautiously optimistic about the year ahead and confident of making further progress towards our long-term strategic and financial objectives.

Meanwhile, it is important to recognise the hard work that has gone into developing the ALDAR business during the past year. I would like to thank all of our employees for their valuable contribution that has manifested itself in these excellent results. We shall continue to work hard together to ensure success in 2009 and beyond.

Finally and on behalf of all members of the Board, I would like to give our collective thanks to their Highnesses Sheikh Khalifa bin Zayed Al Nahyan, President of the United Arab Emirates, Supreme Commander of the UAE Armed Forces and Ruler of Abu Dhabi, and Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, for their continued support.

4 March 2009

Net profitAED millions

3,446.72008

1,941.32007

2006

2005

1,249.7

682.5

John Bullough Chief Executive Officer


Chief Executive Officer’s statement2008 has been a dynamic year for ALDAR with significant progress made across our portfolio. Key large scale mixed use projects have advanced enormously.

While conditions in the global financial and real estate markets are likely to remain challenging in 2009, we are confident in the outlook for the coming year. The underlying economic fundamentals of Abu Dhabi remain relatively strong and ALDAR is well positioned to capture future growth. In 2009 our priority is to deliver on our objective to provide and maintain sustainable communities within Abu Dhabi while maximising returns to our shareholders.

During 2008 the business continued to produce consistent progress across all of our projects. At the same time, we were able to strengthen our sales, leasing, hotels and estate management functions to better serve the needs of our customers.

The progress that was made in 2008 would not have been possible without the consistent effort of our highly skilled and motivated employees, operating across all of our sites.

2008: Operational results Financially our business ended 2008 in a significantly stronger position than when the year began. Profit grew 77.5% due to revenue from sale of land and residential units. Consequently, our net asset value at the end of 2008 increased to AED 16,023.5 million which is more than double the value as at 31 December 2007.

The value of developments under construction increased to AED 22,934.3 million. All business segments witnessed growth culminating in a net operating profit of AED 2,211.3 million compared with AED 120.1 million for 2007. The business was able to increase the dividend by 25% to AED 0.125 per share.

2008: Business review A number of developments were completed in 2008 demonstrating how our strategy is translating from planning and construction into delivery. These developments are much more than buildings: They showcase how ALDAR is contributing to the building of the Abu Dhabi nation and our commitment to it.

The first phase of the Al Mamoura Building has been completed and is now home to the Executive Affairs Authority and Mubadala. The Al Yasmina School was completed and is now dedicated to providing a first class education for 2,000, three to 18 year olds. Key phases of Abraj Towers and Al Raha Gardens have also been completed and handed over.

Significant progress was made throughout 2008 on the developments at Yas Island, Al Raha Beach, Central Market, Al Gurm and Nareel Island. Each of these is a major development that will take a number of years to complete but it is inspirational to see the sustained progress that is made on a monthly and even weekly basis.

For instance Yas Island, which will play host to the inaugural Abu Dhabi Grand Prix on 1 November 2009, witnessed significant progress in its evolution during 2008. Construction at Yas Island includes the Formula 1 racetrack, a links golf course, seven hotels, the Ferrari World Experience, marina and major infrastructure works. It will take a number of years for the whole of Yas Island to be completed but the effort that went in during 2008 will ensure we are able to look forward to enjoying our first Grand Prix this November with all Phase I works complete.

During 2008 members of our team progressed sales of residential units on a number of our key developments including Al Raha Beach.

Operating profitAED millions

2008

2007

2006

2005

(164.7)

648

120.1

2,211.3


Strategy in action

New projects launched in 2008 A number of new projects were successfully launched in 2008, including:

q Retail Mall in Al Ruwais: A retail destination to provide shopping, leisure and entertainment for residents in Al Ruwais;

ALDAR Marinas: q This arm was set up with a mandate to provide a broad range of leisure marine facilities and services for waterfront projects in Abu Dhabi;

Al Falah: q One of the new UAE National Housing Communities which forms a part of the Government housing initiative for Abu Dhabi. Al Falah has been conceived as five villages which comprise over 4,800 houses in total;

Yasmina School: q Second school with an investment of more than AED 146 million which has been opened under the umbrella of ALDAR Academies, focused on providing world class education and learning facilities to the younger population of Abu Dhabi.

Social responsibility ALDAR recognises it has a significant responsibility to behave in a manner befitting a leading organisation in Abu Dhabi, seeking to contribute to the development of sustainable communities. During 2008 we invested significantly in the development of our health, safety and environment team who have started work on a number of innovative initiatives.

Meanwhile we have undertaken a number of initiatives focused on demonstrating our commitment to Abu Dhabi and the wider region, including:

ALDAR supported the Emirates Foundation’s Summer Science, Technology, Engineering, qAerospace and Math (STEAM) programme by hosting the Arab Youth Venture Foundation (AVVF) Mars Robotics Clinic which took place in Al Ain;

ALDAR has pledged support to Emirates Wildlife Society in association with the World Wide qFund for Nature (WWF) for the nationwide innovative educational programme that aims at enhancing environment awareness amongst school children, parents and the community at large;

ALDAR sponsored ten UAE students to study real estate related disciplines in the qUnited Kingdom;

ALDAR has commissioned the Inspirational Development Group (IDG), a leading UK provider qof developmental programmes, to run a special management development programme for ALDAR’s UAE graduate and scholarship students.

Awards During the year, ALDAR received a number of awards and accolades focused on the quality of our developments and the manner in which they are being constructed and managed on an ongoing basis.

These honours range from achievements in areas such as construction quality, sales and marketing excellence, site safety and property management, to waste management, environmental awareness and dedication to corporate governance.

Examples of awards that we are particularly proud of include:

ALDAR was awarded the Best Health and Safety Achievement in construction award by qthe Safety and Health Practice and Institute in Occupation Safety and Health;

ALDAR was awarded ISO9001-2000 certification. This is part of a series of internationally qrecognised standards which define and outline requirements for the implementation of quality systems.

Chief Executive’s statementContinued


Strategy ALDAR launched a strategic review in the later part of 2008 focused on identifying the key requirements needed to deliver quality developments whilst ensuring continual enhancement of their commerciality. This is taking place against a backdrop of the growing global economic crisis, contributing towards decisions to prioritise developments.

Looking forward the strategy will be broadened and will focus not only on the delivery but also the ownership and operation of sustainable communities in Abu Dhabi.

Looking ahead to 2009 2009 will be a year of delivery for ALDAR. The eyes of the world will be on Yas Island on 1 November when the final race in the Formula 1 season takes place. This will be the first time such a global sporting event has been hosted by Abu Dhabi and it is an exciting privilege to be part of the team that will create history.

The last race of the year, the winner that day is likely to be part of a robust team able to contend with the challenges that emerge throughout the season. There are parallels with ALDAR.

Our team is strong and committed – focused on delivering projects that enhance people’s lives in Abu Dhabi – and we are all excited by the opportunity to contribute to that delivery in Abu Dhabi during 2009.

4 March 2009


Strategy in action

Strategic development projects

Overview Based in Abu Dhabi, ALDAR is the leading property development, investment and management company with shares listed on Abu Dhabi Securities Market with a total market capitalisation of AED 10.2 billion as of 31 December 2008 (Source: Abu Dhabi Securities Market). ALDAR Properties PJSC and its subsidiaries operate together as a group of 17 companies, including its joint ventures with its key contractors. The Group’s activities ranges from developing land, carrying out feasibility studies, preparing master plans for its projects, land reclamation and infrastructure development, selling, leasing and holding completed developments as investment properties and asset management. Projects undertaken by the Group include offices, residential properties, retail sites, hotels, tourist attractions, leisure facilities, luxury resorts and schools.

Objectives and strategy Our strategy is driven by our vision to be the leading real estate developer renowned for state-of-the-art developments. We believe in delivering service excellence and innovations across the markets to customers need. We strongly believe the best way to grow the business is through a strategy which allows us to ensure that as we broaden and integrate our projects, the team we build shares the same values, and continues to deliver quality projects.

A strong team of around 800 people, from all over the world, is constantly working to enhance the standards of our projects. With the rapid growth of our operations, everything we do is underpinned by excellence, teamwork and integrity, three of our corporate values, which are delivered via our project management programme.

By following this strategy and managing the risk return matrix, we have produced consistently high shareholder returns combined with low volatility. This is demonstrated by our results over four years of outstanding performance. We have achieved our target results every year since the ALDAR’s IPO in 2005. We believe in our strategy, which is designed to build the nation and maximise returns over the medium to long-term for our shareholders.

ALDAR is very well positioned within the market as it is a real estate development company with the financial resources, management calibre and government support to undertake large scale market driven projects. We are developing some of the most strategic sites on Abu Dhabi including areas around the airport, waterfront and city centre. The Group’s projects are only undertaken after extensive feasibility studies are completed and measures taken to ensure endurable master planning and infrastructure are in place. The Group apply the strictest criteria of quality, yields and investment profiles in all their developments.

Land bank Holding a land bank of over 50 million square metres, the Group’s ambition is to develop the capital city. Abu Dhabi has an excellent location within the Middle East with an abundance of valuable natural coastal habitats. Through effective planning, adequate investment in infrastructure, design and construction, coupled with clear vision, the Group will continue to deliver remarkable and sustainable projects to the nation.

Business review

19ALDAR PROPERTIES PJSC Report and Accounts 2008 19

The breakdown of the land bank for each project is shown in the table below:

Land bank Land area Freehold/ (in square metres) Leasehold

Airport site 720,213 Freehold

Al Bateen Park 103,230 Freehold

Al Falah 12,803,242 Freehold

Al Gurm Resort 1,843,919 Freehold

Al Raha Beach 6,410,458 Freehold

Al Raha Gardens 1,060,889 Freehold

Eco Park 267,033 Freehold

Motor World 2,938,717 Freehold

Nareel Island 689,542 Freehold

Al Ruwais 504,000 Freehold

Yas Island 24,848,472 Freehold

Abraj Towers 47,142 Freehold

Central Market 64,264 Leasehold (50 years)

Al Jimi Mall (including Noor Al Ain) 177,881 Leasehold (75 years)

Source: Title deeds registered with Abu Dhabi Municipality.

Projects The Group is in the process of building a portfolio of real estate assets distinguished by their standards and prestige. Up to the end of 2008, the Group has launched more than 40 major developments and redevelopments primarily across the Emirate of Abu Dhabi. The following tables give a synopsis of the progress of the projects:

Completed projects Project Project type Completion date

Al Mamoura Office building December 2007: Building A completed and leased to Mubadala and Environment Agency for 20 years

Abraj Towers Mixed use (Residential, December 2007: Phase I completed Offices and Retail) and leased to Etihad Airways for 20 years

Al Raha Gardens Mixed use (Residential, December 2007: Phase I completed (Phase I and II) Offices and Retail) and delivered December 2008: Phase II substantially complete and total of 444 villas have been delivered

Imperial College Medical centre April 2006: Complete and handed over London Diabetes to Mubadala Development Company Centre

Al Jimi Mall Shopping Mall Acquired as a completed asset in 2005 and expansion completed in March 2006

The Pearl School School Acquired on a short-term lease. Completely renovated and launched in September 2007

Al Yasmina School School Completed and launched in September 2008


Strategy in action

Business reviewStrategic development projectsContinued

Projects under development Project Project type

Al Raha Gardens Mixed use (Residential, Offices and Retail) (Phase III and Town Centre)

Abraj Towers Mixed use (Residential, Offices and Retail) (part of Phase II)

Central Market Mixed use (Residential, Offices, Retail and Souk)

Al Gurm Mixed use (Residential and Resort)

Al Raha Beach Mixed use (Residential, Offices and Retail)

Al Mamoura (Phase II) Office building

Yas Island Mixed use (Residential and Resort)

Al Bateen Residential

Noor Al Ain Mixed use (Residential, Retail and Leisure)

Baniyas Towers Offices

Injazat Data Centre Offices and data centre

Projects at concept development stage or pre-construction stage Project Project type

Motor World Mixed use (Residential, Offices and Retail)

Al Falah Residential

Al Ruwais Shopping Centre Retail

Eco Park Use not finalised

Airport site Use not finalised


Our strategy aims towards investment in high quality ventures, development of such ventures into prestigious projects and post completion management of such projects.

Completed projects

Al MamouraPhase I

Investment Al Mamoura comprises two new office buildings located in the Al Muroor district in Abu Dhabi with over 69,000 square metres of office space and 25,000 square metres of covered parking. Al Mamoura reflects the first model for the new Grade A international standard buildings that are being developed in Abu Dhabi with corporate occupiers in mind.

Development The first building with over 46,000 square metres was completed in December 2007. The building is fully let to Mubadala Development Company, Environmental Agency Abu Dhabi, Executive Affairs Authority and other tenants. Second building is under construction and is due to be completed in the first half of 2009. Please see “Projects under development” section for more details. The land for Al Mamoura is co-owned by Mubadala and the Environmental Agency and leased to ALDAR for 15 years. Mubadala and the Environmental Agency have also taken a lease on part of the completed building for a period of 15 years. As Al Mamoura is on short-term lease, it has not been revalued by CB Richard Ellis.

Management The completed building is fully managed by ALDAR’s Property and Asset Management team.

Completed projects

Abraj TowersPhase I

Investment Situated adjacent to Al Raha Gardens and within the overall Al Raha Beach development Abraj Towers is a joint project of Etihad Airways and ALDAR Properties PJSC. Abraj Towers is a housing development close to Abu Dhabi airport to help accommodate Etihad Airways’ rapidly expanding workforce. The community around Abraj Towers will eventually house more than 1,000 staff in one, two, and three bedroom furnished and unfurnished apartments with balconies.

Development The first phase was completed in December 2007. The completed phase comprise of ten buildings with 198 residential units and in excess of 4,800 square metres of office and retail space. The complete project is scheduled for completion in 2009. Once complete Abraj Towers will include a 2,363 square metre supermarket and a 1,402 square metre gym facility, as well as a swimming pool and other amenities. For further details regarding the Abraj Towers project, please see “Projects under development” section.

Management The whole development including both phases was sold in January 2008 to a newly created Joint Venture company between Etihad Airways and ALDAR. The Joint Venture company has leased the whole development to Etihad Airways for 20 years.


Strategy in action


Completed projects

Al Jimi Mall

Investment Located in the Al Jimi District of Al Ain city, Al Jimi Mall is a distinctive landmark which consists of two levels, containing over 120 outlets. The prestigious mall offers a wide range of merchandise, services and facilities, which are specifically tailored and continuously enhanced to satisfy the customer’s diverse tastes. The mall is the residence of numerous leading fashion icons, department stores, jewellers, gift shops, furniture showrooms, and much more. With its customised services and unparalleled luxury retail offerings, Al Jimi Mall maintains its reputation as the city’s premiere shopping and leisure destination.

Development Al Jimi Mall was acquired by the Group in 2005 and expansion was completed in March 2006.

Management Al Jimi Mall is fully let and there are currently 130 tenants, the top five tenants produce approximately 49% of the rents. These tenants are Majid Al Futtaim Hypermarkets LLC (Carrefour), Land Mark Group (Shoe Mart, Splash, Baby Shop, Life Style and Home Centre), Obaid Humaid Al Tayer International Trade (Areej), Abu Dhabi Islamic Bank and Fun City.

Completed projects

Al Raha Gardens(Phases I and II)

Investment Al Raha Gardens is situated opposite to Al Raha Beach, on the main highway leading from Abu Dhabi to Dubai. Al Raha Gardens is one among the most prestigious residential developments of ALDAR, which offers the first freehold properties to UAE nationals. The Group has also developed two schools and a kindergarten, ensuring that residents enjoy a premium integrated lifestyle. The handing over of keys to these spacious family dwellings began during August 2007. For further details regarding the Al Raha Gardens project, please see “Projects under development” section.

Development The first and second phase comprising of 785 villas, has been completed and is now fully occupied. The Group also completed 15 million safe hours on-site, without any accidents.

Phase III is under active development and will be delivered during 2009.

Management Revenue has been recognised for villas which were handed over to customers up to 31 December 2008. Significant number of villas has been leased to third parties on behalf of the owners. Our Property and Assets Management team is providing facilities management services to the residents of Al Raha Gardens.


Completed projects

Imperial College London Diabetes CentreInvestment The Imperial College London Diabetes Centre is a specialised facility for diabetes treatment, care and research, an initiative resulting from a partnership between Imperial College London and Mubadala Development Company. The centre comprises a treatment unit for diabetes and its complications, and a research institute.

Development The centre was completed in April 2006. The total area of this development is 3,600 square meters. Imperial College London Diabetes Centre is on a short-term lease and therefore not considered as part of our land bank.

Management The land on which the Imperial College London Diabetes Centre is built is owned by Mubadala Development Company. Mubadala engaged ALDAR to construct the Imperial College London Diabetes Centre. On completion, Mubadala entered into a 15 year lease with ALDAR, pursuant to which ALDAR sub-leased the premises back to Mubadala who has engaged independent operators to manage the Imperial College London Diabetes Centre. As sub-landlord, The Group is not involved with the day-to-day operations or management of the Imperial College London Diabetes Centre.

Completed projects

The Pearl and Al Yasmina SchoolsInvestment Due to the rapid expansion of the local population and the commitments by the Group to deliver a significant number of residential projects in the coming years, there is a pressing need for increased access to good quality education provision in Abu Dhabi and Al Ain. As a result, the Group established ALDAR Academies LLC in the spring of 2007.

ALDAR Academies is planning to expand its portfolio of schools by building several new schools to cater to the growing student population of Abu Dhabi. There are plans to build and operate 20 new schools in Abu Dhabi within the next five years.

Development The Academies’ first school (The Pearl Primary School) was opened in September 2007 in down town Abu Dhabi, and the second school, Al Yasmina, came online in September 2008. Both of these schools are offering an International British curriculum.

Management The Pearl School: The Pearl School is a vibrant and dynamic community in itself. In addition to fully-equipped classrooms, the school features complementary learning facilities such as an extensive library and computer suites as well as comprehensive sports facilities including a swimming pool, football pitch, netball court, and sports hall.

Along with the core subjects, lessons in French, Arabic and Islamic studies are also given, helping to develop cross-cultural understanding and produce genuine international citizens. Furthermore, a wide range of after school activities is available to complete the well rounded learning experience.

Al Yasmina School: Located within Al Raha Gardens adjacent to Abu Dhabi Golf Club, Al Yasmina School has a capacity for over 900 nursery and primary pupils and 1,000 secondary pupils Al Yasmina School offers an International British curriculum to children from 3 to 18 years. The adoption of an all-age school model delivers many advantages including continuity of education and the elimination of any slippage associated with primary to secondary transfer. The large school role enables the provision of a broad and balanced curriculum which meets the individual strengths and talents of pupils.

In addition to a wide range of academic classrooms and administrative areas, the school also provides excellent specialist facilities. The school provides a 25-metre pool as well as a smaller learner pool, a large gymnasium, two junior halls, an activity studio, two astroturf pitches and recreational areas. There are also separate and secure play areas for each of the different school stages.

The school places a high value on creative arts and technology and sees many benefits in the inter-relationship between these subjects. Our state-of-the-art design technology department provides specialist areas for learning activities relating to food preparation, resistant materials and electronics. Our performance spaces include an auditorium, amphitheatre, and drama studio and recital rooms.


Strategy in action

e

Investment Yas Island is on the north-east side of Abu Dhabi’s mainland, conveniently located for Abu Dhabi International Airport. Yas Island will feature acres of green landscape dedicated to leisure activities, along with residential properties in many different settings, and several hotels and resorts. The first phase of Yas Island is set to be completed in 2009 with the final phase finished by 2017, at a development cost of around US$ 40 billion. As well as a wonderful place to call home, the island will be a regular recreational destination for UAE and international visitors, being only 10 minutes’ drive from the airport. For residents of Abu Dhabi it is only 25 minutes’ drive from the main island’s centre.

Yas Island will feature attractions such as a Formula 1 racetrack, 20 hotels, three theme parks including Ferrari Experience, Warner Bros. and water park, retail development of 300,000 square metres, links golf course, three marinas, apartments, villas and numerous food and beverage outlets. Yas Island will be home to high quality residential

Projects under development

Yas Island

Yas Island will feature attractions such as a Formula 1 racetrack, 20 hotels, three theme parks including Ferrari Experience, Warner Bros. and water park, retail development of 300,000 square metres, links golf course, three marinas, apartments, villas and numerous food and beverage outlets.

communities with a variety of modern low rise apartments and villas. Premium attractions will be integrated with a signature shopping centre and leisure facilities which will create a world-class tourism and leisure destination in Abu Dhabi. This mixed use project utilises the island’s natural coastline with around 32 kilometres of waterfront.

Development The whole development is phased over three stages. The “Race Day” related construction works have started on Phase I which include racetrack, links golf course, seven hotels, Ferrari Experience, retail experience and parking for more than 15,000 cars. Phase I will be completed along with infrastructure by last quarter of 2009, whereas, Phases II and III are at the planning stage.


Location: Abu DhabiSegment: Mixed use (Leisure,

residential, offices and retail)Land area: 24.8 million square metres (approx)Website: www.yasisland.ae


Major developments in Phase I of Yas Island are:Infrastructure: Land and infrastructure includes one underpass, nine bridges, nine ramps, 582 metre long southern tunnel, bridge to Marina Hotel, 24 kilometres roads alone in Phase I, Sewerage Treatment Plant, three 132 kV substations, nine 22 kV substations and over 200 kilometres of Phase I cabling. Design works for infrastructure are complete and construction works are over 60% complete.

Racetrack: The Formula 1 racetrack has a length of 5.5 kilometres, with seating capacity of in excess of 45,000 people (41,622 seats). Construction works have now crossed the 50% landmark. Rapid progress is going on for structural works at all buildings and structures. Structural works at few tunnels are complete and drainage pipes and kerbstones are being planted. In addition, structural works for fuel/tyres, showers and transformer buildings are complete. The project is spearheading its completion deadline in second half of 2009.

Ferrari Theme Park: The Ferrari World Theme Park consists of a purpose built building to house 24 rides and attractions, with two external roller coasters. The purpose is to create a structure that is unmistakably Ferrari, and will not show its age. Functional requirements obviously include the need to house the theme park attractions in a huge environmentally controlled space – approximately 175,000 square metres under roof area. The design phase is almost over and construction works are over 50% complete. Piling and wall works for certain sections are complete. The development is progressing at the desired pace.

Marina Hotel: A 500 room 5-star plus iconic hotel striding the Formula 1 racetrack and marina at Yas Island. The development comprises two separate nine storey towers connected by a bridge and service tunnel. Both towers are partially wrapped by a separate steel and glass grid-shell structure. Piling works are fully complete, whereas, design phase is substantially over. Construction works are almost 50% complete.

Yas Mall: Yas Mall is the centre of the constellation and will contain almost 350,000 square metres of leasable area occupied by over 500 retail units and three hotels. The self contained enclosed environment will be unlike any other mall and it will resemble a classic town centre with many free standing buildings bathed in natural light rather than a uniform enclosed regional shopping centre. Design and piling works are almost over for the Mall.

Links golf course and hotels: Six high quality, high density hotels will be arranged along the edge of the links golf course. The 3 and 4-star hotels will be operated by three major hotel brands and will include ball rooms and spas. Active development is in progress for the golf course and hotels and design and piling works are substantially complete.

Management The above projects will be managed by the Group either directly or through a strategic alliance with field specialists. Few of the management contracts and joint venture agreements have already been signed. Management options for remaining tasks are still under consideration.

2009Phase 1 completion

2017Final Phase completion


Strategy in action

eLocation: Abu DhabiSegment: Mixed use (Residential,

offices and retail)Land area: 6.4 million square metres (approx)Website: www.alrahabeach.ae


Al Raha Beach

Investment Al Raha Beach is an 8.5 kilometres of natural beachfront which will house over 120,000 residents. The development is located on the beach side of the main highway leading into Abu Dhabi from Dubai and will provide a strategic gateway to Abu Dhabi with links to Abu Dhabi International Airport, Al Raha Gardens and Khalifa City.

The development is divided into 11 communities of Al Zeina, Khor Al Raha, Al Bandar, Al Seef, Al Dana, Al Rumaila, Al Zahiya (Al Nakhel), Al Lissaily, Al Razeen, Al Sheleela and Al Thurayya. Each of these communities will have their own individual characteristics.

The development is one of the first designated areas where non-UAE nationals can invest in property within Abu Dhabi. Al Raha Beach will become a major tourist destination with fast links to the international airport and access to eight world-class hotels, five marinas, eight schools, a library, post office and two medical facilities with five clinics.

Development Dredging and reclamation activities on the eastern four kilometres of the Al Raha Beach project are complete. Land reclamation works for the western four kilometres are substantially complete. Significant milestones achieved during the year are:

Land and infrastructure development: This comprises land creation, seawalls, roads, bridges, utilities, marinas, canals, light rail transport and public realm. The current scope includes 30 road bridges, 11 pedestrian bridges and seven interchanges, 18 LRT stations, post offices, mosques, marine police stations, civil defence centre and emergency services. The entire primary infrastructure at Al Raha Beach is scheduled to be completed by December 2010. The infrastructure works are almost one-third complete by the end of 2008 and progressing at a very fast pace to achieve its desired targets.


The Gulf’s most spectacular new address. A waterfront city spread lavishly over 6.4 million square metres, creating the new gateway to Abu Dhabi.


Al Zeina: Al Zeina is located in the eastern region of Al Raha Beach and comprises villas and apartments ranging from townhouses to four bedroom duplexes. Al Zeina is one of the rapidly progressing projects with planned delivery dates in 2011. The design works are near completion, whereas, piling and substructure works were fully completed during 2008. Advanced structural works are almost one-third over witnessing a healthy progress.

Khor Al Raha – Al Bandar: Al Bandar is an island development consisting of two basements, podium/ground floor and five residential towers ranging from 11–16 floors. The island is connected to the main land by a bridge which carries all the utilities. During 2008, the project land fill and reclamation was completed and podium works were substantially completed. The buildings are taking shapes and structure is almost complete. The project is heading well in the right direction for its expected delivery dates.

Khor Al Raha – Al Muneera: The project comprises of villas, apartments, parking, commercial space, small area of retail and a public beach. It is located on the eastern side of Al Raha Beach development partly on mainland and partly on a reclaimed island separated from mainland by a 35 metre water canal. During 2008, project designs and ground-works are substantially complete whereas piling works have reached the half-way mark. Structural works have also commenced recently.

Al Seef: Al Seef is a mixed use development consisting of residential, commercial, retail, and hotel buildings, located centrally within the eastern part of Al Raha Beach, between Al Dana and Al Bandar. The development at Al Seef is in the preliminary stages and the design plans are in progress. Construction works will commence shortly after the completion of design phase.

Al Dana: It includes Abu Dhabi World Trade Centre located in a prime position within the precinct and has water views on three sides. In 2008, the project made initial progress in design stage. Structural works will commence following the design stage. The design work is in progress and piling works for 5+ Design development is approaching 50% milestone. Piling works for Al Yah development were also completed in 2008.

Management Phased delivery of completed units will start from early 2010. Sales have been launched for both residential units and land plots within these developments. During 2008 the Group achieved sales in excess of AED 5,569.9 million for residential units and AED 4,074.8 million for land plots.




Strategy in action

eLocation: Abu DhabiSegment: Mixed use (Residential,

offices and retail)Land area: 64,300 square metres (approx)Website: www.centralmarket.ae


Central Market

The new heart of Abu Dhabi City. Features boutique shopping, residential property, office space, a world-class hotel and a magnificent central Arabian souk.

Investment The redevelopment of Central Market consists of luxury apartments, a modern Arabian souk, branded retail outlets, food outlets and restaurants alongside premium office space and world-class hotels and will offer work, leisure and entertainment facilities. There will be underground parking for over 5,300 cars.

Comprising of three skyscrapers, Central Market will be an ideal location for businesses to have premium office space in the office tower, coupled with a 4-star hotel and a 5-star hotel. The residential tower is an 88 storey skyscraper providing apartments ranging from one-bedroom to large duplexes and four-bedroom penthouses. The project is designed by world renowned architects Foster & Partners.

Development In 2008, Central Market continues to progress on its “fast track” programme with concurrent design and construction. The basement car parking is ready and construction of a new souk is around two-thirds complete. Construction works at the residential and office towers are rapidly progressing and heading their planned completion in 2011. The 4-star hotel is expected to be complete by first quarter of 2011 whereas, the 5-star hotel is expected to be complete by fourth quarter of 2012.

Management The offices and residential units will be managed by the Group’s Asset Management team, whereas, the hotel will be managed by the Hotels and Hospitality team. The Group has already signed management agreements with Marriott International for Renaissance Hotel & Suites at Central Market.





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Investment The overall development will be done in a single phase, but in two construction stages, Residential and Resort. Residential consists of 73 private luxury villas, 12 of which will be placed on their own private Island. These three, four and five-bedroom villas include spacious informal living areas with spectacular views across the water. Homes are with open terraces/balconies, private swimming pools, jetty and private beaches.

At Al Gurm Resort, the main feature will be an opulent 5-star leisure resort harmoniously blending into the vista on a central archipelago of islands. Seafood restaurant, pool activity centre with lounge bar, conference centre, marina water sports centre and spa etc. The resort will consist of a mix of chalets on individual islands along with an all suite 161 room international luxury hotel centred on a lagoon. The resort facilities are expected to include a health fitness club, a spa, and a number of boutiques which will be available to the residents of the private villas.

By creating a place that complements rather than dominates this tranquil landscape, the Group has not only attempted to match nature, but to ensure that Al Gurm Resort provides the perfect setting for its customers to see it at its most enchanting. This development is being built on 1.8 million square metres of land.

Development During 2008 dredging and reclamation works were substantially completed. Piling works for 63 Residential villas are complete including the ten additional villas. Shell and Core construction is in progress for the villas and the progress of concrete structure is well advanced and proceeding as planned.

Management The structures of residential villas will be completed with internal finishing by end of 2009 and phased handover will take place by early 2010.

Location: Abu DhabiSegment: Mixed use

(Leisure and residential)Land area: 1.8 million square metres (approx)Website: www.algurmresort.com


Al Gurm Resort

Nestling among the mangrove forests of Abu Dhabi, Al Gurm Resort is an extraordinary residential and tourist destination, standing discreetly on the edges of the sapphire waters of the Gulf amidst the mangrove forests.

2010Expected completion


Strategy in action

eProjects under development

Noor Al AinLocation: Abu DhabiSegment: Mixed use (Leisure,

residential and retail)Land area: 177,900 square metres (approx)Website: www.nooralain.ae

Noor Al Ain is truly remarkable because it provides one of the first residential freeholds for sale in central Al Ain. Taking the form of seven ultra-modern towers in excess of 1,300 residential apartments and a 300-key 3-star hotel.

Investment Noor Al Ain will be the first residential freehold for sale in central Al Ain. The development will include in excess of 1,300 residential apartments and a 300-key 3-star hotel. In addition, the retail mall will provide 120,000 square metres of retail space and over 8,000 new parking spaces. Noor Al Ain will be a mixed use integrated complex that would emerge on the existing Al Jimi Mall to offer modern residential, shopping, and leisure facilities to the residents.

The development of the project will be based on the popular styles of multi-function shopping areas found at Sydney’s Darling Harbour and Brisbane’s South Bank, with a modern twist of Arabia. The creation of this retail and leisure complex will form a new town centre and will add great benefit for Al Ain residents to shop, rest and play, while also ensuring the region’s special character and charm are retained.

Development The development works have commenced in the 2008 and bulk excavation is going on at the site. The design works are at an advanced stage and agreements with different vendors are under review. Primary Substation sites have been identified to ensure complete power supply by mid-2010.

Management The project is targeting its completion date as first half of 2013. The management options for different segments of the project are currently under consideration.





Location: Abu DhabiSegment: Mixed use (Residential and retail)Land area: 1.06 million square metres (approx)Website: www.alrahagardens.com

e

Investment Al Raha Gardens is situated opposite to Al Raha Beach, on the main highway leading from Abu Dhabi to Dubai. Al Raha Gardens is the first development that can be sold as a freehold property to UAE nationals in Abu Dhabi. The development has a total area of 1.06 million square metres.

Development Landscape works in Phase I were completed in March 2008. Phase II landscape works are in progress with three parks in Samra compound completed and handed over.

Phase II consists of 470 villas with all fully completed and handed over. Works on remaining villas in Phase II are in the final stages. Phase III consists of 632 villas and expected to complete by June 2009. Phase IV consists of a new town centre and comprises 1,144 residential units, 36,000 square metres of food and beverages outlets, 12,000 square metres of fitness complex, 200-key 5-star business hotel, 100-key 3-star Shari’a compliant hotel and 4,000 car parking spaces. Phase IV is in design stage and construction will commence shortly once the design phase is over.

Management Al Raha Gardens was the first and most successful project launched by the Group. Almost all the villas in the first three phases of Al Raha Gardens have been sold and as at 31 December 2008, total of 784 villas have been completed and been formally handed over to the customers.


Al Raha Gardens(Phases II, III and Town Centre)

The first development to be offered to UAE nationals in Abu Dhabi on an ownership basis, Al Raha Gardens is a tranquil retreat within the dynamic Al Raha Beach Development.


e

Investment Located in the Al Muroor district of Abu Dhabi, Al Mamoura is a block of two office buildings A and B, with over 69,000 square metres of office space and 25,000 square metres of covered parking. Building A with over 46,000 square metres was completed in December 2007.

Development Building B with over 23,000 thousand square metres of office space is expected to be completed by mid-2009. Building B is designed in a more functional style than Building A but with equal quality of finish and layout. Each floor has an easily divisible grid and is provided with full access raised floors and conveniently positioned fan coil air conditioning to enable the occupiers to install ceilings and lighting to suit their own office layouts.

In addition to premium quality space, occupiers of both buildings benefit from an impressive 150 seat auditorium, an on site café with private dining room, travel agency services and an ATM. There are male and female prayer rooms. Parking for over 750 occupiers’ cars is provided in the fully secure rear parking building and 90 shaded visitor’s bays are located at ground floor level between the two buildings.

Management Al Mamoura is an investment property fully developed and managed by ALDAR. Our specialised property and management team provides complete management services including occupier liaison and facilities management.


Al Mamoura(Phase II)

This imposing development comprises two new state-of-the-art office buildings located in the Al Muroor district in Abu Dhabi. Al Mamoura reflects the first model for the new Grade A international standards building that have been developed in Abu Dhabi with corporate occupiers in mind.

Location: Abu DhabiSegment: Mixed use (Offices and retail)Net Lettable area: 69,000 square metres (approx)Website: www.almamoura.ae



Strategy in action Business review


e e

Investment Abraj Towers are situated adjacent to Al Raha Gardens. This development project is a mixed use development of modern architectural style, influenced by Spanish-Arabian architecture. The development will feature 789 apartments, food and beverage outlets, retail sites and health and fitness amenities. The overall scheme including both phases is centred on a courtyard garden, and is situated on 47,142 square metres of land.

Development Active development is in progress on Phase II which comprises 591 apartments and in excess of 3,000 square metres of retail space. Phase II is expected to be completed and handed over by mid-2009.

Management The whole development including both phases was sold in January 2008 to a newly created joint venture company between Etihad Airways and ALDAR. The joint venture company has leased the whole development to Etihad Airways for 20 years.


Abraj Towers(Phase II)

A housing development situated close to the Abu Dhabi airport to accommodate Etihad Airways’ employees.


(Residential and retail)Land area: 47,142 square metres (approx)

Investment Al Bateen is located on the west side of Abu Dhabi Island. It will be a private access residential community which is expected to attract exclusive residents. Al Bateen is a residential project in Abu Dhabi which includes 274 apartments, 32 villas, 36 townhouses, a mosque, community centre, and amenities such as swimming pools, gym and restaurants (all under a traditional Arabic theme). In addition, there will be supporting services including retail complexes and a service building.

The total site area is approximately 103,230 square metres. The project will be designed and constructed within the “Green Building” techniques and requirements.

Development Enabling Works for project have started and project design is complete. Site office is almost ready and cemetery enhancement works are substantially complete. Construction works will commence shortly and will finish by November 2011.

Management The Group is working closely with the relevant authorities in order to rehabilitate and landscape the area surrounding the old Al Bateen cemetery without disrupting the sanctity of the site. A new wall surrounding the cemetery will also be built, as well as a new entrance on the eastern side, and a parking space. Al Bateen Park will contribute greatly to the community through the development and rehabilitation of urban areas in accordance with social values, emphasising its support to the progress and development of the UAE.


Al Bateen

Al Bateen is located on the west side of Abu Dhabi Island. It will be a private access residential community which is expected to attract exclusive residents.

Location: Abu DhabiSegment: Mixed use (Leisure, residential, offices

and retail)Land area: 103,200 square metres (approx)




e e

Investment Located centrally in Abu Dhabi city, Baniyas Towers are within easy reach of ministries and government institutions and international corporate occupiers. Baniyas Towers combine modern architectural design with a stylish, flexible interior. Natural materials dominate, with a striking aluminium and glass facade and granite and marble lined entrances ensuring strong corporate identity is provided. With over 900 underground parking spaces the development benefits from one of the highest car parking facilities in a rapidly expanding city.

Baniyas Towers will offer grade “A” offices that include high end facilities and amenities, together with flexible sized units available for lease. Baniyas Towers being strategically located with centre of Abu Dhabi city will help to meet the growing need for office space, fuelled by the city’s phenomenal economic growth.

Development The tower design works are complete and construction is more than 70% over. Car park design works are substantially complete. All the contracts have been awarded to date and the project is smoothly heading towards its planned completion date in 2009 except for the car parking which should be ready by March 2010.

Management Once complete the office towers will be leased to premium tenants and will be managed as an investment property by ALDAR.


Baniyas Towers

Located centrally in Abu Dhabi city, Baniyas Towers will offer grade “A” offices that include high end facilities and amenities, together with flexible sized units available for lease.

Location: Abu DhabiSegment: OfficesNet Lettable area: 40,600 square metres (approx)Website: www.baniyastowers.com


Investment Injazat Data Centre is located at Sheikh Mohamed Bin Zayed city and has a net usable space, for client equipment, with all supporting facilities and systems, arranged as a two storey building, with all facilities including electronic access control, UPS back up and standby power generator.

The office building comprises about 1,000 workstations, meeting rooms, pantries, coffee shop, library and an auditorium for 200 persons. The car park is designed to accommodate 800 cars.

Development The Data Centre’s civil and structural works and the DRUPS systems along with testing and commissioning programmes are complete. The office building structural works and fit-out have been completed. The fit-out of the auditorium is now progressing well to meet the programme. The car parking structural works is very close to completion and the main contractor has started demobilisation.

Management The Data Centre will be a regional breakthrough designed according to the specifications of a Tier IV performance rating type. We have achieved excellent results designing and developing various high-profile projects and we are riding on that momentum as we embark on this groundbreaking project with Injazat in 2009.


Injazat Data Centre

The Data Centre will be a regional breakthrough, designed according to the specifications of a Tier IV performance rating type.


(Offices and data centre)Office capacity: 1,000 workstations



Strategy in action Business review

Investment Motor World is seeking to establish an ideal environment to accommodate more than 30,000 visitors. Motor World addresses the growing demand for quality car showrooms that will be centrally located and easily accessible. Located at just 20 minutes’ drive from the Abu Dhabi International Airport, Motor World will be an amazing destination for car shopping, selling, auctioning and renting, all in one location. Spread over approximately three million square metres, Motor World will offer an extensive range of cars. This will be complemented by a wide range of accessories and aftermarket auto products. Motor World promises to enhance the overall retail automotive experience of the consumer. By creating industry focused destinations while simultaneously addressing city planning issues, the Group aims to create developments that serve a greater purpose for the Emirate of Abu Dhabi.

Development Motor World will have many components making it an integrated multi-faceted development which will meet several requirements for the Emirate of Abu Dhabi. The central landmark will be the mega Motor World “car city” which will house a state-of-the-art pavilion hosting a flexible programme of events and exhibitions throughout the year, in addition to car showrooms, motor accessories outlets, maintenance facilities, and a central car auctioning venue.

The development will also comprise a 3-star hotel, office spaces, a residential zone, a retail podium, as well as a wide range of restaurants. Motor World will also provide entertainment for families; it will have a cinema and landscaped open spaces along with water features giving the development a community oriented appeal.

Motor World will set new standards in innovative design to address several key issues concerning the Emirate of Abu Dhabi and its resident communities. The unique approach to the integration of the entire motor-related industry, supported by themed food and beverage and entertainment, will create a lively and interesting environment for the people of the UAE to undertake comparison shopping for motor car and accessories. The project design is in initial phase.

Management The project comprises a mixed use pavilion zone, residential zone and automotive zone, comprising both properties for sale and investment properties. These properties will be managed in accordance with ALDAR’s long-term strategy.

Motor World will be integrated with a unique commercial component featuring an iconic pavilion hosting a flexible programme of events and exhibitions throughout the year.

Projects at concept developmentstage or pre-construction stage

Motor WorldLocation: Abu DhabiSegment: Mixed use (Residential,

offices and retail)Land area: 3.0 million square metres (approx)Website: www.motorworld.ae


e



35ALDAR PROPERTIES PJSC Report and Accounts 2008 35

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Investment Al Falah is a new suburb for 50,000 people in Abu Dhabi. It will be a green oasis for its residents, an ideal place to raise a family, engage in education and start business activities. The Al Falah project offers an opportunity to develop an attractive, functional and culturally appropriate residential community in Abu Dhabi. It is located near the Abu Dhabi International airport.

Al Falah will incorporate a comprehensive range of civic, educational and commercial services. Its unique planning approach will offer opportunities for local business incubation. It is based on the most effective ecological sustainability principles and technologies. Al Falah will be a community for middle-income UAE national families and will comprise a series of villages based around a town centre that will have a mosque, civic and commercial buildings, a shopping mall and an entertainment area. The community will offer its residents more than 4,800 residential villas of varying sizes with parking and large gardens. Each village will also have schools, kindergartens, clinics and shops.

Development The project is in the detailed planning stage in terms of infrastructure, town design and management systems.

Management Different management options are under consideration for Al Falah project.


Al Falah

Al Falah will be a master planned community for middle-income UAE national families and will comprise a series of villages based around a town centre that will have a mosque, civic and commercial buildings, a shopping mall and an entertainment area.

Location: Abu DhabiSegment: Mixed use (Leisure, residential,

offices and retail)Land area: 12.8 million square metres

Investment Al Ruwais is a double-storey shopping centre spread over an area of about 150,000 square metres in the Al Ruwais industrial city, located 240 kilometres west of Abu Dhabi. The project is expected to cater to a growing population of 40,000 by 2010. The Al Ruwais shopping centre will house 99 retail outlets, a supermarket, children’s entertainment centre, food and beverage outlets, and Warner Brothers cinema complex.

The shopping centre will be a step to grow Al Ruwais from an industrial complex into a fully-fledged urban centre. Al Ruwais Shopping Centre is likely to serve residents in the neighbouring cities such as Delma Island, Al Marfaa, Al Ghowifat, Gyathi and Sella, as currently residents of these cities travel to Abu Dhabi for shopping and leisure.

Development The design is substantially complete and construction is expected to commence during first quarter of 2010. In addition, a study is being undertaken to develop the site further with an intention of providing additional elements including villas, town houses and apartments and some commercial elements in the form of offices, a budget hotel and a health and fitness facility.

Management As per the current plan the Group will own the asset and lease the retail outlets.

The shopping centre will be a step to grow Al Ruwais from an industrial complex into a fully-fledged urban centre.

Location: Abu DhabiSegment: Mixed use (Offices and retail)Land area: 504,000 square metres (approx)




Al Ruwais Shopping Centre

Shafqat Ali MalikChief Financial Officer


Strategy in action

The financial information contained in this review is extended or calculated from the attached consolidated income statement, consolidated balance sheet and consolidated cash flow statement.

As at As at 31 December 2008 31 December 2007 AED million AED million

Key consolidated income statement informationGross revenue(i) 5,345.7 1,226.8Direct costs (2,294.9) (666.9)

Gross profit 3,050.8 559.9

Selling and marketing expenses (154.4) (122.4)General and administrative expenses (771.2) (279.6)Investment income(ii) 456.9 416.4Finance costs (370.8) (454.2)

Net operating profit for the year(iii) 2,211.3 120.1

Fair value gain on investment properties 1,532.6 1,821.2Unwinding of discount on receivables 70.2 –Financing element related to receivables (367.4) –

Profit for the year 3,446.7 1,941.3

Basic earnings per share (AED/share) 1.39 1.10Diluted earnings per share (AED/share) 1.03 0.78

As at As at 31 December 2008 31 December 2007 AED million AED million

Key balance sheet information Investment properties 5,149.3 3,328.4Investment properties under development 15,803.9 4,289.9Development work-in-progress 7,130.4 4,042.1Financing(iv) 22,588.1 10,508.2Net assets (Total assets less total liabilities) 16,032.5 7,689.4

(i) Gross revenue includes contractual selling price before discounting the future receipts(ii) Investment income includes share of profit from associates and joint ventures and net of unwinding of discount

on receivables(iii) Net operating profit is defined as net profit for the year adjusted for fair value gain on investment properties and financing

element related to receivables against land sales(iv) Financing is defined as outstanding balance from all borrowings and convertible bonds

Highlights These results have been driven by strong performances and growth across all business lines. We are delighted to report a significant rise in both our revenue and profitability, with gross revenue up by 335.7% to AED 5,345.7 million (2007: AED 1,226.8 million) and net profit for the year rising by 77.5% to AED 3,446.7 million (2007: AED 1,941.3 million) while earnings per share (EPS) increased by 26.4% to AED 1.39 (2007: AED 1.10). These results were achieved alongside substantial investment in our development projects and human resources.

Financial review2008 was a transformational year for ALDAR, in which we achieved excellent land and property sales, executed timely delivery of development projects and strengthened our consolidated balance sheet.

Earnings per shareAED

1.392008

1.102007

0.722006

0.402005

Gross revenueAED millions

5,345.72008

1,226.82007

187.52006

396.82005


Our projects spending for the year was AED 14,936.0 million compared to AED 6,085.5 million reflecting the progressive growth of our projects. During 2008, our human capital grew to 794 employees from 378 employees in the year before.

The Group also achieved further revenue of AED 6,440.1 million from the sale of property under construction during the year which will be recognised in the income statement according to our accounting policies in future periods.

We assess our financial performance on the Key Performance Indicators (KPI). Our KPIs mainly comprise of net assets value, investment in projects under development and net operating profit for the year. All of these KPIs witnessed outstanding financial performance during 2008. Net asset value increased by 108.5% to AED 16,032.5 million, investment in projects under construction (comprising both investment properties and development work in progress) increased to AED 22,934.3 million compared to AED 8,332.0 million for the last year, whereas net operating profit for the year was AED 2,211.3 million compared to AED 120.1 million for the year 2007.

The above variations are explained separately under the following captions:

Investment properties Freehold or leasehold properties held to earn rent or capital appreciation or both are classified as investment properties in accordance with International Accounting Standard (IAS) 40 – Investment Property (IAS 40). Investment properties are measured initially at cost, and thereafter stated at their respective fair values, which reflect market conditions at the balance sheet date. Fair values of investment properties are assessed on a quarterly basis and gains or losses arising from fluctuations in their fair values are included in the income statement in the period in which they arise.

Investment properties increased to AED 5,149.3 million at 31 December 2008 from AED 3,328.4 million at 31 December 2007, an increase of 54.7%. This increase reflects fair value gain on valuation of land held as investment properties and an addition of AED 288.3 million which was completed and transferred from investment properties under development.

Investment properties under development The Group has a number of real estate projects under development, which, once complete, will be either held to earn rent or capital appreciation or both. In accordance with our accounting policies, all such properties are carried at cost. Cost comprises all direct costs attributable to the design and construction of the property including staff costs and, where applicable, the nominal value of the land.

Investment properties under development increased to AED 15,803.9 million at 31 December 2008 from AED 4,289.9 million at 31 December 2007 – an increase of 268.4% reflecting progress achieved in various projects.

Development work in progress The Group is developing several projects with an intention of sale. Sales have already been launched for Al Raha Gardens, Al Gurm villas and part of Al Raha Beach. The revenue from the sale of such properties will be recognised in the income statement in accordance with our accounting policies.

Development work in progress is carried at lower of cost and their net realisable value as required by “IAS 2 – Inventories”, where cost includes all direct costs attributable to the design and construction of the property including staff costs and, and net realisable value is the selling price in the ordinary course of business less costs to complete and selling costs. The Group continuously monitors the value of its developments in progress to ensure that the carrying amounts are realisable.

In 2008, development work in progress has grown to AED 7,130.4 million compared to AED 4,042.1 million at 31 December 2007. The increase of 76.4% mirrors the rapid progress made on development projects during 2008.

Financing Loans and borrowings are initially recognised at the fair value of consideration received less directly attributable transactions costs. After initial recognition, interest and non-interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement. Borrowing costs, except for those eligible for capitalisation, are recognised in the income statement using the effective interest rate method.

Financing is defined as outstanding balance of all the borrowings including convertible and non-convertible bonds. Compared to AED 10,508.2 million at 31 December 2007, total borrowings increased to AED 22,588.1 million as at 31 December 2008, comprising bank loans of AED 14,616.9 million, convertible bonds of AED 4,235.9 million and non-convertible bonds of AED 3,735.3 million. The bank borrowing increased in line with our projects’ funding requirements.

Investment propertiesAED millions

5,1492008

3,3282007

1,5722006

1572005

Projects under developmentAED millions

22,9342008

8,3322007

2,1222006

2782005


Strategy in action

Net asset value Net assets at 31 December 2008 have increased by 108.5% to AED 16,032.5 million compared to AED 7,689.4 million at 31 December 2007. The increase is mainly contributed by the earnings for the year supplemented by increase in share capital and share premium resulting from early voluntary conversion of convertible bonds.

Revenue The Group’s revenue mainly comprise sale of land and property, rental income from investment properties and school fee income. Total gross revenue for the year was AED 5,345.7 million as against AED 1,226.8 million for the year before. The increase was primarily due to revenue from property sales consisting of both sale of land plots and residential units. During 2008, the Group recognised revenue from sale of land plots worth AED 4,074.8 million and residential units worth AED 1,094.6 million.

The revenue has been presented in the income statement net of financing element of AED 367.4 million which relates to discounting of receivables.

Direct costs Direct costs include costs for development of infrastructure, construction costs of projects and other direct costs incurred in the normal operating cycle of investment properties. For the year ended 31 December 2008, direct costs included AED 2,246.1 million for cost of property sold and AED 48.8 million for other direct costs. Direct costs for the year ended 31 December 2007 included AED 648.3 million for cost of property sold and AED 18.6 million for other direct costs. The increase in direct costs is in line with increase in revenue.

Selling and marketing expenses Selling and marketing expenses for the year ended 31 December 2008 were AED 154.4 million as compared to AED 122.4 million for the year ended 31 December 2007. Increase in selling and marketing expenses are in the line with the increase in selling activities.

General and administrative expenses General and administrative expenses primarily comprise staff costs, office accommodation costs and other administrative costs. Staff costs consist of salaries and other short-term employee benefits. Other administrative costs consist mainly of information technology costs, business travels, head office related expenditure and legal and professional fees.

General and administrative expenses were AED 771.2 million for the year ended 31 December 2008 as compared to AED 279.6 million for the year ended 31 December 2007. The increase was primarily due to project activities during the year and increase in staff costs. The staff numbers increased from 378 employees as at 31 December 2007 to 794 employees as at 31 December 2008.

Investment income Investment income and other gains including share of net profits from associates and joint ventures, for the year ended 31 December 2008 was AED 456.9 million as against AED 416.4 million for the year ended 31 December 2007. The increase was primarily due to the profit earned on Islamic deposits, interest income earned on fixed deposits held with banks and our share of profits earned by associates.

Net operating profit Net operating profit is a financial measure used by the management to demonstrate the underlying operating performance of the business. The Group defines net operating profit as profit for the year adjusted for changes in fair values of investment properties and trade receivables. The net operating profit has been calculated as follows:

2008 2007 AED million AED million

Profit for the year 3,446.7 1,941.3

Less: Fair value gain on investment properties (1,532.6) (1,821.2) Unwinding of discount on receivables (70.2) –Add: Financing element related to receivables 367.4 –

Net operating profit 2,211.3 120.1

The increase in net operating profit of AED 2,091.2 million was contributed by increased revenue from the sale of land plots and residential units.

Financial reviewContinued

Net assets valueAED millions

16,0322008

7,6892007

3,2712006

2,1422005


Fair value gain on investment properties Gain or loss arising from changes in fair value of investment properties is recognised in the income statement in accordance with fair value model in “IAS 40 – Investment Property”. For the year ended 31 December 2008, the Group recognised AED 1,532.6 million as the fair value gains on investment properties compared with AED 1,821.2 million for the year ended 31 December 2007. The fair value gain on investment properties reflects the progress achieved during the year on the development projects.

Profit for the year Profit for the year was AED 3,446.7 million as against AED 1,941.3 million for the year ended 31 December 2007, representing an increase of 77.5%. The net profit increase was primarily due to the increase in sales revenue which was partly offset by an increase in selling and marketing and general and administrative expenses.

Finance and capital structure The Group’s financing strategy is to maintain an appropriate net debt to equity ratio (gearing). This ensures that operational performance is translated into enhanced returns for shareholders while maintaining an appropriate risk-reward balance.

The Group’s financing requirements are primarily to fund its property development expenditure. With respect to residential properties, it generally sells the relevant property in advance of construction using standardised sale agreements that typically require the purchaser to deposit 10% to 20% of the purchase price at signing and the remainder of the purchase price at completion. The advance deposits made by the purchasers of the property along with the funding through equity and borrowings finance the residential development projects. Commercial properties are generally financed through equity and borrowings. The Group, therefore, expects continuing growth in the level of debt over the coming years as it pursues its strategy of investing in investment property.

ALDAR also maintains significant cash balances in order to fund any short-term mis-matches between expenses and receipt of payments from its customers. As at 31 December 2008, the Group held AED 12,066.4 million in cash and bank balances.

Cash flows The following table shows, for the year ended 31 December 2008 and 31 December 2007, a comparison of the Group’s net cash inflow from operating activities, net cash used in investing activities, net cash inflow from financing activities and the cash and cash equivalents at the end of each year:

2008 2007 AED million AED million

Net cash inflow/(outflow) from operating activities 1,350.5 (1,990.3)Net cash used in investing activities (17,770.7) (5,836.4)

Net cash inflow from financing activities 16,224.2 12,014.4

Cash and cash equivalents at the end of the year 4,862.7 5,058.7Short-term deposits with banks 7,203.7 2,557.1

Cash and bank balances at the end of the year 12,066.4 7,615.8

Net cash inflow from operating activities for the year ended 31 December 2008 was AED 1,350.5 million as against cash outflow of AED 1,990.3 million for the period ended 31 December 2007. The operational cash flow for the current year was positive due to higher operational profits, advances from customers and effective working capital management.

Net cash used in investing activities for the year ended 31 December 2008 was AED 17,770.7 million as against AED 5,836.4 million for the year ended 31 December 2007. The increase in net cash used in investing activities during the current year is primarily due to the increase in cash spent on property developments of AED 11,762.5 million.

Net cash inflow from financing activities for the year ended 31 December 2008 was AED 16,224.2 million as against AED 12,014.4 million for the year ended 31 December 2007. The increase in cash flow from financing activities is mainly due to a cash inflow from proceeds of convertible and non-convertible bonds amounting to AED 7,312.8 million, supplemented by net funds raised from borrowings of AED 10,065.4 million.

Cash and cash equivalents at the year ended 31 December 2008 were AED 4,862.7 million as against AED 5,058.7 million at the year ended 31 December 2007, representing a decrease of AED 196.0 million. This is primarily due to increased spend on projects under development and investment in deposits with maturities greater than three months.

FinancingAED millions

21.62008

33.92007

2.42006

1.52005 Funds raised during the year


Strategy in action

FinancingOverview The aim of Group’s financing policy is to fund the implementation of the Group’s strategy whilst providing the flexibility to take advantage of opportunities as they arise, on competitive terms. The principal objectives are to ensure that:

significant, committed, undrawn facilities are available to support current and future qbusiness requirements;

the Group’s projects are financed with borrowing terms matching their anticipated qdevelopment period and the investment properties are financed on a longer term to match the related rental income profile;

the Group’s cost of capital is minimised; and q

the Group maintains a prudent financial position by active management of financial risks, qincluding interest rate, liquidity and counterparty risks.

The Group plans to funds its developments by a mix of equity, collections from pre-selling and external borrowings. Once the property developments are completed, the Group plans to refinance the investment properties with long-term borrowings and sell other properties. The Group plans to use the proceeds from the refinancing of investment properties and sale of properties for repayment of the existing borrowings and to invest in new projects.

The Group seeks to finance its development projects with borrowings that reflect the nature of its projects and on all its borrowings with a maturity of greater than one year, the interest rate to be charged will be fixed by interest rate swap agreements. As at 31 December 2008, the Group had undrawn borrowing facilities which totalled approximately AED 10,931.9 million.

The optimal debt structure varies amongst the individual developments and also the type of asset to be developed.

Group financing During 2008, AED 14,331.0 million, had been drawn down under the Group’s loan facilities to fund its development projects as further described in “Current financing arrangements” below.

Current financing arrangements During 2008, the following facilities were drawn:

ALDAR Properties arranged an aggregate of AED 21,643.8 million financing through bank debts and debt instruments. The details of funds raised during the year 2008 are:

Ijara Facility: In April 2008, ALDAR raised AED 2,203.8 million at Eibor + 0.90% through an Ijara facility for a period of four years maturing in 2012. A syndicate of local banks provided the required funds for the facility;

Mubadala loan: In May 2008, ALDAR transferred a portion of Government loan to Mubadala as an interest free convertible bond of AED 3,562.8 million. The conversion is at ALDAR’s discretion until maturity in 2011 and mandatory conversion on maturity;

Sukuk II (Ijara): In June 2008, ALDAR raised AED 3,750.0 million at EIBOR + 1.75% through an Islamic bond issue (Sukuk) for a period of five years maturing in 2013;

Term Loan: In September 2008, ALDAR raised AED 367.3 million at EIBOR + 0.80% as a working capital management facility for a period of one year;

Term loan: In September 2008, ALDAR raised AED 400.0 million at EIBOR + 0.90% as a working capital management facility for a period of one year;

Term loan: In September 2008, ALDAR signed a facility of USD 98.3 million at LIBOR + 2.75% as a working capital management facility for a period of one year;

Credit facility: In September 2008, ALDAR signed a facility of US$ 100.0 million at LIBOR + 1.40% as a corporate facility for a period of five years maturing October 2013.

Details of all existing facilities have been outlined in note 18–20 to the financial statements.



Risk managementRelationships and risk management The Group’s critical external relationships are with its customers, typically individual and corporate investors. The Group’s customer base is very well diffused with no single customer accounting for more than 10% of net revenue. The Company maintains its relationship with its customers and tenants through the efforts of its dedicated sales and asset management teams.

The Group has many contractors who are predominantly internationally renowned entities. The Group has formed strategic alliances with its key contractors to ensure the Group’s continuous and integral involvement in the supply chain and construction process.

The principal risk factors that may be considered in relation to the Company, in the opinion of the Directors, are grouped under two broad categories:

Operational risks; q

Financial risks. q

Operational risk management The Group’s formal risk management process, which defines risk areas and includes a risk assessment methodology based on the assessed impact of the risk event and the likelihood of its occurrence. The principal operational risks identified are considered and reviewed at various stages in the process, culminating in consideration of and discussion by the Board of Directors, the Audit Committee and the Executive Management. Internal procedures to mitigate risks are the focus of assurance work performed by the Group’s Internal Audit team.

Operational risks are further divided under the following captions:

a) Property development and construction Principal risks Completion As at 31 December 2008, the Group has a number of projects under construction or in initial stages of development. The key risk is inability to complete its development projects on schedule or within budgeted amounts and this will have material adverse effect on its business, financial condition and results of operation.

Construction There has been a significant rise in the amount of property development in the Middle East North Africa (MENA) region and, in particular, in the UAE. As a result, the number of contractors and suppliers available to meet demand is limited. Therefore, if one of the Group’s contractors or suppliers defaults on its contract, for any reason, including the bankruptcy or insolvency of such contractor or supplier, there is a strong likelihood that the Group will not be able to find a replacement contractor or supplier promptly.

Mitigating controls

Completion risk is managed by phasing the development programme, by rigorous project management and proactive procurement strategy.

The performance of each contractor is continuously monitored by dedicated in-house project development team led by the project director. The relevant project director has relative autonomy to execute the project but any material changes to the master development plan and any expenditure of over AED 2 million in excess of budget is reported to the executive management with full explanation.


Strategy in action


b) Property investment and management Principal risks Market Real estate investments in general are relatively illiquid, Group’s ability to promptly sell one or more of its properties in response to changing political, economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond Group’s control.

Asset management Commercial property markets are cyclical. Rental levels are determined by the supply of suitable space in a market and occupiers’ demand. The value of a commercial property depends upon the characteristics of the lease, the credit worthiness of the tenant, the prospects of rental growth and the stage of the property market cycle. Property values may decline and returns not be optimised. Uneconomic investments may be made or under-performing properties retained. Significant tenant defaults may reduce income and property values.

Investment performance and returns Decisions about the allocation and investment of capital and other resources may not deliver the anticipated returns, or may fail to maximise their potential value for the Group.

Mitigating controls

A dedicated in-house team supplemented by external advisors monitor current and future market trends. This includes considering current and future yield prospects (which form an integral part of business planning), forecasting and the capital allocation decision making process.

The performance of each property is reviewed regularly. Key performance measures such as voids, lease expiry profiles and progress on rent reviews are actively managed to mitigate risks. The Group principally seeks low credit risk tenants like government departments or large corporations, thereby maintaining low level of tenant defaults to which the Group is exposed.

An Executive Committee has been established to monitor and mitigate this risk. The senior management team monitors actual performance against targets, recommending corrective actions as appropriate.


c) Group management and operations Principal risks Management The Group is reliant on its small, high calibre senior management team.

Disaster planning The Group has developed IT and other systems to manage its business. Without sufficient recovery planning, there is an increased risk that the business may fail to recover from a “disaster” and potentially suffer long-term damage.

IT integrity and performance The Group’s ability to meet its obligations under outsourcing contracts is reliant on the continuing performance of its IT systems. A major failure in these IT systems could result in financial and reputational loss.

d) Regulation Principal risks Legal and regulatory The UAE is in the process of developing institutions and legal and regulatory systems which are not yet as firmly established as they are in Western Europe and the United States. The UAE is also in the process of transitioning to a market economy and, as a result, may experience changes in its economy and government policies (including, without limitation, policies relating to foreign ownership, repatriation of profits, property and contractual rights and planning and permit-granting regimes) that may affect ALDAR’s business.

Mitigating controls

Knowledge of all processes and projects is shared by at least two employees and the Group recruits and develops high-calibre employees.

Disaster recovery plans are in place and are regularly updated.

The IT back up plan is a key element of the Group’s disaster recovery plans. The Group makes use of an outsourced, third party, IT service provider which provides a fully managed desktop and application support service.

Mitigating controls

The Group regularly monitors legislative proposals and consults external advisors to understand, and if possible, mitigate the impact of any changes.


Strategy in action

Financial risk management The Group’s Corporate Finance and Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group by analysing exposures by degree and magnitude of risks. The Group seeks to minimise the effects of such risks by using derivative financial instruments to hedge risk exposures. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Group analyses financial risks under the following captions:

Capital risk Capital risk is the risk that the Group is not able to manage its capital structure to ensure that all entities in the Group will be able to continue as a going concern.

The capital structure of the Group comprises debt, cash and cash equivalents and equity attributable to equity holders of the parent company, comprising issued capital, share premium, reserves and retained earnings.


Principal risks The Group’s may not be able to maintain an efficient capital structure to optimise the cost of capital and may face difficulties in providing appropriate returns for shareholders.

Mitigating controls The Group monitors and adjusts its capital structure with a view to promote the long-term success of the business while maintaining sustainable returns for shareholders. This is achieved through a combination of risk management actions including monitoring solvency, minimising financing costs, rigorous investment appraisals and maintaining high standards of business conduct.

Key financial measures that are subject to regular review include cash flow projections and assessment of ability to meet contracted commitments, projected gearing levels and compliance with borrowing covenants, although no absolute targets are set for these.


Credit risk Credit risk in relation to the Group, refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

Liquidity risk Liquidity risk is the risk that the Group fails to maintain sufficient cash and other liquid assets to match its financial obligations.

Principal risks The Group may be exposed to significant financial loss due to default on contractual obligations by its debtors or bankers.

Mitigating controls The Group does not have any significant credit risk exposure to any single counterparty or any group of related counterparties.

The Group’s trade receivables consist of only local customers with a good credit standing. Recoverability of trade receivables is reviewed on an ongoing basis and provision made for doubtful debts as and when required.

All financial institution counterparties are subject to approval under the Group’s treasury policy. The amount of exposure to any individual financial institution is assessed regularly and is subject to conditions defined within the Group’s treasury policies.

The Group places all of its deposits with reputed major banks operating in the UAE. As these banks are partly owned by the Government, the Group is not exposed to concentration risk on its deposits.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-rating assigned by international credit-rating agencies or reputable local banks closely monitored by the regulatory body.

Principal risks The Group may not be able to meet its financial obligations due to insufficient liquid assets including cash and cash equivalents.

Mitigating controls The Group has built an appropriate liquidity risk management framework for the Group’s short- medium- and long-term funding and liquidity requirements. The Group manages liquidity risk by maintaining adequate reserves, bank borrowings and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of its financial assets and liabilities.

The committed borrowing facilities, together with available undrawn facilities and cash and cash equivalents along with expected collections from its customers, are considered sufficient to meet the Group’s projected cash requirements for the foreseeable future.


Strategy in action


Market risk Market risk is the risk that the fair value or future cash flows of a financial asset or liability will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk. The Group’s risk exposure to foreign currency risk and interest rate risk is described below. The Group is not exposed to other price risks.

Principal risks Foreign currency risk: The Group may be exposed to foreign currency risk such that the fair value or future cash flows of a financial asset or liability will fluctuate because of changes in foreign exchange rates.

Interest rate risk: The Group is exposed to interest rate risk as the fair value or future cash flows associated with a financial asset or liability will fluctuate because of changes in market interest rates.

Mitigating controls

The Group has no cross-border trading transactions and therefore, foreign exchange transaction exposure is negligible.

The Group does borrow money in foreign currencies. The Group’s currency exposure therefore is in relation to the repayment of loans and also the translation risk associated with converting outstanding loan balances back into UAE Dirhams in the Group consolidated accounts at each balance sheet date. However, as at the balance sheet date virtually all of the Group’s foreign currency borrowings are in US Dollars. The exchange rate between UAE Dirhams and US Dollars is fixed and therefore Group considers foreign exchange risk associated with repayment of loans and translation as negligible.

The Group is exposed to interest rate risk on its borrowings which are at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, by the use of interest rate swap contracts.

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rate on the fair value of issued fixed rate debt and the cash flow exposures on the issued variable rate debt.

The Group also monitors its exposures to interest rate risks by doing regular sensitivity analyses based on the exposure to interest rates for both derivatives and non-derivative instruments.


Numeric disclosures The Group’s exposures to the above risks and risk management procedures have been detailed in note 34 to the financial statements.

Global markets The current financial and economic uncertainty prevailing in the world has affected all the economic sectors including real estate in the UAE. This has led to some squeeze in real estate prices and liquidity in banking sector and reduction in commodity prices. However, we believe that ALDAR Properties PJSC is in a very strong position to face such challenges. We have developed a very robust financial management system to monitor our financial risks especially liquidity risk. We have also planned a number of measures including prioritisation of projects, take advantage of the declining commodity and construction prices, etc. We have sufficient amount of liquidity and committed credit facilities from reputed financial institutions which will enable us to continue our operations smoothly during 2009 and beyond.

For all these reasons we are cautious but optimistic about the year ahead and confident of making further progress towards our long-term strategic and financial objectives.


Strategy in action

The Group works in partnership with the Government, community bodies, employees and society at large to support growth and stability in the community. Our approach to corporate social responsibility focuses on certain key areas where what we do and how we do it has a particularly significant effect on the environment around us.

Customers We believe our outstanding customer service differentiates us from our peers. Our aim is to provide innovative projects and highest class of services so that our customers choose us as their preferred real estate company in UAE. We are currently considering a number of steps to enhance customer satisfaction:

Building relationships Undertaking an occupier survey to assess the areas for improvement in overall customer satisfaction.

Delivering value for money Comply with the highest standards and practices for leasing and provision of ancillary services for our commercial properties.

Improving property management Implement a process to monitor our managing agents’ performance based on certain Key Performance Indicators.

Managing environmental impacts Work closely with our customers to explore opportunities for key environmental issues such as waste management, and develop effective strategies to manage these issues.

Employees We employ around 800 people across the Group and aspire to be the property sector’s employer of choice. The wellbeing and professional development of our employees is vital to our growth and success.

Staff training and development We recognise human resources as an essential element behind the Group’s continuing success. To fully exploit the talent of its staff, the Group fosters a culture of continual learning by providing comprehensive study and training opportunities. During the year, several internal training programmes and seminars were organised by the Group which covered topics in various areas. In addition to in-house training programmes, the Group also provides eligible staff with an educational subsidy to encourage and support employees who wish to improve their professional knowledge and skills by enrolling in external courses.

Orientation programme During the year, the Group provided a monthly orientation programme for new staff which is intended to help them quickly adapt to their working environment. The programme introduces the Group’s business operations and helps to promote a sense of belonging among new employees.

Corporate social responsibilityOur business activities have an enormous influence on the day-to-day lives of people across Abu Dhabi. As a dedicated corporate citizen with a commitment to corporate social responsibility, the Group strives to pursue business activities that bring simultaneous economic, social and environmental benefits.


Equal opportunities policy The Group is committed to providing equal opportunities in employment regardless of age, sex, marital status, disability, colour, race, nationality or ethnic or national origin. This applies to recruitment, training, promotion and all other aspects of employment.

The Group ensures that all job vacancies are widely advertised in order that the broadest range of candidates may apply. It is in the Group’s interest to attract job applications and applications for promotion and training from the best available candidates, on merit alone, and regardless of age, sex, marital status, disability, colour, race, nationality or ethnic or national origin.

Everyone associated with the Group, whether an employee or not, must behave in accordance with the principles set out in this policy in order to ensure that it is observed and implemented. Any act of discrimination, which includes harassment of any sort, is viewed extremely seriously by the Group and will constitute a serious disciplinary offence which may lead to dismissal.

Staff activities The Group organises a variety of activities and gatherings every year for its staff, strengthening communication between departments and enabling colleagues to socialise with each other outside the workplace. During 2008, the Group organised a desert safari, annual gala dinner, staff suhoor, national day celebrations and several other events to promote staff gathering and socialisation.

Suppliers and contractors We aim to treat our suppliers and staff as members of a single team who work together to ensure the success of our business and delivery of service to our customers. We work with suppliers whose values and approach mirror our own, helping us to ensure high standards are maintained and risks minimised because it is only by working closely with our people and suppliers that we will be able to embed corporate responsibility within all levels of our business and throughout our supply chain.

During 2008 our project teams worked closely with their suppliers and contractors on-site to reduce waste and increase recycling. Not only do these initiatives lessen our impact on the environment and save valuable resources, they also often cut disposal and transport costs.

Our suppliers are fully aware of the importance of our customers, staff, the environment and communities. During the year we achieved the following milestones on waste management front:

Comprehensive waste management policy statement developed under the umbrella qof ALDAR Corporate Responsibility Statement;

Corporate membership of Emirates Environmental Group – Recycling NGO and Public qAwareness body;

Active development of Waste Management Procedures including Minimum qRequirement Checklist;

Waste Management Articles in ALDAR Darna Newspaper; q

Circulation of regular waste management notices within ALDAR. q

Health, Safety and EnvironmentEnvironment We are committed to taking every reasonable step to ensure the health and safety of our employees and anyone else affected by our business activities. How we build and run our buildings has a significant effect on the human and natural environment. Innovation and best practice procedures help us to develop and manage buildings to good environmental standards.

We acknowledge our contribution, as a consumer of resources, to the growing global environmental burden and therefore its responsibilities to future generations of environmental stakeholders under the principles of the sustainability concept. It is our philosophy to demonstrate a full commitment to the identification of all areas of environmental impact and to strive to minimise or prevent any negative environmental impacts.

We are committed to comply with all environmental legislation and other relevant requirements enforced by Abu Dhabi Municipality and Agricultural Department as a minimum standard. Every possible effort is undertaken to ensure that the relevant rules of the Abu Dhabi Environmental Agency are complied with (for example not using prohibited materials or having high carbon emissions). The Abu Dhabi Municipality and Agricultural Department inspects regularly for any breach of environmental permits and to check ongoing compliance.

We have also been working together with the Government on a comprehensive Abu Dhabi enviro-development programme in association with environmental organisations which includes co-operation on environmental issues such as global warming.


Strategy in action

Corporate social responsibilityContinued

We encourage environmentally responsible behaviour throughout our work force and our suppliers and contractors to comply with our Environmental Policy and to adopt similar standards themselves. We have hired an environmental assessment group for regular monitoring of all environmental impacts of projects, setting objectives and targets to help minimise those impacts and by monitoring our performance to ensure continual improvement for this process, for example, the Al Gurm project, due to its proximity to the mangrove swamps has had more extensive environmental research and has a comprehensive environmental plan.

We appreciate our employees to integrate environmentally responsible concepts into their normal working procedures. In addition, we use our influence to improve environmental performance in our supply chain and to encourage purchasing of sustainable products and materials. We also ensure that the contractor who is in charge of construction of the project obtains all permits required from the relevant government authorities and manages the permit process.

The Group’s policy for environmental matters is subject to review and development in line with our evolving areas of business interests, and the continual implementation of the policy is periodically monitored by the Board of Directors.

During 2008, ALDAR pledged support to Emirates Wildlife Society in association with World Wide Fund for Nature (EWS-WWF) for their nationwide innovative educational programme that aims at enhancing environment awareness amongst school children, parents and the community at large.

With the support of His Highness Sheikh Hamdan Bin Zayed Al Nahyan, ALDAR will plant up to 80 000 mangroves (rising to 130 000 in 2009) on the western shores of Yas Island adjacent to the Links Golf Course. This newly planted area will command at least 2 square km and will create a perfect view of the UAE’s beautiful coastline.

ALDAR also announced support of the Tawteen program which was launched in 2007 by Emirates Foundation to develop and deliver sustainable solutions to learning and development in the UAE.

Health and Safety The Group is committed to providing and maintaining a healthy safe and secure working environment for all its employees and any other persons who may be affected by its activities. The Group recognises the fact that good health and safety management has positive benefits to the organisation and that commitment to a high level of safety makes good business sense. It also recognises that health and safety is an essential function, and must therefore continually improve, update and adapt to changes.

The success of this statement and the implementation relies on the commitment from the Group’s senior management and it applies to all premises and activities within the control. In order to achieve this aim, the Group has the following key objectives:

to ensure the health, safety, security and welfare of all its employees whilst at work; q

to ensure that visitors, and the general public who may be affected by the Group’s activities, qare not exposed to risks of their health and safety;

to identify hazards (the potential for harm), assess the risks (the likelihood of that harm being qrealised) and manage those risks;

to consult with employees and ensure all who work on our behalf are adequately informed qof identified risks and where appropriate receive the relevant information, instruction, training and supervision;

to make arrangements for co-ordination and co-operation with other employers where the qGroup share premises, facilities or activities with persons working in other organisations or where persons from other organisations are working in the Groups controlled premises, facilities or activities;

to maintain work equipment in a safe state and provide both safe systems of work and a safe qworking environment for employees and all who work on our behalf;

to maintain arrangements for ensuring safe use, handling, storage and transport of articles qand substances;

to maintain clear procedures for action to be taken in the event of an emergency; q

to encourage the development and maintenance of a positive attitude towards health qand safety throughout the Group.

51ALDAR PROPERTIES PJSC Report and Accounts 2008 51ALDAR PROPERTIES PJSC Report and Accounts 2008

On 30th June 2008, ALDAR signed the Abu Dhabi Sustainability Group (ADSG) declaration to implement sustainability management in the Group. Later on 26th November 2008, ALDAR was elected to be a member of the ADSG General Secretariat. We have also undertaken detailed assessments against Estidama (meaning “Sustainability” in Arabic) guidelines for Al Zeina and Central Market projects. Further work is being done for conducting assessments for building design against the Estidama guidelines and the US Green Buildings Council LEED system.

During the year, Yas Island, one of our major projects, received the “Best health and safety achievement in construction” award for 2008 by the Safety and Health Practitioner (SHP) and the Institute in Occupational Safety and Health (IOSH). SHP is the largest safety and health magazine in the world, while IOSH is the largest professional body of occupational health and safety practitioners in the world. Both UK based institutions have credited ALDAR with the best health and safety record in the construction sector worldwide. This is the first time that an overseas organisation has won this award.

In addition, Welfare conditions at the worker communities on Yas Island serving projects on both Al Raha Beach and Yas Island receive Grade A recognition from the Abu Dhabi Ministry of Labour.

Community An important element of our Corporate Social Responsibility is our contribution towards the community we work in. Strong relationships are integral for any community and we focus on building these relationships as we want our projects to create a sense of local ownership and civic pride. We strongly believe that commitment to social responsibility really makes a good company, a great company. Some examples of our social commitments are:

United Arab Emirates Special Olympics: ALDAR was one of the sponsors of the UAE Special Olympics in which more than 1,000 athletes from 23 countries in the Middle East and North Africa participated in Abu Dhabi for the opening ceremony of the sixth annual regional Special Olympic Games;

Takatof: ALDAR volunteered for “School Supplement to Children in need” established by Emirates Foundation;

Children’s Cancer Centre Lebanon: ALDAR has committed to sponsoring a child at the Children’s Cancer Centre Lebanon;

The First International Forum for Children with Autistic Spectrum Disorder: During 2008, ALDAR also sponsored “The First International Forum for Children with Autistic Spectrum Disorder,” an organisation to support special children;

Shakespeare 4 Kidz: ALDAR also sponsored “Shakespeare 4 Kidz” – the award winning theatre company for their show, “Shakespeare 4 Kidz HAMLET” in UAE. The event was hosted by HSBC Bank Middle East Limited in association with ALDAR and ALDAR Academies;

Majid’s Carnival: ALDAR sponsored the Family day to honor the 30th anniversary of Majid, the magazine, home to the much loved character, “Majid”. The sponsorship of this family event is a testament to ALDAR’s support to keep social values omnipresent in our lives;

Special guests of honour were the orphans sponsored by Abu Dhabi Red Crescent Authority and kids of Abu Dhabi Centre for Autism of Zayed Higher Organisation for Humanitarian Care;

Charitable donations: To support the noble causes by Emirates Foundation, ALDAR has committed a fixed donation amount for three years. Charitable donations were also extended to British School- Al Khubairat and Future Centre for Special Needs, a school focusing on enabling students with physical and mental disabilities to experience joyful and meaningful lives.

I Play Sports Ramadan Football Tournament: ALDAR was the platinum sponsor for I Play Sports Ramadan Football Tournament organised by the Imperial College London Diabetes Centre.


Strategy in action52 ALDAR PROPERTIES PJSC Report and Accounts 2008

Strategy in action

Mr Ahmed Ali Al Sayegh ChairmanMr Ahmed Ali Al Sayegh is the Chairman of ALDAR Properties PJSC. He is also the Chief Executive Officer of Dolphin Energy Limited. In addition, Mr. Al Sayegh is the Chairman of Abu Dhabi Future Energy Company (MASDAR).

Mr Al Sayegh is also a board member of numerous private and governmental associations including the UAE Offsets Group (UOG), Abu Dhabi Water and Electricity Authority (ADWEA), Etihad Airways and First Gulf Bank.

Mr Al Sayegh has worked throughout his career to support many environmental initiatives in the Emirate of Abu Dhabi. He is also the Managing Director of the Emirates Foundation, a leading philanthropy for social educational, artistic and environmental development in the UAE.

With a degree in Economics from the United States, Mr Al Sayegh started his career many years ago at the Abu Dhabi National Oil Company (ADNOC). He has also worked in senior positions at other leading Abu Dhabi Government organisations, including the Abu Dhabi Investment Company (ADIC).

Mr Nasser Ahmed Al Sowaidi Vice ChairmanMr Nasser Ahmed Al Sowaidi is currently Chairman of the Department of Planning and Economy (DPE) which is a key government department in the Emirate of Abu Dhabi. Mr Al Sowaidi is a Member of the Executive Council at the apex of the Abu Dhabi Government. In addition, he is Chairman of the Abu Dhabi Securities Market (ADSM), Abu Dhabi Ports Company (ADPC) and a Board member of Mubadala Development Company (MDC).

Over the last 20 years, he worked in various leading posts for Abu Dhabi Government organisations including Abu Dhabi Investment Authority (ADIA) and Abu Dhabi National Oil Company (ADNOC).

Mr Al Sowaidi holds a degree in Economics from the California State Polytechnic University in the USA.

Mr Khaldoon Khalifa Al Mubarak Vice ChairmanMr Al Mubarak is the Chairman of the Executive Affairs Authority of the Government. He is also the Chief Executive Officer and Managing Director of Mubadala. Mr Al Mubarak is also a member of the Abu Dhabi Education Council and is Chairman of “The Imperial College London Diabetes Centre”. Mr Al Mubarak is also a member of the Abu Dhabi Council for Economic Development and is a board member of Dolphin Energy Limited. He is also Vice Chairman of the Supervisory Board of Piaggio Aero, an Italian aerospace company, and Vice Chairman of the Board of Directors of First Gulf Bank. Mr Al Mubarak is a board member of the Emirates Foundation, a philanthropic organisation mandated to provide advice and financial support to community development initiatives in the UAE.

Mr Al Mubarak began his career at ADNOC. Since then he held a number of positions at UAE Offsets Group before assuming his current portfolio of responsibilities. He holds a degree in Economics and Finance from Tufts University, Boston, USA.

Mr Ronald S. BarrottMr Ronald S. Barrott serves as a member of the Board of Directors. Until September 2008, he served as the Chief Executive Officer of ALDAR and acted in that capacity since 2005.

Mr Barrott is a building engineer by profession with over 37 years of experience in the construction and development industries. This includes eight years as a Managing Director and 14 years as Chief Executive Officer and Chairman.

Three development companies were founded by Mr Barrott under the Stannifer name; two property development companies in the UK, and one in the Czech Republic as well as one operational hotel group.

Mr Barrott is on the advisory board of the British Council of Shopping Centres (BCSC).He was previously a member of the board of “International Swiss based Trust” with

international interests in the USA, the UK and Europe, and is a member of the International Council of Shopping Centres (ICSC).

Governance

Board of Directors

ALDAR PROPERTIES PJSC Report and Accounts 2008 53ALDAR PROPERTIES PJSC Report and Accounts 2008 5353ALDAR PROPERTIES PJSC Report and Accounts 2008

Mr Khadem Abdulla Al QubaissiMr Al Qubaissi is the Managing Director of International Petroleum Investment Company (IPIC), the Chairman of Hyundai Oilbank Co. Ltd., the Chairman of National Central Cooling Company PJSC (Tabreed), the Chairman of Abu Dhabi National Takaful Co and the Vice Chairman of Abu Dhabi Polymers Co. Ltd (Borouge). He is also a board member of Borealis AG, First Gulf Bank and Emirates Investment Authority.

Mr Al Qubaissi’s previous positions included acting as senior financial analyst at ADIA and investment management division manager at IPIC.

Mr Al Qubaissi holds a bachelor degree in Economics.

Mr Khalifa Sultan Al SuwaidiMr Al Suwaidi is the Executive Director of the Direct Investments Department at ADIC. Prior to this, he was the Deputy Director of the External Funds (Americas) Department at ADIA. Mr Al Suwaidi is also a member of the supervisory boards of National Bank of Abu Dhabi, Etihad Airways and ADIC.

Mr Al Suwaidi graduated from Seattle University, USA with a BA in Business Administration (Finance), and an MSC in Finance.

Dr Sultan Al JaberDr Al Jaber is the Chief Executive Officer of the Abu Dhabi Future Energy Company and an advisor to Mubadala where his responsibilities include direct project origination and execution in the energy, industry and utilities sectors as well as relationship management with key multinational companies and government institutions.

Previously, Dr Al Jaber held various positions with different responsibilities within ADNOC and Abu Dhabi Gas Company and served as the Executive Marketing Director for the Dubai Department of Tourism and Commerce Marketing based in Los Angeles, California.

Dr Al Jaber is a board member of the Abu Dhabi Shipbuilding Company, American University of Dubai and the Young Arab Leaders Organisation. He is a steering committee member of the REN21 and a member of the Advisory Board of the College of Business and Economy at the UAE University. He is also a member of the executive committee of the designated National Authority in the UAE.

Dr Al Jaber holds a PhD in Business and Economics with emphasis on Foreign Direct Investment from Coventry University, UK. He also holds an MBA and a BSc in Chemical Engineering from the University of Southern California, Los Angeles, USA.

Mr Ali Eid Al MehairiMr Al Mehairi is a member of the board of Abu Dhabi Health Services Company PJSC and a senior project manager with Mubadala, a position he has held since 2002.

Mr Al Mehairi holds a masters degree in Business Administration and Finance and a BSc in Accountancy.

Mr Ibrahim LariMr Lari began his career as an automation engineer with ADNOC. In 2002, Mr Lari became Vice President of IT and Automation at Dolphin Energy. In May 2005, Mr Lari became Chief Executive Officer of Injazat Data Systems, a joint venture between Mubadala and Electronic Data Systems.

Mr Lari holds a degree in Electrical Engineering from Georgia Tech.


Strategy in action

Governance Directors’ reportPrincipal activities The Group’s activities ranges from sourcing land, carrying out feasibility studies, developing a master plan, development of land including infrastructure, leasing and sales, holding completed developments as investment properties and asset management. The Group’s developments include office, residential properties, retail sites, hotels, tourist attraction, leisure facilities, luxury resorts and schools which are built according to a master development plan prepared prior to the commencement of each project.

Further information on the Group’s activities is set out in the Operating review.

Review of business The Consolidated income statement for the year is set out on page 64. A review of the development and performance of the business has been set out in the Chairman’s statement, Chief Executive’s statement, Operating review and Financial review. The principal risks and uncertainties facing the business are set out in the risk management section.

Dividends On 2 February 2009, the Board of Directors proposed a dividend of AED 0.125 per share for the year ended 31 December 2008, an increase of 25% per share from the prior year, reflecting the Company’s strong financial results for the year.

Debt financing Information on the Group’s borrowings is set out in the Financing section on page 40.

Share capital In March 2007, the Group issued convertible bonds in the form of Trust Certificates/Sukuk al-Mudaraba (the “Sukuk”) for a total value of AED 9.29 billion (US$ 2.53 billion). At any time between 10 September 2007 and the scheduled redemption date, the Sukuk holder is eligible for voluntary early redemption on the basis of converting each US Dollar 1,000 certificate into 645.161 shares in the Company. The Company may elect to redeem the Sukuk by way of physical settlement of shares or by way of cash settlement. The Company has the option to redeem the bonds on or at any time after 27 August 2009 as per terms of the offer.

During the year, the Group received conversion notice totalling US$ 549.9 million and therefore 354,798,006 shares were issued.

Apart from impact of the above there were no changes in the share capital of the Group.

Share performance data

Closing share price on 31 December 2008 AED 3.99 per shareDividend proposed for the year ended 31 December 2008 AED 0.125 per share

ALDAR PROPERTIES PJSC Report and Accounts 2008 55

Substantial shareholding The following table sets forth certain information with respect to the beneficial ownership of ordinary shares as of 31 December 2008 based on an aggregate of 2,577.9 million ordinary shares then outstanding, by persons or groups or affiliated persons known by the Group to beneficially own at least 5% of its ordinary shares.

Name of the shareholder Number of shares

Mubadala Development Company 477,993,338 Abu Dhabi Investment Company 185,626,974 National Bank of Abu Dhabi 134,968,918 Tasameem Real Estate Company LLC 88,237,000 Abu Dhabi Retirement Pensions and Benefits Fund 86,250,000 The Children’s Investment Master Fund Ltd 78,883,470 Shu’aa Capital 66,440,464 HSBC Private Bank Suisse SA, Geneva 58,891,599 Hermitage Global Master 53,815,629 National Corporation for Tourism & Hotels 36,620,502

1,267,727,894

The Government of Abu Dhabi has an indirect shareholding of approximately 41% in ALDAR through Mubadala Development Company, Abu Dhabi Investment Company, National Bank of Abu Dhabi, Abu Dhabi Retirement Pension and Benefits Fund and National Corporation for Tourism and Hotels.

Health, safety and environmental issues The Group has a formal health and safety policy in place and complies with the Emirate of Abu Dhabi Municipalities and Agricultural Department’s “Health and Safety Codes of Practice for Construction Projects” and associated legislation to ensure the highest possible standards of safety for its employees and contractors. It is a primary concern of the Board that the Group manages its activities in such a manner as to ensure that the health and safety of its employees, contractors, advisors, tenants and the general public is not compromised.

The Group also recognises the importance of long-term maintenance of the environment and encourages continuous environmental awareness. In general terms, the Group aims to minimise the risk of causing harm through the specification and use of sustainable materials with a view to the elimination of materials or substances harmful to the environment, the reduction of waste, the minimisation of energy consumption and the adoption of safe working practices in the construction and maintenance of its buildings. Further information on Health, safety and environmental matters is set out on page 50 to 51.

Employees The Group recognises the contribution its employees make to its continued success. It acknowledges the need to attract and retain employees of a high calibre. It believes in continuous development, and supports its employees to achieve their self improvement goals which are set and approved annually and intended to benefit both the Group and the individuals. As a part of this plan, the Group has embarked on a graduate training scheme for UAE nationals enabling them to achieve international qualifications and professional status in the worldwide property industry.

There is one pro forma contract which sets out details of employees’ benefits, leave, salary, policies and procedures. This is supplemented by a personnel policy manual which is in place from the first quarter of 2007. Each employee then has an individual contract with details specific to the employee and a bilingual contract (in English and Arabic) which is registered with the labour department.


Strategy in action

GovernanceDirectors’ reportContinued

At 31 December 2008, the Group directly employed 794 (2007: employed 378) permanent staff at its head office in Abu Dhabi, comprising:

Number of employees 2008 2007 2006 2005

Gender:Women 356 160 68 56Men 438 218 137 118

794 378 205 174

Age range:Under 18 – – – –18–30 240 115 69 5031–45 397 186 105 9546 and over 157 77 31 29

794 378 205 174

Supplier and contractors payment policy The Group’s principal suppliers of design and architectural services are located throughout the world, many of which have completed a wide variety of award-winning projects. The Group either tenders out the positions of contractor or supplier or negotiates with a selected developer with whom they have a working history. The Group has also entered into several joint ventures with contractors and plans to enter into joint ventures with suppliers in due course.

The Group agrees payment terms with its other suppliers and contractors when it enters into binding contracts which are usually to pay within 30 days. The Group seeks to abide by the payment terms with other suppliers whenever it is satisfied that the supplier has provided the goods or services in accordance with the agreed terms and conditions.


Corporate social responsibility The Board recognises that the way the Group undertakes its business activities impacts upon all its stakeholders including its employees, contractors, tenants, suppliers, the public and on the environment and is committed to continuous development and improvement of the Group’s Corporate Social Responsibility policy, practice and performance (see Corporate responsibility section).

Political and charitable donations The Group made no political donations during the years ended 31 December 2008 and 2007. Charitable donations of AED 1.6 million were made during the year ended 31 December 2008 (2007: AED 0.1 million).

Directors’ liability insurance The Group has put in place Directors’ liability insurance during the year.

Annual General Meeting The Annual General Meeting (“AGM”) of the Company will be held on 4 March 2009 in Abu Dhabi.

At the AGM, investors will be given the opportunity to question the Board and to meet with them afterwards. They are encouraged to participate in the meeting.

Going concern After making enquiries and examining major areas which could give rise to significant financial exposure the Board of Directors is satisfied that no material or significant exposures exist and that the Group has adequate resources to continue its operations for the foreseeable future and, accordingly, the Group continues to adopt the going concern basis for preparing the financial statements.

Auditors A resolution concerning the reappointment of Deloitte & Touche as auditors and to authorise the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting.

By order of the Board

Ahmed Ali Al Sayegh Chairman 4 March 2009


Strategy in action

Corporate governanceCode of business conduct The Board of Directors is committed to corporate governance and has put in place a “Code of Business Conduct,” to ensure good corporate governance in business practices and activities. The Group aims to preserve and enhance shareholder’s value by ensuring high standards of professionalism, corporate performance and accountability.

The Code of Business Conduct which sets out best practice and covers conflicts of interest, improper payments and gifts, insider trading, confidentiality and employees’ responsibilities amongst other things. The Group has appointed a compliance officer to monitor implementation and adherence to the Code of Business Conduct. The Code of Business Conduct applies to its Board of Directors, and its officers and employees. Each employee must sign the Code of Business Conduct and must attend seminars on its content and application. It is also best practice that the Code of Business Conduct be followed by agents and representatives, including consultants and contractors, suppliers and vendors.

Role of the Board The Board is responsible for the strategy, effective control and management of the Group. There is a clear segregation of responsibilities between the Chairman and Chief Executive, which has been approved by the Board. The Board delegates authority to the various Committees of the Board (described below) and the Executive Management Team, in respect of certain transactions within defined and limited parameters. The Board has a regular schedule of meetings together with further meetings as required by the ongoing business of the Company.

The Board is responsible to the shareholders for the management and control of the Group’s activities and good corporate governance. The Board met regularly during the year and monitored Group strategy, reviewed performance, ensured adequate funding and examined major potential development projects, formulating policy on key issues and reporting to the shareholders.

The Chairman of the Board and individual Directors also meet regularly, outside formal Board meetings, as part of each Director’s continuing contribution to delivery of the Company’s strategy and superior returns for the shareholders and to plan as necessary to deal with any issues relating to the Board effectiveness before they can become a risk to the Group. To enable the Board to discharge its duties, all the Directors receive appropriate and timely information, including briefing papers distributed in advance of Board meetings.

The Executive Management Team members meet regularly, chaired by the Chief Executive, to deal with the ongoing management of the Group.

Board Committees The Board has established an Audit Committee which deals with specific aspects of the Group’s affairs.

Governance


Audit Committee The Audit Committee is appointed by the Board of Directors and is chaired by Mr Riyad Al Mubarak. Its other two members are Mr Ali Al Muhairi and Mr Ibrahim Lari. The Audit Committee meets at least four times a year or more frequently if required.

The Committee’s responsibilities include:

monitoring the integrity of the financial statements of the Group and any formal qannouncements relating to the Group’s financial performance;

reviewing the Group’s internal financial controls and the Group’s internal control qand risk management systems;

monitoring and reviewing the effectiveness of the Group’s internal audit function; q

making recommendations to the Board in relation to the appointment of the external auditors qand approving their remuneration and terms of engagement;

reviewing and monitoring the external auditors’ independence, objectivity and effectiveness; q

reviewing and monitoring the valuation process; and q

developing and implementing policy on the engagement of the external auditors to supply qnon-audit services, taking into account relevant ethical guidance.

The Audit Committee has undertaken each of the above responsibilities during the year on which it has received and reviewed relevant reports from management, the valuers, the internal and the external auditors. It has agreed a schedule of internal audit reviews of several of the Group’s processes and controls to be undertaken, and has considered the results of such reviews.

Internal audit The internal audit function determines whether system of risk management, internal controls and governance processes, as designed and represented by the executive management, is adequate and functioning properly. There is an independent internal audit team who reports directly to the Audit Committee. Occasionally, parts of internal audit functions are outsourced to external consultants.

Key strategic objectives of the internal audit team include:

enhance business processes by assisting in key process streamlining as well as setting-up of qpolicies and procedures for these processes;

assist in developing a strong corporate governance framework by performing appropriate qreviews and monitoring of its effective implementation;

instil strong risk and control awareness within key processes throughout the business; q

facilitate compliance of and adherence to policies, procedures and regulations; q

build and develop in-house resources, capabilities and knowledge for the function; and q

train and develop UAE nationals in the internal audit profession within ALDAR’s diversified qbusiness environment.


Strategy in action

External auditors The Audit Committee meets with the external auditors to discuss with them the scope and conclusions of their work. The Committee is specifically charged under its terms of reference with considering matters relating to the external auditors’ appointment, the independence and objectivity of the auditors, and reviewing the results and effectiveness of the audit. The Group has a policy on the provision of non-audit services by the auditors. The implementation of the policy is continually monitored by the Audit Committee. The Committee has considered the provision of non-audit services performed by the auditors and was satisfied they were and continue to be objective and independent of the Group.

Internal control There is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. The Executive Directors and senior operational management are responsible for identifying key risks and assessing their probable impact through formal processes at both Group and subsidiary levels.

During 2008, the Board discharged responsibility for internal control through the following key procedures:

a comprehensive system of reporting, budgeting and planning, that is approved by the Board qand against which performance is monitored;

the establishment of an organisational structure with clearly defined levels of authority and qdivisions of responsibilities;

the formulation of policies and of approval procedures in a number of key areas such as qtreasury operations and capital expenditure. These are to be reviewed from time to time by the Board to confirm their adequacy; and

the provision of a code of conduct for employees and the monitoring of the quality of qpersonnel through an annual performance appraisal process;

the Group has designed and implemented procedures to ensure complete and accurate qaccounting and to limit the potential exposure to loss of assets or fraud. Control measures undertaken include physical controls, segregation of duties and reviews by management;

the Board considers its policy and procedures to be robust, whilst recognising that such a qsystem is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide reasonable but not absolute assurance against material misstatement or loss.

Relations with shareholders The Chairman, Chief Executive and designated members of senior management are the Company’s principal spokespersons with investors, the press and other interested parties. The Board is fully informed on the information provided to the shareholders and their reactions.

At our AGM, all investors are given the opportunity to question the Board and to meet with them afterwards. They will be encouraged to participate in the Meeting and management assures them that their concerns, if any, will be appropriately addressed.

GovernanceCorporate governanceContinued


Independent auditor’s reportTo the Shareholders of ALDAR Properties PJSC Abu Dhabi, UAE

Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of ALDAR Properties PJSC (the “Company”) and its subsidiaries (together the “Group”), which comprise the consolidated balance sheet as at 31 December 2008, and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and a summary 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 consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects the financial position of the Group as of 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements Also, in our opinion, proper books of account are maintained by the Company, and the information included in the Board of Directors’ report is in agreement with the books of account. We have obtained all the information and explanations which we considered necessary for the purpose of our audit. According to the information available to us, there were no contraventions of the UAE Federal Commercial Companies Law No. (8) of 1984 (as amended) or the Articles of Association of the Company which might have a material effect on the financial position of the Company or on the results of its operations for the year.

Deloitte & Touche

Saba Y. SindahaRegistration Number 4104 March 2009

Governance

ALDAR PROPERTIES PJSC Strategy in action Report & Accounts 2008 Financial statements

Financial statements Consolidated balance sheet as at 31 December 2008

The accompanying notes form an integral part of these consolidated financial statements.

62

Notes 2008

AED ’000 2007

AED ’000

Assets Non-current assets Property, plant and equipment 5 1,830,969 487,166Intangible assets 6 162,891 64,633Investment properties 7 5,149,304 3,328,381Investment properties under development 8 15,803,863 4,289,966Investment in associates and joint ventures 9 874,684 239,025Available-for-sale financial assets 10 74,275 71,200Trade and other receivables 11 1,000,420 151,010Other financial assets 34.5 23,128 9,367

Total non-current assets 24,919,534 8,640,748

Current assets Development work in progress 12 7,130,429 4,042,063Trade and other receivables 11 5,650,663 2,328,858Cash and bank balances 13 12,066,352 7,615,784

Total current assets 24,847,444 13,986,705

Total assets 49,766,978 22,627,453

ALDAR PROPERTIES PJSC Report & Accounts 2008

Financial statements Consolidated balance sheet continued as at 31 December 2008


63

Notes 2008

AED ’000 2007

AED ’000

Equity and liabilities Capital and reserves Share capital 14 2,577,895 2,223,097Share premium 15 3,823,173 2,241,392Share issuance costs, net 14 (79,920) (79,920)Statutory reserve 16 728,333 383,666Hedging reserve (646,574) (293,656)Convertible bonds – equity component 181,293 181,293Non-interest bearing convertible bonds 17 3,562,810 –Retained earnings 5,885,351 3,033,441

Attributable to equity holders of the parent 16,032,361 7,689,313Minority interest 109 86

Total equity 16,032,470 7,689,399

Non-current liabilities Convertible bonds – liability component 18 4,235,871 6,172,157Non-convertible bonds 19 3,735,318 –Borrowings 20 11,934,100 3,579,094Retentions payable 937,515 312,490Provision for end of service benefits 21 22,238 9,004Other financial liabilities 34.5 586,148 293,656

Total non-current liabilities 21,451,190 10,366,401

Current liabilities Advances from customers 22 2,136,404 682,705Trade and other payables 23 7,464,151 3,115,666Borrowings 20 2,682,763 756,932Obligations under finance lease – 16,350

Total current liabilities 12,283,318 4,571,653

Total liabilities 33,734,508 14,938,054

Total equity and liabilities 49,766,978 22,627,453

Ahmed Ali Al Sayegh Chairman

John Bullough Chief Executive Officer

Shafqat Ali Malik Chief Financial Officer


Financial statements Consolidated income statement for the year ended 31 December 2008


64

Notes 2008

AED ’000 2007

AED ’000

Revenue 24 4,978,339 1,226,844Direct costs 25 (2,294,901) (666,884)

Gross profit 2,683,438 559,960Fair value gain on investment properties 7 1,532,584 1,821,235Share of net profit from associates and joint ventures 9 46,957 23,655Selling and marketing expenses 26 (154,430) (122,400)General and administrative expenses 27 (771,172) (279,630)Investment income 29 480,129 392,696Finance costs 30 (370,833) (454,218)

Net profit for the year 3,446,673 1,941,298

Attributable to: Equity holders of the parent company 3,446,673 1,941,298

Earnings per share Basic (AED per share) 31 1.39 1.10

Diluted (AED per share) 31 1.03 0.78


Financial statements Consolidated statement of changes in equity for the year ended 31 December 2008


65

Share capital

AED ’000

Share premiumAED ’000

Share issuance

costs AED ’000

Statutory reserve

AED ’000

Hedging reserve

AED ’000

Convertible bonds –

equity component

AED ’000

Non-interest bearing

convertible bonds

AED ’000

Retained earnings AED ’000

Attributable to equity

holders of the parent

company AED ’000

Minorityinterest

AED ’000 Total

AED ’000

Balance at 1 January 2007 1,725,000 – (79,920) 189,536 – – – 1,436,276 3,270,892 86 3,270,978Dividend for the year 2006 – – – – – – – (138,000) (138,000) – (138,000)Directors’ remuneration – – – – – – – (12,003) (12,003) – (12,003)Profit for the year – – – – – – – 1,941,298 1,941,298 – 1,941,298Convertible bonds issued – – – – – 232,032 – – 232,032 – 232,032Loss on cash flow hedge – – – – (293,656) – – – (293,656) – (293,656)Conversion of bonds into shares 498,097 2,241,392 – – – – – – 2,739,489 – 2,739,489Repurchase of convertible bonds – – – – – (50,739) – – (50,739) – (50,739)Transfer to statutory reserve – – – 194,130 – – – (194,130) – – –

Balance at 1 January 2008 2,223,097 2,241,392 (79,920) 383,666 (293,656) 181,293 – 3,033,441 7,689,313 86 7,689,399Dividend for the year 2007 – – – – – – – (232,096) (232,096) – (232,096)Directors’ remuneration – – – – – – – (18,000) (18,000) – (18,000)Profit for the year – – – – – – – 3,446,673 3,446,673 – 3,446,673Changes in fair value of cash flow hedges – – – – (372,940) – – – (372,940) – (372,940)Loss on hedge transferred to income statement (note 30) – – – – 20,022 – – – 20,022 – 20,022Conversion of bonds into shares 354,798 1,581,781 – – – – – – 1,936,579 – 1,936,579Minority share in the capital contribution of a subsidiary – – – – – – – – – 23 23Issue of non-interest bearing convertible bonds – – – – – – 3,562,810 – 3,562,810 – 3,562,810Transfer to statutory reserve – – – 344,667 – – – (344,667) – – –

Balance at 31 December 2008 2,577,895 3,823,173 (79,920) 728,333 (646,574) 181,293 3,562,810 5,885,351 16,032,361 109 16,032,470


Financial statements Consolidated cash flow statement for the year ended 31 December 2008


66

2008

AED ’000 2007

AED ’000

Cash flows from operating activities Net profit for the year 3,446,673 1,941,298Adjustments for: Depreciation of property, plant and equipment 13,918 15,671Amortisation of intangible assets 10,717 3,260Investment income (480,129) (392,696)Finance costs 159,466 24,943Profit on Islamic borrowings 208,603 427,174Amortisation of prepaid finance costs 4,570 –Fair value gain on investment properties (1,532,584) (1,821,235)Share of profits in joint ventures and associates (46,957) (23,655)Project costs written off 311,114 71,260(Gain)/loss on revaluation of foreign currency balances (410) 563Provision for end of service benefits, net 13,234 5,356

Operating cash flows before changes in working capital 2,108,215 251,939Additions to development work-in-progress (3,092,810) (3,159,012)Increase in trade and other receivables (4,048,204) (2,014,721)Increase in trade and other payables 4,322,606 2,566,893Increase in advances from customers 1,453,699 168,809Increase in retentions – long term 625,025 207,761Directors’ remuneration paid (18,000) (12,003)

Net cash generated from/(used in) operating activities 1,350,531 (1,990,334)

Cash flows from investing activities Movement in term deposits with maturities above three months from balance sheet date (4,646,538) (2,533,110)Purchases of property, plant and equipment (1,485,248) (504,304)Purchases of intangible assets (108,975) (29,823)Additions to investment properties – (1,408)Additions to investment properties under development (11,762,479) (2,926,494)Investment in associates and joint ventures (393,007) (47,351)Investment in available-for-sale financial assets (3,075) –Finance income received 555,095 203,609Dividends received 73,500 2,500

Net cash used in investing activities (17,770,727) (5,836,381)


Financial statements Consolidated cash flow statement continued for the year ended 31 December 2008


67

2008

AED ’000 2007

AED ’000

Cash flows from financing activities Net proceeds from issuance of convertible bonds – 9,080,300Proceeds from issuance of non-convertible bonds 3,750,000 –Proceeds from issuance of non-interest bearing convertible bonds 3,562,810 –Bank borrowings raised 14,331,026 4,326,899Bank borrowings repaid (4,265,617) (606,554)Repayment of obligation under finance lease (16,796) (16,795)Finance costs paid (488,771) (158,003)Distribution to convertible bond holders (398,373) (338,542)Dividends paid (232,096) (138,000)Conversion costs paid (17,957) –Redemption of convertible bonds by cash – (134,897)

Net cash generated from financing activities 16,224,226 12,014,408

Net (decrease)/increase in cash and cash equivalents (195,970) 4,187,693Cash and cash equivalents at the beginning of the year 5,058,655 870,962

Cash and cash equivalents at the end of the year (note 13) 4,862,685 5,058,655


Financial statements Notes to the consolidated financial statements for the year ended 31 December 2008

68

1 General information The establishment of Aldar Properties PJSC (the “Company”) was approved by Decision No. (16) of 2004 of the Abu Dhabi Department of Planning and Economy dated 12 October 2004. The Company’s incorporation was declared by Ministerial Resolution No. (59) of 2005 issued by the UAE Minister of Economy dated 23 February 2005.

The Company is domiciled in the United Arab Emirates and its registered office address is PO Box 51133, Abu Dhabi.

The Company’s ordinary shares are listed on the Abu Dhabi Securities Exchange.

The Company and its subsidiaries (together referred to as “the Group”) are principally engaged in the real estate business which includes development, sales, investment, construction, management and associated services.

2 Adoption of new and revised Standards 2.1 Standards and interpretations effective in the current period Three interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) effective for the current period are as follows:

− IFRIC 11 IFRS 2: Group and Treasury Share Transactions

− IFRIC 12 Service Concession Arrangements

− IFRIC 14 IAS 19: The Limit on a Defined Benefit Asset, Minimum Funding Requirement and their interaction.

The adoption of these Interpretations has not led to any changes in the Group’s accounting policies.

2.2 Standards and interpretations in issue not yet adopted At the date of authorisation of these consolidated financial statements, the following Standards and Interpretations were in issue but not yet effective:

New Standards and Amendments to Standards: − IAS 1 (revised) Presentation of Financial Statements Effective for annual periods beginning on or after 1 January 2009

− IAS 1 (revised) Presentation of Financial Statements and Effective for annual periods beginning on or after 1 January 2009 IAS 32 (revised) Financial Instruments: Presentation – Amendments relating to puttable instruments and obligations arising on liquidation

− IAS 23 (revised) Borrowing Costs Effective for annual periods beginning on or after 1 January 2009

− IAS 39 (revised) Financial Instruments: Recognition and Effective for annual periods beginning on or after 1 July 2009 Measurement – Amendments for eligible hedged Items

− IFRS 1 (revised) First time Adoption of IFRS and IAS 27 Effective for annual periods beginning on or after 1 January 2009 (revised) Consolidated and Separate Financial Statements – Amendment relating to cost of an investment on first time adoption

− IFRS 2 (revised) Share-based payment – Amendment Effective for annual periods beginning on or after 1 January 2009 relating to vesting conditions and cancellations

− IFRS 3 (revised) Business Combinations – Effective for annual periods beginning on or after 1 July 2009 Comprehensive revision on applying the acquisition method and consequential amendments to IAS 27 (revised) Consolidated and Separate Financial Statements, IAS 28 (revised) Investments in Associates and IAS 31 (revised) Interests in Joint Ventures

− IFRS 8 Operating Segments Effective for annual periods beginning on or after 1 January 2009

− Amendments to IFRS 5, IAS 1, IAS 16, IAS 19, IAS 20, Effective for annual periods beginning on or after 1 January 2009 IAS 23, IAS 27, IAS 28, IAS 29, IAS 31, IAS 36, IAS 38, IAS 39, IAS 40 and IAS 41 resulting from the May and October 2008 Annual Improvements to IFRSs


69

2 Adoption of new and revised Standards continued 2.2 Standards and interpretations in issue not yet adopted continued New Interpretations: − IFRIC 13 Customer Loyalty Programmes Effective for annual periods beginning on or after 1 July 2008

− IFRIC 15 Agreements for the Construction of Real Estate Effective for annual periods beginning on or after 1 January 2009

− IFRIC 16 Hedges of a Net Investment in a Foreign Operation Effective for annual periods beginning on or after 1 October 2008

− IFRIC 17 Distributions of Non-cash Assets to Owners Effective for annual periods beginning on or after 1 July 2009

The Directors anticipate the adoption of those Standards and Interpretations in future periods will have no material impact on the consolidated financial statements of the Group in the period of initial application.

3 Summary of significant accounting policies 3.1 Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

3.2 Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for the revaluation of investment properties and certain financial instruments. The principal accounting policies are set out below.

3.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Details of the Company’s subsidiaries at 31 December 2008 are as follows:

Name of subsidiary Percentage

of ownership Country of

incorporation Principal activity

Al Raha Gardens Property LLC 100% UAE Development, sale and management of propertiesAl Jimi Mall LLC 100% UAE Development and management of investment propertyAddar Real Estate Services LLC 99% UAE Property developmentAl Raha Infrastructure Company LLC

100% UAE Development, sale and management of, and investment in, properties

Aldar Academies LLC

100% UAE Investment in, and management of entities providing educational services

Aldar Facilities Management LLC

100% UAE Investment in, and management of, entities providing facilities management services

Aldar Commercial Property Developments LLC 100% UAE Ownership, management and development of buildingsFarah Leisure Parks Management LLC 85% UAE Supervise, manage and operate theme parks

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.


Financial statements Notes to the consolidated financial statements continued for the year ended 31 December 2008

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3 Summary of significant accounting policies continued 3.4 Interests in joint ventures A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control. The results and assets and liabilities of joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under IFRS 5: Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in joint venture are carried in the balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of individual investments.

Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group’s interest in the joint venture.

3.5 Investment in associates An associate is an entity over which the Group has significant influence that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but has no control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under IFRS 5: Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in associate) are not recognised.

Where an entity of the Group transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

3.6 Revenue recognition Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in the consolidated income statement as follows:

Sale of properties Revenue from sale of properties is recognised when equitable interest in a property vests in the buyer and all the following conditions have been satisfied:

− the Group has transferred to the buyer the significant risks and rewards of ownership of the property;

− the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the property sold;

− the amount of revenue can be measured reliably;

− it is probable that the economic benefits associated with the transaction will flow to the Group; and

− the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rental income The Group’s policy for recognition of revenue from operating leases is described in 3.7 below.

Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and effective interest rate applicable.

3.7 Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.


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3 Summary of significant accounting policies continued 3.7 Leasing continued The Group as lessee Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see below).

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

3.8 Foreign currencies For the purpose of these consolidated financial statements UAE Dirhams (AED) is the functional and the presentation currency of the Group.

Transactions in currencies other than AED (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in the income statement in the period in which they arise.

3.9 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in income statement in the period during which they are incurred.

3.10 Government grants Land granted by the Government of Abu Dhabi is recognised at nominal value where there is reasonable assurance that the land will be received and the Group will comply with any attached conditions, where applicable.

3.11 Property, plant and equipment Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the asset.

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

Depreciation is calculated using the straight-line method to allocate the assets’ cost to their residual values over their estimated useful lives as follows:

Buildings 20 years Labour camps 10 years Leasehold improvements 4 years Office equipment 5 years Computers 3 years Furniture and fixtures 5 years Motor vehicles 4 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.



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3 Summary of significant accounting policies continued 3.12 Capital work in progress Capital work in progress is stated at cost. When commissioned, capital work in progress is transferred to the appropriate property, plant and equipment category and is depreciated in accordance with the Group’s policies.

3.13 Investment property Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at its cost, including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

3.14 Investment properties under development Properties in the course of construction for rental and/or appreciation in value are carried at cost, less any recognised impairment loss. Cost includes all direct costs attributable to the design and construction of the property including direct staff costs. Upon completion of construction or development, such properties are transferred to investment properties.

3.15 Development work in progress Development work in progress consists of property being developed principally for sale and is stated at the lower of cost or net realisable value. Cost comprises all direct costs attributable to the design and construction of the property including direct staff costs. Net realisable value is the estimated selling price in the ordinary course of the business less estimated costs to complete and applicable variable selling expenses.

3.16 Intangible assets Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful lives are reviewed at the end of each annual reporting period, with effect of any changes in estimate being accounted for on a prospective basis.

Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised on a straight-line basis over their estimated useful lives which is normally a period of three to five years.

Land lease rights Long-term lease rights relating to land are recognised when it is probable that the expected future economic benefits attributable to the asset will flow to the Group. Long-term lease rights are initially recognised at cost and are amortised over the period of the lease.

Licences Acquired licences are recorded at historical cost. Licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of licences over their estimated useful lives.

3.17 Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its assets whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

3.18 Provisions Provisions are recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.


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3 Summary of significant accounting policies continued 3.19 Employee benefits An accrual is made for the estimated liability for employees’ entitlement to annual leave and leave passage as a result of services rendered by eligible employees up to the balance sheet date.

Provision is also made for the full amount of end of service benefit due to non-UAE national employees in accordance with UAE Labour Law, for their period of service up to the balance sheet date. The accrual relating to annual leave and leave passage is disclosed as a current liability, while the provision relating to end of service benefit is disclosed as a non-current liability.

Pension contributions are made in respect of UAE national employees to the UAE General Pension and Social Security Authority in accordance with the UAE Federal Law No. (7), 1999 for Pension and Social Security. Such contributions are charged to the income statement during the employees’ period of service.

3.20 Financial assets Financial assets are classified into the following specified categories: ’’available-for-sale’’ (AFS) financial assets, ‘’loans and receivables’’ and ‘’cash and cash equivalents’’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Cash and cash equivalents Cash and cash equivalents include cash on hand and deposits held at call with banks with original maturities of three months or less.

AFS financial assets Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs.

AFS investments are measured at subsequent reporting dates at fair value unless the latter cannot be reliably measured. Gains and losses arising from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gains or losses previously recognised in equity are included in the net profit or loss for the period. Impairment losses recognised in profit or loss for equity investments classified as AFS are not subsequently reversed through profit or loss.

Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established.

Loans and receivables Trade receivables, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets Financial assets are assessed for indicators of impairment at each balance sheet date.

For unquoted shares classified as AFS at cost, objective evidence of impairment could include:

− significant financial difficulty of the issuer or counterparty; or

− default or delinquency in interest or principal payments; or

− it becoming probable that the borrower will enter bankruptcy or financial reorganisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised through profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised directly in equity.



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3 Summary of significant accounting policies continued 3.20 Financial assets continued Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset.

3.21 Financial liabilities and equity instruments Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Compound instruments The component parts of compound instruments issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity and is not subsequently remeasured.

Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

3.22 Derivative financial instruments The Group enters into derivative financial instruments to manage its exposure to interest rate risk, including interest rate swaps.

Derivative financial instruments are initially measured at fair value at contract date, and are subsequently remeasured at fair value at each balance sheet date. All derivatives are carried at their fair values as assets where the fair values are positive and as liabilities where the fair values are negative. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Fair values of the derivatives are carried out by independent valuers by reference to quoted market prices, discounted cash flow models and recognised pricing models as appropriate.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise. Derivative financial instruments that do not qualify for hedge accounting are classified as held for trading derivatives.

For the purpose of hedge accounting, the Group designates certain derivatives into two types of hedge categories: (a) fair value hedges which hedge the exposure to changes in the fair value of a recognised asset or liability; and (b) cash flow hedges which hedge exposure to variability in cash flows that are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted transaction that will affect future reported net income.

Hedge accounting In order to qualify for hedge accounting, it is required that the hedge should be expected to be highly effective, i.e. the changes in fair value or cash flows of the hedging instrument should effectively offset corresponding changes in the hedged item and the effectiveness can be reliably measured. At inception of the hedge, the Group documents its risk management objective and strategy for undertaking various hedge transactions, including the identification of the hedging instrument, the related hedged item, the nature of risk being hedged, and how the Group will assess the effectiveness of the hedging relationship. Subsequently, the hedge is required to be assessed and determined to be an effective hedge on an ongoing basis.

Note 34.5 sets out details of the fair values of the derivative instruments used for hedging purposes. Movements in the hedging reserve in equity are also detailed in the statement of changes in equity.


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3 Summary of significant accounting policies continued 3.22 Derivative financial instruments continued Fair value hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement immediately, together with any changes in the fair value of the hedged item that are attributable to the hedged risk.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. The adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to the income statement from that date.

Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Amounts deferred in equity (under hedging reserve) are recycled in the income statement in the periods when the hedged item is recognised in income statement, in the same line of the income statement as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the income statement.

Interest rate caps are measured at fair value, with changes in time value recognised in the income statement and changes in intrinsic value are deferred in equity.

3.23 Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.

A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those of segments operating in other economic environments.

4 Critical accounting judgments and key sources of estimation uncertainty 4.1 Critical judgments in applying accounting policies While applying the accounting policies as stated in note 3, management of the Group has made certain judgments, estimates and assumptions that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period of the revision in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Significant judgments made by management that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:

Classification of leases The Group, as a lessor, has entered into long-term lease arrangements for plots of land with entities outside the Gulf Cooperation Council (non-GCC entities) whereby the lease term under each lease is valid for a period of 99 years renewable at the option of the lessees for an indefinite duration.

In the process of determining whether these arrangements represent operating leases or finance leases, the Group management has made various judgements. In making its judgements, the Group management considered the terms and conditions of the lease agreements and the requirements of International Accounting Standard 17 “Leases”, including the Basis for Conclusions on IAS 17 provided by the International Accounting Standards Board and related guidance, to determine whether significant risks and rewards associated with the land in accordance with each lease term would have been transferred to the lessees despite there being no transfers of title. The Group evaluated the transfer of risks and rewards before and after entering into the lease arrangements, and has obtained a legal opinion from independent legal advisors. Management has determined that in the lease arrangements referred to above, the Group transferred substantially all risks and rewards of ownership to the lessees with practical ability for the lessees to exercise unilaterally all rights on the plots of land. Accordingly, management is satisfied that these arrangements represent finance leases (note 24).

Classification of properties In the process of classifying properties, management has made various judgements. Judgement is needed to determine whether a property qualifies as an investment property, property, plant and equipment and/or property held for resale. The Group develops criteria so that it can exercise that judgement consistently in accordance with the definitions of investment property, property, plant and equipment and property held for resale. In making its judgement, management considered the detailed criteria and related guidance for the classification of properties as set out in IAS 2, IAS 16 and IAS 40, in particular, the intended usage of property as determined by management.



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4 Critical accounting judgments and key sources of estimation uncertainty continued 4.2 Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

Fair value of land held as investment property The best evidence of fair value is current prices in an active market for similar lease and other contracts. In the absence of such information, the Group determined the amount within a range of reasonable fair value estimates. In making its judgment, the Group considered recent prices of similar properties in the same location and similar conditions, with adjustments to reflect any changes in the nature, location or economic conditions since the date of the transactions that occurred at those prices. Such estimation is based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results.

Useful lives of property, plant and equipment, investment properties and intangible assets Management reviews the residual values and estimated useful lives of property, plant and equipment, investment properties and intangible assets at the end of each annual reporting period in accordance with IAS 16, IAS 40 and IAS 38. Management determined that current year expectations do not differ from previous estimates based on its review.

Impairment of properties under development Properties classified under capital work in progress, development work in progress and investment properties under development are assessed for impairment based on assessed cash flows on individual cash-generating units when there is indication that those assets have suffered an impairment loss. Cash flows are determined based on contractual agreements and estimations over the useful life of the assets and discounted using a range of discounting rates representing the rate of return on such cash-generating units. The net present values are compared to the carrying amounts to assess any probable impairment.

Valuation of unquoted AFS equity investments Valuation of unquoted AFS equity investments is normally based on recent market transactions on an arm’s length basis, fair value of another instrument that is substantially the same, expected cash flows discounted at current rates for similar instruments or other valuation models. In the absence of an active market for these investments or any recent transactions that could provide evidence of the current fair value, these investments are carried at cost less recognised impairment losses, if any. Management believes that the carrying values of these unquoted equity investments are not materially different from their fair values.

Impairment of investments in joint ventures and associates Management regularly reviews its investments in joint ventures and associates for indicators of impairment. This determination of whether investments in joint ventures and associates are impaired, entails Management’s evaluation of the specific investee’s profitability, liquidity, solvency and ability to generate operating cash flows from the date of acquisition and until the foreseeable future. The difference between the estimated recoverable amount and the carrying value of investment is recognised as an expense in the income statement. Management is satisfied that no impairment provision is necessary on its investments in joint ventures and associates.

Impairment of trade and other receivables An estimate of the collectible amount of trade and other receivables is made when collection of the full amount is no longer probable. This determination of whether the receivables are impaired, entails Management’s evaluation of the specific credit and liquidity position of the customers and related parties and their historical recovery rates, including discussion with the legal department and review of the current economic environment. Management is satisfied that no impairment provision is necessary on its trade and other receivables.

Derivative financial instruments The fair values of derivative financial instruments measured at fair value are generally obtained by reference to quoted market prices, discounted cash flow models and recognised pricing models as appropriate.


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5 Property, plant and equipment

Land and buildings AED ’000

Labour camps

AED ’000

Furniture and fixtures

AED ’000

Office equipment

AED ’000 Computers

AED ’000 Motor vehicles

AED ’000

Leasehold improvements

AED ’000

Capital work in progress

AED ’000 Total

AED ’000

Cost 1 January 2007 1,457 – 1,573 2,385 3,422 1,185 5,397 382 15,801Additions 10,518 171,373 5,552 4,956 3,644 1,301 5,081 287,406 489,831Transfers – – – 382 – – – (382) –

1 January 2008 11,975 171,373 7,125 7,723 7,066 2,486 10,478 287,406 505,632Additions 2,812 544,520 22,885 4,868 14,414 318 2,312 846,304 1,438,433Transfers 146,160 – – – – – – (146,160) –

31 December 2008 160,947 715,893 30,010 12,591 21,480 2,804 12,790 987,550 1,944,065

Accumulated depreciation 1 January 2007 73 – 481 374 904 177 786 – 2,795Charge for the year 1,418 8,577 587 952 1,658 561 1,918 – 15,671

1 January 2008 1,491 8,577 1,068 1,326 2,562 738 2,704 – 18,466Charge for the year 2,968 80,713 2,286 1,885 3,609 678 2,491 – 94,630

31 December 2008 4,459 89,290 3,354 3,211 6,171 1,416 5,195 – 113,096

Carrying amount 31 December 2008 156,488 626,603 26,656 9,380 15,309 1,388 7,595 987,550 1,830,969

31 December 2007 10,484 162,796 6,057 6,397 4,504 1,748 7,774 287,406 487,166

The depreciation charge for the year has been allocated as follows:

2008

AED ’000 2007

AED ’000

Development work in progress 80,712 –General and administrative expenses 13,918 15,671

94,630 15,671



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6 Intangible assets

Land lease rights

AED ’000 LicencesAED ’000

Computer Software AED ’000

Software under development

AED ’000 Total

AED ’000

Cost 1 January 2007 20,401 12,463 5,942 243 39,049Additions – 11,041 18,782 – 29,823Transfers – – 5 (5) –

1 January 2008 20,401 23,504 24,729 238 68,872Additions – 84,525 24,450 – 108,975Transfers – – 159 (159) –

31 December 2008 20,401 108,029 49,338 79 177,847

Accumulated amortisation 1 January 2007 – – 979 – 979Charge for the year – 7 3,253 – 3,260

1 January 2008 – 7 4,232 – 4,239Charge for the year – 68 10,649 – 10,717

31 December 2008 – 75 14,881 – 14,956

Carrying amount 31 December 2008 20,401 107,954 34,457 79 162,891

31 December 2007 20,401 23,497 20,497 238 64,633

The Group has acquired land leasehold rights for development of a mixed use property. These leasehold rights will be amortised over the lease period of 50 years commencing from the year 2010.

Licences include a non-refundable signing fee of AED 11 million (USD 3 million) in respect of rights granted by Ferrari SPA for the use of Ferrari intellectual properties exclusively for the development, building, operation and promotion of the Ferrari theme parks as per the licensing agreement dated 7 September 2005 between the Group and Ferrari SPA. The licence fees will be amortised over a period of ten years commencing from the year 2009.

Addition to licences during the year include a licence fee of AED 84.5 million (USD 23 million) in respect of rights granted by Warner Bros Company for the establishment of a theme park, hotel, film making facilities and chain of Cineplex cinemas in the Middle East and North Africa region. The signing fee will be amortised over a period of ten years commencing from the start of operations.

7 Investment properties Investment properties comprise the following at fair value:

2008

AED ’000 2007

AED ’000

Building 250,158 –Shopping mall 248,790 248,790Land 4,650,356 3,079,591

5,149,304 3,328,381

Movement during the year is as follows:

2008

AED ’000 2007

AED ’000

Balance at the beginning of the year 3,328,381 1,571,766Additions – 1,408Transfer from investment properties under development (Note 8) 288,339 –Increase in fair value, net 1,532,584 1,821,235Transferred to development work in progress upon change in use (note 12) – (66,028)

Balance at the end of the year 5,149,304 3,328,381


79

7 Investment properties continued The shopping mall was acquired by the Group in 2005 under a long-term lease agreement that expires on 31 July 2080.

The fair value of the shopping mall has been arrived at on the basis of a valuation carried out by independent valuers not connected with the Group. The valuers are members of various professional valuers΄ associations, and have appropriate qualifications and recent experience in the valuation of properties at the relevant locations. The valuation was determined by reference to discounted cash flow. The effective date of the valuation is 31 December 2008.

The fair value of land held as investment property is estimated by considering recent prices for similar properties in the same location and similar condition, with adjustments to reflect any changes in the nature, location or economic conditions since the date of the transactions that occurred at those prices.

The fair value of building has been calculated by discounting cash flow projections based on reliable estimates of future cash flows, supported by the existing lease contracts and using a discount rate of 12% per annum.

All investment properties are located in the United Arab Emirates.

8 Investment properties under development Investment properties under development include real estate projects in the Emirate of Abu Dhabi, which are in the process of development or currently at the design or pre-development phase. Investment properties under development comprise of the following:

2008

AED ’000 2007

AED ’000

Yas Island 10,053,675 1,815,724Al Raha Beach development 2,400,348 1,019,652Central Market 1,637,962 851,579Injazat Data Centre 440,089 186,710Abu Dhabi Cleveland Clinic 392,558 14,532Al Mamoura building 148,624 247,430Baniyas Towers 141,997 9,601Noor Al Ain 115,202 44,620Al Ain labour village 109,009 5,790Abu Dhabi Plaza 91,420 8,541Motor World 90,882 864Sea Palace development 47,820 1,117Al Bateen 32,124 984Al Ruwais Shopping Centre 19,061 5,087Eco Park development 14,324 118Other projects 68,768 77,617

15,803,863 4,289,966

Movement during the year is as follows: Balance at the beginning of the year 4,289,966 1,267,965Developments during the year, net 11,589,002 2,897,179Capitalised finance cost during the year 310,301 124,822

16,189,269 4,289,966

Less: Project completed and transferred to investment properties during the year (note 7) (288,339) –Project transferred to a joint venture during the year (97,067) –


All investment properties under development are located in the United Arab Emirates except for one project amounting to AED 91.42 million, which is located in a foreign country.



80

9 Investment in associates and joint ventures

Investee

Ownership interest

AED ’000

Voting power

AED ’000

Place of registration

AED ’000

Share in underlying

net assets at 1 January

2008AED ’000

AdditionAED ’000

Share in current year’s

profit/(loss)AED ’000

Unrealised profits

AED ’000

Dividends received AED ’000

Allocated to current

account of the

associates/ joint ventures

AED ’000

Share in underlying net

assets at31 December

2008AED ’000

Associates Green Emirates Properties PJSC 20% 20% Abu Dhabi 80,944 – 51,855 – (3,000) – 129,799Aseel PJSC 20% 20% Abu Dhabi 63,076 40,000 15,021 – – – 118,097Dimarco LLC 34% 34% Abu Dhabi 51 – – – – – 51Al Maabar Investments 20% 20% Abu Dhabi 30,000 70,000 (5,150) – – – 94,850Abu Dhabi Finance Company LLC 20% 20% Abu Dhabi – 100,000 – – – – 100,000Iskandar Holdings Ltd 19% 19%

Cayman Islands – 35,503 – – – – 35,503

174,071 245,503 61,726 – (3,000) – 478,300

Joint ventures Aldar Laing O’Rourke Construction LLC 51% 50% Abu Dhabi 58,144 – (2,720) 156,924 (62,500) – 149,848Royal House LLC 50% 50% Abu Dhabi 6,600 – – – – – 6,600Coconut Island Development Company LLC 50% 50% Abu Dhabi 75 – (1,143) – – 1,068 –Fadar Retail LLC 50% 50% Abu Dhabi 75 – 401 – – – 476Abu Dhabi Motor Sports Management LLC 40% 40% Abu Dhabi 60 – – – – – 60Aldar Readymix LLC 50% 50% Abu Dhabi – 10,000 (8,060) – – – 1,940Aldar Besix LLC 51% 50% Abu Dhabi – 10,541 693 91,716 – – 102,950Aldar Etihad Investment Properties LLC 50% 50% Abu Dhabi – 126,861 7,649 – – – 134,510Textura Middle East LLC 50% 50% Abu Dhabi – 102 (11,589) 1,037 – 10,450 –

64,954 147,504 (14,769) 249,677 (62,500) 11,518 396,384

239,025 393,007 46,957 249,677 (65,500) 11,518 874,684

As at the balance sheet date there were no post acquisition changes in the Group’s share of net assets of Dimarco LLC, Royal House LLC and Abu Dhabi Motor Sports Management LLC.

As at the balance sheet date, only 60% of the capital was called and collected by Green Emirates Properties PJSC (“Associate”). The remaining 40% is payable within two years from the date of registration of the Associates in the commercial registry.


81

9 Investment in associates and joint ventures continued Latest available financial information in respect of the Group’s associates is summarised below:

2008

AED ’000 2007

AED ’000

Total assets 5,658,814 1,750,123Total liabilities (3,258,076) (929,873)

Net assets 2,400,738 820,250

Group’s share in net assets of associates 478,300 174,071

Total revenue 424,348 159,941

Total profit for the year 308,628 120,109

Latest available financial information in respect of the Group’s joint ventures is set out below:

2008

AED ’000 2007

AED ’000

Total assets 2,885,406 1,004,092Total liabilities (2,092,254) (874,566)

Net assets 793,152 129,526

Group’s share in net assets of joint ventures 396,384 64,954

Total revenue 5,486,897 1,009,970

Total profit for the year 469,819 95,206

Unrealised profits comprise share of profit on various projects of the joint venture within the Group. These unrealised profits are distributed in the following accounts in the balance sheet:

2008

AED ’000 2007

AED ’000

Property, plant and equipment 46,815 14,473Investment properties under development 173,476 29,314Development work in progress 19,990 4,181Refundable infrastructure costs 9,396 –

Total 249,677 47,968

10 Available-for-sale financial assets

2008

AED ’000 2007

AED ’000

At cost 74,275 71,200

Available-for-sale financial assets represent investments in unlisted equity securities of companies registered in the United Arab Emirates. Due to the absence of an active market for these investments or any recent transactions that could provide evidence of the current fair value, these investments are carried at cost. Subject to the Group’s overall operating strategy, the Group intends to dispose these investments in the normal course of business if a favourable price is offered. There were no disposals or impairment provisions on available-for-sale financial assets during the year.

During the year, dividend income received from available financial assets amounted to AED 8 million (note 29).



82

11 Trade and other receivables

2008

AED ’000 2007

AED ’000

Non-current portion Trade receivables (note 11.1) 639,311 –Refundable costs (note 11.2) 156,833 80,815Receivable from project finance (note 11.3) 38,285 40,415Due from joint ventures (note 32) 165,991 29,780

1,000,420 151,010

Current portion: Trade receivables (note 11.1) 2,090,651 799,592Refundable costs (note 11.2) 856,701 37,593Receivable from project finance (note 11.3) 8,000 3,000Due from joint ventures (note 32) 277,685 25,563Advances and prepayments 2,221,396 1,268,419Accrued interest 156,170 191,509Accrued lease income 9,606 1,212Others 30,454 1,970

5,650,663 2,328,858

11.1 Trade receivables The Group’s trade receivables consist of customers with a good credit standing. At the end of the year, 84% of the trade receivables (31 December 2007: 72% of the trade receivables) is due from top five customers. The Group considers these customers to be reputable and creditworthy and is confident that this concentration of credit risk will not result in any significant loss to the Group.

Included in the Group’s trade receivables are customer balances with a carrying amount of AED 663.5 million (31 December 2007: Nil) which are past due at the reporting date for which no allowance has been provided for, as there was no significant change in credit quality of these customers and the amounts are still considered recoverable. No interest is charged and no collateral is taken on trade receivables.

Ageing of trade receivables

2008

AED ’000 2007

AED ’000

Not past due 2,066,481 799,592

Past due but not impaired Up to 120 days 486,414 –121 to 180 days 177,067 –

663,481 –

Total trade receivables 2,729,962 799,592

11.2 Refundable costs Refundable costs represent costs incurred on behalf of the Government of Abu Dhabi in relation with development of infrastructure of various projects. At 31 December 2008, an amount of AED 156.8 million (2007: [AED] 80.8 million) will be refunded by the relevant Government Authorities upon completion.


83

11 Trade and other receivables continued 11.3 Receivable from project finance

Minimum payments Present value

of minimum payments

2008

AED ’0002007

AED ’000 2008

AED ’0002007

AED ’000

Amounts receivable for project finance: Within one year 8,000 3,000 7,754 2,925In the second to fifth year 20,000 20,000 16,116 15,851After five years 41,000 46,000 22,415 24,639

69,000 69,000 46,285 43,415Less: Unearned finance income (22,715) (25,585) – –

Present value of minimum payments receivable 46,285 43,415 46,285 43,415

Non-current receivables 38,285 40,415Current receivables 8,000 3,000

46,285 43,415

12 Development work in progress Development work in progress represents development and construction costs incurred on properties being constructed for and are related to the following projects:

2008

AED ’0002007

AED ’000

Al Raha Beach development 4,670,535 2,276,410Al Raha Gardens development 930,657 1,058,419Al Falah Development 493,229 48,517Al Gurm villas 471,508 353,799Abraaj Towers 425,855 304,918Multi-unit building at Al Reem Island 138,645 –

7,130,429 4,042,063

Movement during the year is as follows:

2008

AED ’0002007

AED ’000

Balance at beginning of the year 4,042,063 854,285Developments during the year, net 4,307,094 3,497,939Finance costs capitalised during the year 245,947 38,179Transferred from investment properties (note 7) – 66,028

8,595,104 4,456,431Less: Projects completed during the year (1,153,561) (343,108)Project costs written off during the year (311,114) (71,260)


All development work in progress projects are located in the United Arab Emirates.



84

13 Cash and cash equivalents

2008

AED ’0002007

AED ’000

Cash and bank balances 326,015 103,950Short-term deposits held with banks 11,740,337 7,511,834

12,066,352 7,615,784Less: Short-term deposits with maturities at the balance sheet date greater than three months (7,181,268) (2,534,730)Restricted short-term deposits (22,399) (22,399)

4,862,685 5,058,655

The interest rate on term deposits ranges between 2.5% and 7.15% (2007: 4.13% and 5.70%) per annum. As of 31 December 2008, AED 250 million short-term deposits were placed with a local branch of a foreign bank. All other bank deposits are with local banks.

14 Share capital Share capital comprises 2,577,894,735 (2007: 2,223,096,729) authorised, issued and fully paid up ordinary shares with a par value of AED 1 each. Share issuance costs of AED 94.9 million (31 December 2007: AED 94.9 million) have been presented net of share issuance fees of AED 15.0 million, within equity.

Share capital includes 354,798,006 shares converted against Sukuk bonds during the year (note 18).

15 Share premium Share premium amounting to AED 3,823.2 million (2007: AED 2,241.4 million) represents the difference between the carrying amount of Sukuk and the par value of 852,894,735 shares issued upon conversion of these bonds into shares of the Company. Conversion costs amounting to AED 18 million were paid during the year.

16 Statutory reserve In accordance with its Articles of Association and the UAE Federal Law No. (8) of 1984, as amended, 10% of the net profit of the Company is transferred to a statutory reserve that is non-distributable. Transfers to this reserve are required to be made until such time as it equals at least 50% of the paid up share capital of the Company.

17 Non-interest bearing convertible bonds During 2008, the Group issued non-interest bearing convertible bonds (the Bonds) to a related party (the Bond holder). The Bonds have a face value of AED 3,562.8 million and will mature during November 2011. On maturity, the Bonds will be converted into the Company’s ordinary shares at a conversion price of AED 11.73 which is the average trading price of the Company’s shares for the preceding three days prior to issue of the Bonds. Under the scheme, there is no early conversion option available to the Bond holder. However, the Bonds may be converted to ordinary share at any date before the maturity date at the option of the Company.

There were no conversions of the Bonds up to the balance sheet date.


85

18 Convertible bonds In March 2007, the Group issued convertible bonds in the form of Trust Certificates/Sukuk al-Mudaraba (the “Sukuk”) for a total value of AED 9.29 billion (US$ 2.53 billion). The Sukuk is structured to conform with the principles of Islamic Sharia. The Sukuk have a profit rate of 5.767% per annum paid quarterly and are due for repayment on 10 November 2011. The Sukuk are secured by mortgage of part of the land owned by the Group. Transaction costs in connection with the issuance of the Sukuk amounted to AED 210.82 million (US$ 57.15 million).

During the year, the Group redeemed Sukuk for a total value of AED 2.02 billion (US$ 549.9 million) consequent to the receipt of early redemption notices from the Sukuk holders. The redemptions were made in accordance with the terms of Sukuk which entitle the Sukuk holder to voluntary early redemption on the basis of converting each US$ 1,000 certificate into 645.161 shares in the Company.

The convertible bonds are presented in the consolidated balance sheet as follows:

2008

AED ’0002007

AED ’000

Proceeds from the issue of convertible bonds 9,291,124 9,291,124Less: Issuance costs (210,824) (210,824)

Net proceeds from the issue of convertible bonds 9,080,300 9,080,300Equity component on initial recognition (232,032) (232,032)

Liability component on initial recognition 8,848,268 8,848,268Redemption of convertible bonds by cash (84,158) (84,158)Redemption of convertible bonds by share issue (4,694,087) (2,739,489)

Carrying amount of liability component after redemption 4,070,023 6,024,621Profit distribution accrued up to year end 165,848 147,301Effect of foreign exchange revaluation – 235

Carrying amount of liability component at 31 December 4,235,871 6,172,157

Details of Sukuk profit payable capitalised during the year are as follows:

2008

AED ’0002007

AED ’000

Investment properties under development (note 8) 120,060 51,583Development work in progress (note 12) 53,561 7,086Recoverable from a joint venture 1,218 –

Total interest capitalised to projects during the year 174,839 58,669



86

19 Non-convertible bonds During 2008, the Group issued non-convertible bonds in the form of Trust Certificates/Sukuk al-Ijara (the “non-convertible Sukuks”) for a total value of AED 3.75 billion. The non-convertible Sukuks are structured to conform to the principles of Islamic Sharia. The non-convertible Sukuks have a profit rate of three months EIBOR plus 1.75% per annum paid quarterly and are due for repayment on 17 June 2013.

2008

AED ’0002007

AED ’000

Proceeds from the issue of non-convertible bonds 3,750,000 –Less: Unamortised issue cost (14,682) –

Net proceeds 3,735,318 –Profit distribution accrued up to year end 9,600 –Carrying amount of liability component 3,744,918 –Less: Current portion (9,600) –

3,735,318 –

Details of non-convertible Sukuks profit payable capitalised during the year are as follows:

2008

AED ’0002007

AED ’000

Investment properties under development (note 8) 28,130 –Development work in progress (note 12) 14,559 –Recoverable from a joint venture 390 –

Total interest capitalised to projects during the year 43,079 –

20 Borrowings The borrowings are repayable as follows:

2008

AED ’0002007

AED ’000

Current Within one year 2,682,763 756,932

Non-current In the second to fifth year 9,120,876 2,818,498After fifth year 2,813,224 760,596

11,934,100 3,579,094

14,616,863 4,336,026


87

20 Borrowings continued Outstanding amount

Current

AED ’000 Non-current

AED ’000

Total

AED ’000

Unused facility

AED ’000 Interest rate Maturity Purpose

Capitalised interest

AED ’000

2008: Syndicated Infrastructure loan

– 6,150,694

6,150,694

1,560,600 3 months US$ LIBOR + 0.9%

July 2011

Al Raha Beach infrastructure

198,312

Government loan

–

2,496,510

2,496,510

8,971,320 1 year US$ LIBOR + 0.35%

December 2017

Development of Yas Island

158,904

Musharaka financing

500,000

–

500,000

– 1 year EBOR + 0.85%

February 2009

Abraj Towers Phase II & III

25,005

Mudaraba financing

100,000

–

100,000

– 1 year EBOR + 0.85%

February 2009

Abraj Towers, Phase I

4,330

Revolving credit facility

400,000

–

400,000

400,000 3 months EBOR + 0.85%

September 2009

Al Raha Gardens Phase II and III

17,954

Term loan

–

275,400

275,400

– 0.75% compounded quarterly

October 2011


8,539

Term loan 28,550 201,263 229,813 – 3 months EBOR + 1% January 2021 Al Mamoura building 2,324Term loan

16,100

7,759

23,859

– 6 months EBOR + 0.75%

November 2015

Al Jimi Shopping Mall expansion

–

Term loan

367,293

–

367,293

– 3 months US$ LIBOR + 0.90%

August 2009

General corporate purpose

11,989

Term loan

300,000

–

300,000


August 2009


3,989

Murabaha financing

6,964

61,072

68,036 –

6 months EBOR + 0.85%

April 2014


809

Murabaha financing

–

30,000

30,000 –


April 2014


357

Ijarah facility

–

2,203,800

2,203,800 –


April 2012


25,222

Term loan

400,000

–

400,000 –

3 months LIBOR + 0.90%

September 2009


2,838

Murabaha financing

6,323

–

6,323 –


January 2009

Financing steel purchases

–

Murabaha financing

125,000

–

125,000 –


January 2009

Financing steel purchases

–

Term loan

367,300

–

367,300 –

1 year US$ EBOR + 0.80%

September 2009

Working capital requirement

2,930

Term loan

–

367,200

367,200 –

3 months US$ LIBOR + 1.4%

October 2013


2,983

Unamortised borrowing cost

–

(53,247)

(53,247)

–

–

Accrual for interests and profits

65,233

193,649

258,882

–

–

2,682,763 11,934,100 14,616,863 10,931,920 466,485



88

20 Borrowings continued Outstanding amount

Current

AED ’000 Non-current

AED ’000 Total

AED ’000 Unused

facility Interest rate Maturity Purpose

Capitalised interest

AED ’000

2007: Syndicated Infrastructure loan

–

1,432,236

1,432,236

6,279,483 3 months USD LIBOR + 0.9%

July 2011


60,691

Government loan

–

672,310

672,310

14,358,330 1 year US$ LIBOR + 0.35%

December 2017

Development of Yas Island

7,799

Musharaka financing

–

500,000

500,000


February 2009

Abraj Towers Phase II

8,589

Mudaraba financing

–

100,000

100,000


February 2009

Abraj Towers, Phase I – III

–

Revolving credit facility

–

400,000

400,000

400,000 3 months EBOR + 0.85%

September 2009

Al Raha Gardens Phase II and III

4,206

Term loan

367,240

–

367,240

– 3 months US$ LIBOR + 0.35%

August 2008

Al Raha Gardens Phase II

8,381

Term loan

300,000

–

300,000


August 2008

Working capital requirements

–

Term loan

–

275,430

275,430

– 0.75% compounded quarterly

October 2011


1,400

Term loan 28,550 141,306 169,856 88,507 3 months EBOR + 1% January 2021 Al Mamoura building 3,349Murabaha financing

6,964

68,036

75,000


April 2014


–

Murabaha financing

–

30,000

30,000


April 2014

ICL Diabetic Centre

–

Term loan

13,800

10,059

23,859


November 2015


–

Accrual for interests and profits

40,378

3,694

44,072

–

–

Unamortised borrowing cost

–

(53,977)

(53,977)

–

–

Bank loans repaid during the year

–

–

–

–

9,917

756,932 3,579,094 4,336,026 21,126,320 104,332

21 Provision for end of service benefit Movement in the provision for end of service benefits is as follows:

2008

AED ’0002007

AED ’000

Balance at the beginning of the year 9,004 3,648Charge for the year 14,879 5,684Paid during the year (1,645) (328)

Balance at end of the year 22,238 9,004

22 Advances from customers Advances from customers represent instalments collected from customers for the sale of the Group’s property developments.


89

23 Trade and other payables

2008

AED ’0002007

AED ’000

Trade payables 1,237,494 459,790Provision for contractors’ costs 3,290,089 1,691,501Amounts payable to sub-contractors 1,499,412 492,340Provision for infrastructure costs 1,076,272 305,168Advances from Government 126,982 98,514Security deposits 42,056 3,300Deferred income 38,736 11,996Dividends payable 23,292 7,879Other liabilities 129,818 45,178

7,464,151 3,115,666

24 Revenue

2008

AED ’0002007

AED ’000

Sale of properties 4,802,028 1,187,336Rental income from investment properties 72,056 30,131Transfer fees 50,432 3,876School revenue 23,210 3,654Others 30,613 1,847

4,978,339 1,226,844

The Group, as a lessor, has entered into long-term lease arrangements for plots of land with non-Gulf Cooperation Council (GCC) entities whereby the lease term under each lease is valid for a period of 99 years renewable at the option of the lessees for an indefinite duration.

Management has determined that in the lease arrangements referred to above, the Group transferred substantially all risks and rewards of ownership to the lessees with practical ability for the lessees to exercise unilaterally all rights on the plots of land (note 4). Accordingly, management is satisfied that these arrangements represent finance leases.

During the year, the Group recognised revenue from sale of land under finance leases amounting to AED 77.5 million (2007: AED 418.3 million) with cost of sale amounting to AED 18.2 million (2007: AED 113.5 million).

25 Direct costs

2008

AED ’0002007

AED ’000

Cost of properties sold 2,246,088 648,275Operating costs for investment properties 16,204 11,730School operating costs 18,406 3,408Other direct operating expenses 14,203 3,471

2,294,901 666,884

26 Selling and marketing expenses

2008

AED ’0002007

AED ’000

Exhibitions and sponsorships 90,520 47,548Project marketing 22,167 32,090Corporate advertising 20,020 30,042Others 21,723 12,720

154,430 122,400



90

27 General and administrative expenses

2008

AED ’0002007

AED ’000

Staff expenses 301,501 167,183Project costs written off 312,403 37,723Professional fees 27,675 13,064Depreciation and amortisation 24,635 18,932Business travel 14,591 10,880Office and communication expenses 10,539 5,884Rent 8,124 3,851Printing and stationery 13,999 2,398Guest house accommodation 11,233 –Office general expenses 9,790 4,053Other administrative expenses 36,682 15,662

771,172 279,630

28 Staff costs

2008

AED ’0002007

AED ’000

Salaries and wages 315,317 143,904Bonuses and other benefits 83,145 67,822

398,462 211,726

Number of employees at year end 794 378

Out of the total staff costs, AED 96.9 million (31 December 2007: AED 44.5 million) has been allocated to various projects under development during the year. The remaining staff costs are included under general and administrative expenses.

29 Investment income

2008

AED ’0002007

AED ’000

Interest and profit income: Islamic deposits 229,270 338,194 Bank fixed deposits 294,989 48,202 Call and current accounts 990 1,127Financing element earned on receivables 70,253 –Receivables from project finance 2,870 2,673Dividend income (note 10) 8,000 2,500

Gross income 606,372 392,696Less: Amounts offset against the finance costs capitalised during the year (126,243) –

480,129 392,696

Investment income earned on financial assets, analysed by category of asset is as follows:

2008

AED ’0002007

AED ’000

Available-for-sale financial assets 8,000 2,500Loans and receivables 73,123 2,673Cash and bank balances 399,006 387,523

480,129 392,696


91

30 Finance costs

2008

AED ’0002007

AED ’000

Interest on bank loans: Gross 527,030 135,221 Less: Amounts included in the cost of qualifying assets (466,485) (104,332)

60,545 30,889

Sukuk profits: Gross 426,521 485,843 Less: Amounts included in the cost of qualifying assets (217,918) (58,669)

208,603 427,174

Loss/(gain) on hedge 77,981 (10,325)Recycling of hedging reserve loss 20,022 –Interest on overdraft and other facilities 472 2,955Interest on finance lease 446 1,424Net foreign exchange loss 2,764 2,101

101,685 (3,845)

370,833 454,218

The weighted average capitalisation rate of funds borrowed for general purposes is 6.13% per annum (2007: 6.96% per annum).

31 Earnings per share

2008

AED ’0002007

AED ’000

Basic earnings per share (AED) 1.39 1.10

Diluted earnings per share (AED) 1.03 0.78

The calculation of basic and diluted earnings per share attributable to the ordinary equity holders of the parent company is based on the following data:

Earnings

2008

AED ’0002007

AED ’000

Earnings for the purpose of basic earnings per share (profit for the year attributable to equity holders of the parent company) 3,446,673 1,941,298Effect of dilutive potential ordinary shares: Profit distribution to Sukuk holders 208,602 427,174

Earnings for the purpose of diluted earnings per share 3,655,275 2,368,472

Weighted average number of shares 2008 2007

Weighted average number of ordinary shares for the purpose of basic earnings per share 2,472,829,063 1,769,935,887Effect of dilutive potential ordinary shares: Convertible bonds 1,073,223,098 1,283,510,002

Weighted average number of ordinary shares for the purpose of diluted earnings per share 3,546,052,161 3,053,445,889



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32 Transactions and balances with related parties Related parties include the Company’s major shareholders, Directors and business controlled by them and their families or over which they exercise significant management influence as well as key management personnel.

Related party balance:

2008

AED ’0002007

AED ’000

Due from joint ventures Due within one year (note 11) 277,685 25,563Due after one year (note 11) 165,991 29,780

443,676 55,343

Receivable from project finance from a related party 46,285 43,415

Due from a major shareholder 5,209 –

Significant transactions with related parties during the year are as follows:

2008

AED ’0002007

AED ’000

Directors’ fees 540 420

Directors’ remuneration paid 18,000 12,003

Key management compensation Salaries and other short-term employee benefits 62,669 46,283Post-employment benefits 1,126 768

63,795 47,051

Work provided by joint ventures 5,441,801 1,009,970

Rental income from a major shareholder 15,690 –

Non-interest bearing convertible bonds 3,562,810 –

33 Commitments and contingencies Capital commitments Capital expenditure contracted but not yet incurred at the end of the year is as follows:

2008

AED ’0002007

AED ’000

Investment properties under development 38,171,541 15,158,342Development work in progress 2,675,990 1,735,155Investments 128,725 200,000Capital work in progress 2,186,094 731,128Marketing expenses 30,308 24,251Letters of credit – 12,436

43,192,658 17,861,312

The above commitments are spread over a period of one to thirteen years.


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33 Commitments and contingencies continued Operating lease commitments The Group has annual operating lease commitments with respect to rental of land for one of its investment properties and buildings for staff accommodation. The minimum lease payments are as follows:

2008

AED ’0002007

AED ’000

Land (over a period of 72 years): Within one year 1,000 1,000In the second to fifth year 4,000 4,000After five years 66,583 67,583

71,583 72,583

Staff accommodation (over a period of five years): Within one year 94,987 –In the second to fifth year 255,461 –

350,448 –

422,031 72,583

The Group does not have the option to purchase the leased premises at expiry of the lease period but can be renewed upon mutual agreements of both parties.

Contingencies

2008

AED ’0002007

AED ’000

Bank guarantee 108,889 –

34 Financial instruments 34.1 Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the consolidated financial statements.

34.2 Categories of financial instruments

2008

AED ’0002007

AED ’000

Financial assets Available-for-sale financial assets 74,275 71,200Loans and receivables (including cash and cash equivalents) 16,368,465 8,753,293Derivative instruments in designated hedge accounting relationship 23,128 9,367

Total 16,465,868 8,833,860

Financial liabilities Financial liabilities measured at cost 28,802,184 13,306,731Derivative instruments in designated hedge accounting relationship 646,574 293,656

Total 29,448,758 13,600,387

34.3 Financial risk management The Group’s Corporate Finance and Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages financial risks based on internally developed models, benchmarks and forecasts. The Group seeks to minimise the effects of financial risks by using appropriate risk management techniques including using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by management’s analysis of market trends, liquidity position and predicted movements in interest rate and foreign currency rates which are reviewed by the management on a continuous basis.

The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.



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34 Financial instruments continued The Group analyses financial risks under the following captions:

34.4 Capital risk management Capital risk is the risk that the Group is not able to manage its capital structure to ensure that all entities in the Group will be able to continue as a going concern.

The Group’s capital structure comprises borrowings disclosed in notes 18, 19 and 20, cash and bank balances and equity attributable to equity holders of the parent company, comprising issued capital, share premium, reserves and retained earnings as disclosed in the statement of changes in equity.

The Group monitors and adjusts its capital structure with a view to promote the long-term success of the business while maintaining sustainable returns for shareholders. This is achieved through a combination of risk management actions including monitoring solvency, minimising financing costs, rigorous investment appraisals and maintaining high standards of business conduct.

Key financial measures that are subject to regular review include cash flow projections and assessment of ability to meet contracted commitments, projected gearing levels and compliance with borrowing covenants, although no absolute targets are set for these.

At end of the year, the net debt to equity ratio is as follows:

2008

AED ’0002007

AED ’000

Debt(i) 22,588,053 10,508,183Cash and bank balances (note 13) (12,066,352) (7,615,784)

Net debt 10,521,701 2,892,399

Total equity(ii) 16,032,470 7,689,399

Net debt to equity ratio (%) 65.6% 37.6%

(i) Debt is defined as convertible and non-convertible bonds and long- and short-term borrowings as detailed in notes 18, 19 and 20.

(ii) Equity includes all capital and reserves of the Group.

The Group monitors its cost of debt on a regular basis. At 31 December 2008, the weighted average cost of debt was 4.7% (2007: 6.3%). Investment and development opportunities are evaluated against the equity return in excess of 15% in order to ensure that long-term shareholder value is created.

The Group is not subject to any externally imposed capital requirements.

34.5 Market risk management Market risk is the risk that the fair value or future cash flows of a financial asset or liability will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk.

a) Foreign currency risk management The Group has no significant cross-border trading transactions and therefore, foreign exchange transaction exposure is negligible. However, it does borrow money in foreign currencies primarily in US Dollars. The Group’s currency exposure therefore is in relation to the repayment of loans and also the translation risk associated with converting outstanding loan balances back into UAE Dirhams in the Group consolidated accounts at each balance sheet date. The exchange rate between UAE Dirhams and US Dollars is fixed and therefore Group considers foreign exchange risk associated with repayment of loans and translation as minimum.

Foreign currency sensitivity analysis The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date are as follows:

Liabilities Assets

2008

AED ’0002007

AED ’000 2008

AED ’0002007

AED ’000

US Dollars 11,150,570 8,675,956 300,148 2,013,776Pound Sterling (a) 9,993 2,088 – –Euro (b) 68,769 4,079 – –Singapore Dollars (c) 142 – – –

11,229,474 8,682,123 300,148 2,013,776

There is no impact on US$ as the UAE Dirham is pegged to the US$. Based on the sensitivity analysis to a 20% increase/decrease in the AED against the relevant foreign currencies (assumed outstanding for):

(a) there is AED 2.0 million (2007: AED 422.0 thousand) net revaluation gain/loss on the Pound Sterling outstanding balances.

(b) there is AED 13.8 million (2007: AED 790.9 thousand) net revaluation gain/loss on the Euro outstanding balances.

(c) there is AED 28.3 thousand (2007: AED Nil) net revaluation gain/loss on the Singapore Dollars outstanding balances.


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34 Financial instruments continued 34.5 Market risk management continued b) Interest rate risk management The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, by the use of interest rate swap contracts.

The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in notes 13, 18, 19 and 20.

Interest rate sensitivity analysis The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the balance sheet date. For floating rate assets and liabilities, the analysis is prepared assuming the amount of asset or liability outstanding at the balance sheet date was outstanding for the whole year.

If interest rates had been 100 basis points higher and all other variables were held constant, the Group’s profit for the year ended 31 December 2008 would increase by AED 49.0 million. The resulting gain is due to significant interest bearing deposits and interest rate caps on two of the Group’s major loans.

If interest rates had been 100 basis points lower and all other variables were held constant, the Group’s profit for the year ended 31 December 2008 would increase by AED 8.2 million.

The Group’s sensitivity to interest rates has increased during the current year mainly due to the increase in variable interest bearing deposits and borrowings.

Interest rate swap contracts Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rate on the fair value of issued fixed rate debt and the cash flow exposures on the issued variable rate debt.

Cash flow hedges The following table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding as at reporting date:

Average contracted

fixed interest rate Notional principal amount Fair value

2008

%2007

% 2008

AED ’0002007

AED ’000 2008

AED ’0002007

AED ’000

Less than 1 year

5.92% & 5.4035%

5.90% & 5.4035% 6,159,113 3,601,478 166,112 37,680

1 to 2 years

5.90% & 5.4035%

5.88% & 5.4035% 6,476,131 6,176,390 251,316 121,943

2 to 5 years

5.92% & 5.4035%

5.89% & 5.4033% 4,653,432 5,677,670 155,512 128,590

More than 5 years 6.05% 6.01% 122,789 129,823 13,208 5,443

17,411,465 15,585,361 586,148 293,656

All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. The interest rate swaps and the payments on the loan occur simultaneously and the amount deferred in equity is recognised in profit or loss over the period that the floating rate interest payments on debt impact profit or loss.

The carrying amount of the Group’s interest rate caps were adjusted to fair value at 31 December 2008 amounting to AED 20.1 million (2007: AED Nil). Net loss related to time value amounting to AED 73.1 million was included in the income statement for the year (note 30).

The fair value of the interest rate swaps and caps designated as cash flow hedges have been arrived at on the basis of a valuation carried out by Messrs JC Rathbone, independent valuers not connected with the Group. Messrs JC Rathbone have appropriate qualifications and experience in the valuation of derivative financial instruments.

Fair value hedges Interest rate swap contracts exchanging fixed rate interest for floating rate interest are designated and effective as fair value hedges in respect of interest rates. The carrying amount of the derivative was adjusted to fair value at 31 December 2008 amounting to AED 3 million (2007: AED 9.4 million). The net loss on fair value hedges amounting to AED 4.9 million (2007: net income of AED 10.3 million) was included in the income statement for the year (note 30).

The Group’s derivative financial instruments were contracted with counterparties operating in the United Arab Emirates.



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34 Financial instruments continued 34.6 Credit risk management Credit risk in relation to the Group, refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group.

Key areas where the Group is exposed to credit risk are trade and other receivables and bank and cash balances and derivative financial assets (liquid assets).

The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group attempts to control credit risk by monitoring credit exposures, limiting transactions with specific non-related counterparties, and continually assessing the creditworthiness of such non-related counterparties.

Concentration of credit risk Concentration of credit risk arise when a number of counter-parties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentration of credit risk indicates the relative sensitivity of the Group’s performance to developments affecting a particular industry or geographic location. Details on concentration of trade receivable balances are disclosed in note 11. Management believes that the concentration of credit risk is mitigated by high credit rating and financial stability of its trade customers.

At 31 December 2008, 74% (2007: 100%) of the deposits were placed with four banks. Balances with banks are assessed to have low credit risk of default since these banks are among the major banks operating in the UAE and are highly regulated by the central bank.

Trade and other receivables and balances with banks and derivative financial assets are not secured by any collateral. The amount that best represents maximum credit risk exposure on financial assets at the balance sheet date, in the event counterparties fail to perform their obligations generally approximates their carrying value.

34.7 Liquidity risk management The responsibility for liquidity risk management rests with the management of the Group, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 20 is a listing of additional un-drawn facilities that the Group has at its disposal to further reduce liquidity risk.

The following tables detail the Group’s remaining contractual maturity for its financial assets and liabilities. The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the earliest date on which the Group can be required to pay or collect. The table includes both interest and principal cash flows. Maturity profile of financial assets and liabilities as at the balance sheet date is as follows:

Effective interest rate

AED ’000 < 1 month

AED ’0001 to 3 months

AED ’000

3 monthsto 1 yearAED ’000

1 to 5 years AED ’000

> 5 yearsAED ’000

TotalAED ’000

31 December 2008: Financial assets Non-interest bearing instruments – 727,736 605,065 2,224,002 1,140,993 – 4,697,796Receivables from project finance 6.7502% 3,000 – 5,000 20,000 41,000 69,000Derivative financial instruments 5.817% – – 593 22,535 – 23,128Fixed interest rate instruments 9.00% – – – 8,600 – 8,600Variable interest rate instruments Note 13 1,305,414 3,231,256 7,529,682 – – 12,066,352

Total 2,036,150 3,836,321 9,759,277 1,192,128 41,000 16,864,876

Financial liabilities Non-interest bearing instruments – 544,342 2,206,091 3,463,699 – – 6,214,132Derivative financial instruments 5.4434% – – 166,112 467,254 13,208 646,574Non-convertible bonds Note 19 – – – 3,750,000 – 3,750,000Fixed interest rate instruments 7.0288% – 62,707 188,120 5,125,641 – 5,376,468Variable interest rate instruments Note 20 214,152 639,917 1,881,941 8,845,476 2,813,224 14,394,710

Total 758,494 2,908,715 5,699,872 18,188,371 2,826,432 30,381,884


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34 Financial instruments continued 34.7 Liquidity risk management continued

Effective interest rate

AED ’000 < 1 month

AED ’000 1 to 3 months

AED ’000

3 monthsto 1 yearAED ’000

1 to 5 years AED ’000

> 5 yearsAED ’000

TotalAED ’000

31 December 2007: Financial assets Non-interest bearing instruments – 165,123 156,188 805,604 110,794 – 1,236,051Receivables from project finance 6.28% 2,000 – 1,000 20,000 46,000 69,000Derivative financial instruments 5.767% – – – 9,367 – 9,367Fixed interest rate instruments 9% – – 8,600 – – 8,600Variable interest rate instruments Note 13 – 5,058,655 2,557,129 – – 7,615,784

Total 167,123 5,214,843 3,372,333 139,961 46,000 8,938,802

Financial liabilities Non-interest bearing instruments – 328,062 172,952 2,183,841 – – 2,684,855Finance lease liability 5.50% – – 16,796 – – 16,796Derivative financial instruments – – – 37,680 250,533 5,443 293,656Fixed interest rate instruments 6.92% – 91,824 275,471 7,745,083 – 8,112,378Variable interest rate instruments Note 20 – 78,127 678,805 2,597,075 760,596 4,114,603

Total 328,062 342,903 3,192,593 10,592,691 766,039 15,222,288

35 Segment information Primary reporting format – business segments For management purposes, the Group is organised into three main business segments – property development and sales, land sales and investment properties portfolio.

Segment information about the Group’s continuing operations for the year then ended is presented below:

Year ended 31 December 2008

Property development

and salesAED ’000

Land salesAED ’000

Investment properties

portfolio AED ’000

UnallocatedAED ’000

GroupAED ’000

Revenue 1,115,452 3,737,008 86,959 38,920 4,978,339

Fair value gains – – 1,532,584 – 1,532,584

Investment income – 70,253 291 409,585 480,129

Finance costs – – (4,348) (366,485) (370,833)

Net profit/(loss) for the year (768,442) 2,594,689 1,591,593 28,833 3,446,673

Year ended 31 December 2007


and salesAED ’000





GroupAED ’000

Revenue 267,869 919,467 30,131 9,377 1,226,844

Fair value gains – – 1,821,235 – 1,821,235

Investment income – – 407 392,289 392,696

Finance costs – – (2,976) (451,242) (454,218)

Net profit/(loss) for the year (383,506) 533,104 1,834,077 (42,377) 1,941,298



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35 Segment information continued Primary reporting format – business segments continued The segment assets and liabilities and capital expenditure for the year then ended are as follows:

As at 31 December 2008


and salesAED ’000





GroupAED ’000

Assets 28,602,592 2,712,245 5,182,752 13,269,389 49,766,978

Liabilities 18,691,599 1,076,272 42,550 13,924,087 33,734,508

Capital expenditure 544,520 – 373 1,002,516 1,547,409

As at 31 December 2007


and salesAED ’000





GroupAED ’000

Assets 8,814,457 713,356 3,356,098 9,831,185 22,715,096

Liabilities 7,768,385 313,846 60,654 6,882,812 15,025,697

Capital expenditure 233,271 – 780 285,603 519,654

The Group operated only in one geographical segment, i.e., United Arab Emirates.

36 Comparatives Certain comparative amounts have been reclassified to conform to current year’s presentation.

37 Approval of consolidated financial statements The consolidated financial statements were approved by the Board of Directors and authorised for issue on 28 January 2009.


Corporate directory

Board of Directors Chairman Ahmed Ali Al Sayegh

Vice Chairmen Nasser Ahmed Al Sowaidi Khaldoon Khalifa Al Mubarak

Other Board Members Khadem Abdulla Al Qubaissi Khalifa Sultan Al Suwaidi Sultan Al Jaber Ali Eid Al Mehairi Ibrahim Lari Ronald Barrott

Executive Management Team Chief Executive Officer John Bullough

Chief Financial Officer Shafqat Malik

Chief Operating Officer Sami Asad

Chief Economic and Administration Officer Abdalla Zamzam

Chief Commercial Officer Mohammed Al Mubarak

Chief Legal Officer Richard Gray

Chief Planning and Strategy Officer Sharon Warburton

Managing Director of ALDAR Hotels and Hospitality Paul Bell

Marketing and Media Director Ousama Ghannoum

Deputy Director of Planning & Infrastructure Talal Al Dhiyebi

Chief Audit Executive Haider Najim

Head office ALDAR Properties PJSC P.O. Box 51133 Abu Dhabi United Arab Emirates

Website www.aldar.com

Listing Details ALDAR Properties PJSC is listed on the Abu Dhabi Securities Market under the ticker symbol ALDAR

Legal Advisors Allen & Overy P.O. Box 7907 Abu Dhabi United Arab Emirates

Simons & Simons 10th Floor The ADNIC Building Khalifa Street Abu Dhabi United Arab Emirates

Auditors Deloitte & Touche (M.E.) Bin Ghanim, 10th Floor Hamdan Street P.O. Box 990 Abu Dhabi United Arab Emirates

Registrar National Bank of Abu Dhabi P.O. Box 6865 Abu Dhabi United Arab Emirates

If you have any comments in respect to this year’s Annual Report please contact:

Israr Liaqat Director Finance ALDAR Properties PJSC P.O. Box 51133 Abu Dhabi

T: +971 (0) 2 696 4444 E: [email protected] www.aldar.com

Designed and produced by Radley Yeldar

www.ry.com

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