FY 2010 Annual Report - Part II - Orascom Development

ODH Annual Report 2010
16 INVESTMENT PROPERTY
___________________________________________________________________________________
The Group has historically accounted for all its property as
property, plant and equipment and measured them at cost less
accumulated depreciation and / or accumulated impairment
losses under IAS 16 (“property, plant and equipment”). The
Group has restated its previously reported financial information
including these financial statements to reflect the retrospective
restatement of the Mauritius real-estate from property, plant and
equipment to investment property measured at fair value as of 1
January 2009 (see notes 3.3, 3.19 and 4.2.9).
The following table summarizes movements, which have
occurred, during the current reporting period, on the carrying
amount of investment property.
CHF 31-Dec-10 31-Dec-09 1-Jan-09
Balance at the
beginning of the
year before
restatement as of 71,786,344 65,834,078 -
Transfer from
property, plant
and equipment 3,822,824 1,249,173 58,893,243
Revaluation gain
resulting from
accounting
policy change - - 6,940,835
Revaluation gain
14,120,934 5,170,672 -
Foreign currency
translation
adjustment (11,374,867) (467,579) -
Restated
balance as of 78,355,235 71,786,344 65,834,078
The Group’s investment properties are located in Mauritius and in
Egypt. The transfer from property, plant and equipment to
investment property during 2009 and 2010 relates to several
premises located in El Gouna (Egypt) which have been leased to
third parties for the first time.
Their fair values at 31 December 2010, at 31 December 2009
and 1 January 2009 have been arrived at on the basis of
valuations carried out at these dates by Messrs Alan Tinkler,
Ramlackhan & Co and Fincorp & CPM, independent valuation
specialists not related to the Group. They are both accredited
valuators in Mauritius and Egypt and have appropriate
qualifications and recent experience in the valuation of properties
in the relevant locations.
The valuation for the investment property in Egypt was arrived at
by reference to market evidence of transaction prices for similar
properties. Due to the lack of recent, comparable property trades,
the valuation for the investment property in Mauritius was based
on the summation approach. This approach considers the value
of land using a comparative method and the value of buildings
and other improvements based of their depreciated replacement
cost defined as being the current cost of replacing an asset with
its modern equivalent asset less deductions for physical
deterioration and all relevant forms of obsolescence and
optimization. Both valuation methods are in conformity with the
International Valuation Standards.
All of the Group’s investment property is held under freehold
interests.
The following table summarizes income and direct operating
expenses from investment properties rented out to third parties.
CHF 2010 2009
Rental income from investment
properties (i) 7,161,744 5,062,180
Direct operating expenses (including
repairs and maintenance) arising
from investment properties that
generated rental income during the
period 68,228 117,421
(i)
See note 7.1 for further information on the
Group’s rental income.
F-42