damas international limited and its...

Damas International Limited and its Subsidiaries

FINANCIAL STATEMENTS 31 MARCH 2009

Board of Directors H.E. Mr. Mohamed Alabbar (Director) Tawfique Abdulla (Chairman) Aamer Abdul Jalil Mohd Al Fahim (Director) Tawhid Abdulla (Managing Director) Dr Gaetano Cavalieri (Non-Executive Independent Director) Tamjid Abdulla (Deputy Managing Director) John Harper (Non-Executive Independent Director) Dr Maryam Matar (Non-Executive Independent Director) Essam Abdulkadir Al Muhaidib (Non-Executive Independent Director) Ammar A. Alkhudairy (Non-Executive Independent Director) Auditors Ernst & Young Bankers ABN Amro Bank N.V, Dubai Branch Bullion Banks Abu Dhabi Commercial Bank, Dubai Bank of Nova Scotia, London Barclays Bank, Dubai Hollandsche Bank, Rotterdam BNP Paribas, Dubai HSBC Bank Middle East, Dubai Calyon Corporate & Investment Bank, Dubai National Bank of Dubai Diamond Bank Switzerland Ltd, Switzerland National Bank of Fujairah Dubai Bank, Dubai Standard Bank London, London Emirates Bank International, Dubai Standard Chartered Bank, Dubai First Gulf Bank, Abu Dhabi Syndicated Banks Gulf International Bank, Bahrain ABN Amro Bank N.V., Dubai Branch HSBC Bank Middle East, Dubai Bank Muscat International B.S.C Mashreq Bank, Dubai Bank Of Bahrain & Kuwait – Bahrain National Bank of Ras Al Khaimah, Dubai Bank Of Taiwan, London Branch National Bank of Dubai, Dubai Barclays Bank Plc Standard Chartered Bank, Dubai BNP Paribas United Arab Bank, Dubai Commercial Bank of Dubai PSC Union National Bank, Dubai Doha Bank

State bank of India - Bahrain Efibanca SPA - Rome First Gulf Bank First Commercial Bank LTD., London Branch Gulf International Bank B.S.C International Bank Of Qatar (Q.S.C) National Bank of Abu Dhabi National Bank of Dubai P.J.S.C The Arab Investment Company S.A.A (OBU)

Union National Bank Registered Office Damas International Limited P.O. Box 1522, 3rd Floor, New Gold Center, Suite No 57/58, Deira, Dubai – UAE

Damas International Limited and its Subsidiaries Consolidated financial statements 31 March 2009 Contents Page Director’s report 3 (i)-(iv) Management discussion and analysis 3 (v)-(vii) Corporate governance 3 (viii)-(xiv) Independent auditors’ report 4-5 Consolidated income statement 6 Consolidated balance sheet 7-8 Consolidated cash flow statement 9-10 Consolidated statement of changes in equity 11-12 Notes to the consolidated financial statements 13-76

3 (i)

DIRECTORS’ REPORT Your Directors have pleasure in presenting the Report and Accounts for the year ended 31st March, 2009. Your Company is the hundred percent holding Company of Damas LLC and in turn holds controlling power directly or indirectly in the other Companies in Damas Group (“the Group” or “Damas”).

Financial highlights of the Group

(AED’ 000) 1 January 2008 to

31 March 2009 (15 Months)

1 January 2007 to 31 December 2007

(12 Months) Revenue

6,032,876

3,553,269

Gross profit

1,116,490

643,096

Profit for the period/year

226,913

209,126

Earnings per share in AED

0.25

0.28

Dividend During the Financial Year your Directors have paid an Interim Dividend @ 2.5% on the paid up capital of the Company amounting to AED 90.89 million. The Directors recommend approval of the same by the Members of the Company at the ensuing Annual General Meeting. Industry Structure and Development The retail jewellery market in the regions in which the Group operates is highly fragmented and presents significant challenges to new entrants. The Group structured itself to effectively tap the market by positioning itself as a leading retailer in gold, diamond and pearl jewellery and watches retailer through its vast retail network across the regions in which it operates. The retail operation is supported with its own wholesale business and designing and manufacturing facilities. The Group’s stores offer its own branded products as well as products sold under leading global and regional luxury brands. The Group sells jewellery and watches through three main distinctive store formats, each of which is tailored to a specific type of customers. The Group also sells loose diamonds and gold and diamond jewellery on a wholesale basis to other jewellery retailers, including those in other Middle Eastern countries and India, as well as individual business owners and small family-owned local jewelers. The Group’s manufacturing capabilities encompass the entire manufacturing cycle – from design to manufacturing and branding. The Group manufactures a portion of the branded and unbranded jewellery sold in its stores, either directly through its own facilities or indirectly through shared facilities. Review of operations The core market for the Company in UAE and GCC countries are expected to remain the same for the next year. With the recent approval obtained from the Government of India, the Company expects to focus in that market from 2010. Initial Public Offer In the month of July2008, the Company issued shares to public and got its shares listed in the Stock Exchange. Presently 29.44 % of Company’s shares are held by public as free float. The details of listing are given under the section “Corporate Governance”

3 (ii)

Future outlook The current global economic recession cast a degree of uncertainty in the future outlook. However dominant markets like UAE and other GCC Countries are expected to behave well albeit at a lower level of activities. India however has an exciting proposition in future. Accordingly, Damas has initiated its new venture in India which is given in more detail in the following paragraph. Joint Venture in India Damas LLC, the Wholly Owned Subsidiary of the Company, is in the process of establishing a joint venture Company in India with its Indian Partner, M/s Gitanjali Group. The investment by Damas in the new venture will be in the tune of INR 1,800 Million (approx AED 135.9 Million) which will be introduced in the next three to five years. Damas will hold 51% equity in the new entity. Damas has already obtained the necessary approval in this regard from the Government of India. Corporate Social Responsibility Damas is committed and actively engaged in providing various voluntary social services to different segments of the society and thus fulfilling its duty as a good Corporate Citizen. In this regard Damas is committed to making a positive contribution to the society in a number of ways. As a policy, Damas promotes and encourages economic, social and educational development while also giving active support to other local initiatives including sports, employment generation and social and health care. Human Resource Development Keeping in view the Global downturn and cut throat competition in the market the main focus of your Company was the optimal utilisation of available talent pool by providing intensive and better training and institutionalising communication. The objective is to develop a performance-driven dynamic organizational culture through job enrichment. Continuous employee training programmes are in place across the Group’s locations to upgrade competence and skills. Employee relations continued to be healthy. Financial Year Change The Board of Directors of the Company vide their resolution dated 22 December, 2008 has changed its Financial Year End from 31 December, 2008 to 31 March, 2009 due to the following reasons. i) Since the market conditions were very much volatile, the first part of 2009 would give the Company, some time to see how expansions could be made effectively in the later part of the calendar year. ii) All the Auditors were extremely busy at the end of the calendar year and feel pressurised to deliver and that it would be a better option to choose a lean period for audit reviews and for consolidation of more than 75 Group companies. Accordingly all the subsequent Financial Years will be from 1 April to 31 March. Buy back of shares The Members of the Company vide special resolution dated 08 February, 2009 authorised the Board of Directors/ Committee of Directors of the Company to purchase back the ordinary shares of the Company. The Share Buy Back Committee of the Board of Directors of the Company vide its resolution dated 11 March, 2009 authorized purchase up to 120,000,000 ordinary shares of the Company. The Company is in the process of getting necessary approval from NASDAQ Dubai only after which the actual purchase can be made. Auditors The Auditors, M/s Ernst & Young Middle East (Dubai Branch), will retire at the ensuing Annual General Meeting and are eligible for re – appointment.

3 (iii)

Directors H.E. Mohamed Alabbar, H.E. Aamer Abdul Jalil Mohammed Al Fahim, Dr. Gaetano Cavalieri, Mr. John Harper, H.E. Dr. Mariam Matar (Mrs.), Mr. Abdulla Nasser H Al Mansouri, Mr. Essam Abdulkadir Al Muhaidib and Mr. Ammar A Alkhudairy were appointed as Directors with effect from 08 July, 2008.

Mr. Abdulla Nasser H Al Mansouri resigned from the Directorship of the Company and the Board accepted his resignation at its meeting held on 25 March, 2009. The resignation is effective from 05 March, 2009.

During the Financial Year 2008-09 Mr. Tawfique Abdullah, Mr. Tawhid Abdullah and Mr. Tamjid Abdullah resigned from the Board of Directors. The Board of Directors accepted their resignation with effect from 28 May, 2009 and immediately re appointed them as Directors to fill up the vacancy caused by their resignation and to continue up to the date of the next General Meeting. The Board further appointed Mr. Tawfique Abdullah as its Chairman, Mr. Tawhid Abdullah as the Managing Director and Mr. Tamjid Abdullah as the Deputy Managing Director of the Company. All the three Directors being eligible offered themselves for re appointment by the Shareholders of the Company. The Board has also recommended their re appointment by the Shareholders in the Annual General Meeting. All the other Directors viz. H.E. Mohamed Alabbar, H.E. Aamer Abdul Jalil Mohammed Al Fahim, Dr. Gaetano Cavalieri, Mr. John Harper, H.E. Dr. Mariam Matar (Mrs.), Mr. Essam Abdulkadir Al Muhaidib and Mr. Ammar A Alkhudairy have submitted themselves and consented to reappointment by the shareholders in the Annual General Meeting. Corporate Governance As per the Requirements of Markets Law ( DIFC Law 12 of 2004), the Offered Securities Rules of Dubai Financial Services Authority and the Listing Rules of the NASDAQ Dubai, a section on Corporate Governance is set out forming part of this Annual Report. Internal Control System and Adequacy There are adequate internal control systems in all areas of operation of the Group by it’s in – house expertise and resources. Moreover, the Company continuously upgrades these systems in line with the best available practices. Operational Reports are tabled at Board Meetings. An independent Audit Committee of the Board reviews the adequacy of Internal Control. Insurance All the Properties, Assets and Insurable interest of the Company including Plant & Machinery, Building, Inventory, wherever necessary and to the extent required have been adequately insured. Directors’ Responsibilities in Respect of the Preparation of the Accounts The following statement, which should be read in conjunction with the statement of Auditors’ responsibilities included in the report of the independent Auditors, is made with a view to distinguishing the respective responsibilities of the Directors and of the Auditors in relation to the accounts. The Directors are required to prepare accounts for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit and loss for the financial year. In preparing the accounts, the Directors are required to select appropriate accounting policies and then apply them consistently, make judgments and estimates that are reasonable and prudent and state whether all accounting standards which they consider to be applicable have been followed, subject to any material departures disclosed and explained in the financial statements. The Directors also use a going concern basis in preparing the accounts unless this is inappropriate. Forward- Looking Statements This Report contains forward–looking statements that involve risks and uncertainties. Actual results, performance or achievements could differ materially from those expressed or implied in such forward–looking statements. Significant factors that could make a difference to Damas’s operations include domestic and international economic conditions affecting demand, supply and price conditions, foreign exchange fluctuations, changes in government regulations, tax regimes and other statutes.

3 (iv)

Acknowledgement Your Directors record their sincere appreciation of the encouragement, assistance and co-operation received from Shareholders, Government authorities, Banks and Customers. They thank them for the trust reposed in the Management and wish to thank all employees for their commitment and service.

For and on behalf of the Board Dubai (Tawhid Abdullah) 27 July, 2009 Managing Director

3 (v)

MANAGEMENT DISCUSSION AND ANALYSIS Economy The global economic crisis has not spared the Middle East. The extremely large fall in the price of oil is hitting the region hard. The deterioration in external financing conditions and reversal of capital inflows are also taking a toll: local property and equity markets have come under intense pressure across the region, domestic liquidity conditions have deteriorated, credit spreads have soared for some firms, financial system strains have emerged in a number of countries, and sovereign wealth funds have suffered losses from investments in global markets. The International Monetary Fund in its World Economic Outlook 2009 expects a contraction in the GDP, the second-largest in the Arab World after the Saudi economy. In the United Arab Emirates (UAE), where the exit of external funds (which had entered the country on speculation of a currency revaluation) has contributed to a large contraction in liquidity, a sizable fall in property and equity prices, and substantial pressure in the banking system. A major financial center, UAE will also suffer from the contraction in global finance and merger and acquisition activity. Extracts from Statement by His Excellency Sultan N. Al-Suwaidi Governor of the Central Bank of the United Arab Emirates at International Monetary and Financial Committee Meeting on Saturday, April 25, 2009 is given below: Growth in the region is projected to slow sharply to 2.5 percent before picking up in 2010, although growth outcomes will be different across countries. For oil exporting GCC countries, the decline in oil GDP resulting from OPEC cuts is likely to be offset by robust growth in non oil GDP. Financial buffers accumulated during the boom years as well as much strengthened policy and macroeconomic frameworks in many Arab countries allow the scope for supportive policies to cushion the impact of the crisis. In several countries, high government spending is deployed to support domestic demand and mitigate the impact of retrenchment in private sector activity. Where liquidity pressures emerged, central banks across the region have acted swiftly by providing liquidity and lowering reserve requirements. Countries with pegged exchange rates have additionally benefited from the continued monetary easing in the U.S., further reinforcing the stabilizing role of the exchange rate peg in oil producing economies. Policy responses in the financial sector have also been swift with measures aimed to shore up confidence and prevent systemic banking crises. Looking ahead, governments stand ready to provide additional support as needed to shield the financial sector and domestic activity from further deterioration in global conditions. But in a study last month, the National Bank of Kuwait (NBK) ruled out a contraction in the UAE's real GDP on the grounds the drop in oil production and prices would be offset by modest growth in the non-oil sector. The UAE economy is expected to grow by four per cent in real terms in 2009 despite the downward pressure of the global credit crunch and a steep cut in its oil production, as per the forecast by the Arab Monetary Fund (AMF) which is the latest in a series of projections about the UAE economy. It also expects inflation in the UAE to decline to between six and eight per cent this year from a record 14 per cent in 2008. According to estimates by the UAE Ministry of Economy, the nominal GDP jumped by at least 27 per cent to a record Dh929.4 billion in 2008 from Dh729.bn in 2007. The non-oil sector shot up by 23.5 per cent. The figures showed the high growth was also a result of a surge in capital investments, which climbed to a record Dh251.4bn from Dh155.9bn How ever it might be understood that the economy has to go through a phase of consolidation, both domestically and internationally. Cautious optimism for the remaining quarters for the year is advocated by experts. Source: World Economic Outlook (WEO) 2009 from IMF and UAE Interact the official website of UAE Industry The World Gold Council (WGC) confirms that the market remains healthy compared to global markets. WGC's latest reports announced that the UAE gold jewellery sales increased by 17% in 2008 to cross Dh13.7 billion compared to Dh11.4 in 2007. While jewellery accounts for 90% of total consumer demand, net retail investment witnessed strong growth of 38% in the last quarter of 2008 compared to the same period of the previous year. Tonnage gold demand in the first quarter of 2009 was up a strong 38% on the levels of a year earlier. In $US value terms, this represented a 36% rise to $29.7bn. Global economic conditions continued to take their toll on jewellery and industrial demand while underpinning safe haven demand from investors.

3 (vi)

The gold price averaged $US908.41 during Q1, down 2% on the Q1 2008 average. However, this relatively flat result in $US terms masks significant gains in local currency terms for consumers in several key countries, including India and Turkey. The biggest source of growth in demand for gold was investment. Identifiable investment demand reached 595.9 tonnes in Q1, up 248% from 171.3 tonnes in Q1 2008. Taking into account inferred investment, which in the first quarter largely reflected investor flows into bullion accounts, total investment off-take reached 711.2 tonnes, up 173% on the levels of a year earlier. Global jewellery sales will grow at 4.6 per cent on year-to-year basis to touch $185 billion in 2010 and $230 billion in 2015. Palladium is expected to establish itself as an alternative metal for jewellery fabrication while gold and jewellery will continue to dominate the market together, accounting for about 82 per cent of overall market share. Diamond jewellery will be the slowest growing segment at a compound growth rate of 3.3 per cent and will attain a size of $95 billion by 2015. However, demand for polished diamonds will be higher at 4.2 per cent. The Middle East will be a large market with close to 9 per cent of global jewellery sales by 2015. The crisis in the diamond industry has hit bottom, and the industry can now look forward to growth, according to DeBeers. Global diamond markets continue to stabilize with prices slowly solidifying against a shortage of supplies in the market. Buyers are resisting the new, higher prices as they are still unwilling to pay them. There is particular strength in medium to high quality rounds in the 1.00 ct range. The new diamond supply is estimated to be down 15% by volume, 45% by value, Global diamond production in 2009 will run at about 85 percent of production in 2008. Sources: WGC; Business Intelligence - Tacy Ltd. forecast: 2009; The KPMG Report on ‘The Global Gems and Jewellery’ Business Overview The Group is operating in18 countries with 514 stores as at 31 March 2009, and the leading jewellery and watch retailer in the Middle East, based on number of stores. As at 31 March 2009, the Group’s network of retail outlets included 277 operated through subsidiaries predominantly in the GCC countries and Italy; 65 operated through subsidiaries in the other Middle East countries, North Africa, Europe and other regions. The Group’s stores offer its own branded products as well as products sold under leading global and regional luxury brands. The Group sells jewellery and watches through three main distinctive store formats, each of which is tailored to a specific type of customer. As at March 2009, these included:

• Les Exclusive stores, 68 in total, which cater to high net worth consumers through products that include some of the world’s most exclusive luxury brands, for jewellery and watches, and some of the Group’s own brands;

• Semi- Exclusive stores, 227 in total, which cater principally to upper-middle income consumers such as

tourists and expatriate professionals and office workers, through products that include well known international jewellery brands of wider appeal, in addition to regional brands and the Group’s own labels; and

• Damas 22K stores, 133 in total, which cater mostly to middle income and working class immigrant

populations, primarily of South Asian origin, and primarily offer jewellery under the Group’s own brands and regional brands.

In addition to the three principal store formats, the Group has other stores, 86 in total, such as watch stores and mono-brand stores, as well as Damas Kids for children and duty- free shops. The Group also sells loose diamonds and gold and diamond jewellery on a wholesale basis to other jewellery retailers, including those in other Middle Eastern countries, as well as individual business owners and small family-owned local jewelers. The Group sources gold bullion primarily from bullion banks, finished unbranded jewellery mainly from suppliers in the UAE and direct overseas suppliers in Italy , India, Singapore, Saudi Arabia and Bahrain etc, and international brands from large international jewellery businesses. The Group also makes corporate sales to business clients throughout the Middle East.

3 (vii)

The Group’s manufacturing capabilities encompass the entire manufacturing cycle – from design to manufacturing and branding. The Group manufactures a portion of the branded and unbranded jewellery sold in its stores, either directly through its own facilities or indirectly through shared facilities. Realizing the impact of current economic scenario in Group’s business, your Company has initiated a lot of cost saving measures, including controlled expensing in general administration and selling and distribution by maximum utilization of resources with commendable co-operation from employees. Our Strength Management believes that the primary competitive factors beneficial to the Group’s operations are brand strength (reputation for reliability and trust), marketing, pricing, product variety, quality of sales personnel, service and convenience and visibility of store locations. Risks and Uncertainties The retail jewellery market in the regions in which the Group operates is highly fragmented and presents significant challenges to new entrants. Among the most important of these barriers to entry are the difficulties of securing retail store locations and competition from the numerous other retailers. The Group analyses its competitors according to the number of stores they operate, as well as their customer base, estimated sales, product types, marketing activities and estimated foot fall. The Group’s primary competition is presented by regional retail and wholesale jewellery chains that sell to customers targeted by each of the Group’s store formats. To a lesser extent, the Group also faces competition from a number of small, local family owned businesses. Risks are also present in the form of certain investments in subsidiaries or JCEs in different geographical areas coming under the influence of economic conditions prevalent in those geographic areas. Risk Management Your company has developed a risk management system for the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to monitor, control and minimize the probability and/or impact of unfortunate events. Risks can come from uncertainty in financial markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters. Statements in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates and expectations may be forward-looking. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.

For and on behalf of the Board Dubai (Tawhid Abdullah) 27 July, 2009 Managing Director

3 (viii)

CORPORATE GOVERNANCE Damas Group is committed to the adoption of best governance practices and its adherence in both letter and spirit, at all times. Our governance practices stem from an inherent ethical practice and transparency in transactions coupled with high morale and Corporate Social Responsibility. Your Company also complies with the Corporate Governance requirements provided under legal and regulatory mechanism. The details of Compliances are as follows. Governing body The Company has an effective Board of Directors to lead and Control the Company headed by a Chairman who is responsible for the leadership of the Board. At present the Board is comprised of ten Directors out of which five Directors are Non Executive Independent Directors, two Directors are Non Executive Non Independent Directors and three Executive Directors. The Office of Chairman of the Board is different from the Office of the Managing Director of the Company. The Chairman of the Board is a Non Executive Director. The Board of Directors is properly balanced and the Board Members are adequately qualified and experienced to ensure that no individual or small group of individuals can dominate the Board’s decision making. Moreover the division of responsibilities of the Directors are clearly established and recorded by the Board. The Board focuses on the overall objectives, strategy and policy issues of the Group and is responsible for approving acquisitions and divestments, major capital expenditure projects, considering Group budgets, dividend policy etc. The Management is responsible for implementation of the decisions taken by the Board and various other Committees of the Board and also for the day-to-day affairs of the Business. Meetings of the Board of Directors The Board of Directors of the Company duly met seven times during the Financial Year 2008-09 on 14 February 2008, 28 May 2008, 8 June 2008, 18 September 2008, 22 December 2008, 12 March 2009 and 25 March 2009 to effectively discharge its duties. The Company strives as far as practicable to provide the Directors, detailed agenda well in advance of the Board Meetings so that the Board can take well informed decision in the best interest of the Company. The following table sets out the number of meetings of the Board during the Financial Year 2008-09 together with the details of attendance:

Date of the Board Meeting

Director 14

Feb, 2008

28 May, 2008

08 Jun, 2008

18 Sep, 2008

22 Dec, 2008

12 Mar, 2009

25 Mar, 2009

Mr. Tawfique Abdullah P P P P P P P Mr. Tawhid Abdullah P P P P P P P Mr. Tamjid Abdullah P P P P P P P H.E. Mohamed Alabbar # NA NA NA A P A A H.E. Aamer Abdul Jalil Mohammed Al Fahim # NA NA NA P A A P Dr. Gaetano Cavalieri # NA NA NA P P P P Mr. John Harper # NA NA NA P P P P Dr. Maryam Matar # NA NA NA P P A P Mr. Abdulla Nasser H Al Mansouri * # NA NA NA P A A A Mr. Essam Abdulkadir Al Muhaidib # NA NA NA A P P A Mr. Ammar A. Alkhudairy # NA NA NA P P A P P = Present, A= Absent, NA = Not Applicable, # = Appointed as Director with effect from 08 July, 2008 * = Resigned effective 05 March, 2009

3 (ix)

Directors’ Remuneration

Director Sitting Fees (AED)

Fixed Remuneration (AED)

Mr. Tawfique Abdullah 40,000 471,667 Mr. Tawhid Abdullah Nil Nil Mr. Tamjid Abdullah Nil Nil H.E. Mohamed Alabbar 10,000 Nil H.E. Aamer Abdul Jalil Mohammed Al Fahim 20,000 Nil Dr. Gaetano Cavalieri 40,000 183,333 Mr. John Harper 40,000 220000 Dr. Maryam Matar 30,000 Nil Mr. Essam Abdulkadir Al Muhaidib 20,000 Nil Mr. Ammar A. Alkhudairy 30,000 Nil The remuneration of Mr. Tawhid Abdullah (Managing Director) and Mr. Tamjid Abdullah (Deputy Managing Director) has not yet been decided by the Board. Audit Committee The Board of Directors has constituted the Audit Committee with the following members:

1. Dr Gaetano Cavalieri- Independent Director 2. Mr John Harper- Independent Director 3. H.E. Aamer Abdul Jalil Mohammed Al Fahim – Director

Dr Gaetano Cavalieri is the Chairman of the Committee and the Company Secretary acts as the Secretary to the Committee. The Committee monitors and reviews the effectiveness of the Company’s internal audit function, financial reporting and internal control policies and procedures for the identification, assessment and reporting of risks, reviews the management of financial matters and focuses upon the freedom allowed to the internal auditors; monitors the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance, considers and makes recommendations to the Board as regards the appointment, removal and terms of engagement of the Company’s external auditors; keeps under review the consistency of accounting policies both on a year to year basis and across the group companies; reviews on a regular basis its own performance, constitution, and terms of reference to ensure it is operating at maximum effectiveness, give due consideration to the requirements of the Offered Securities Rules of the DFSA Rulebook etc. Details of the terms of reference of the Audit Committee are available at the website of the Company www.damasjewellery.com. Since the Committee was formally constituted only in the Month of September2008 and the Committee Members took some time to cope up with the terms of reference, their duties and responsibilities, the Committee could not hold a formal meeting in the Financial Year 2008-09 but informally met with the External Auditors to review the scope of Audit and related matters. Moreover the Committee formally met on 26 July, 2009 to consider the Financial Results for the Financial Year 2008-09 and all the Committee Members except H.E. Aamer Abdul Jalil Mohammed Al Fahim were present therein. Remuneration Committee The Board of Directors has constituted the Remuneration Committee with the following members:

1. Dr Gaetano Cavalieri- Independent Director 2. Mr John Harper- Independent Director 3. Mr. Ammar A Alkhudairy- Independent Director

Dr Gaetano Cavalieri is the Chairman of the Committee and the Company Secretary acts as the Secretary to the Committee. As per the terms of reference of the Committee the Chief Executive and Human Resources Manager of the Company have right to attend and speak at meetings of the Committee.

3 (x)

The Committee determines and agrees with the Board the framework for Board policy for the remuneration of the Directors, the Company's Chief Executive, the Chairman of the Company. The Committee also within the terms of the agreed policy determines the total individual remuneration package of each director and also makes recommendations for the remuneration of the executive directors of the Company in consultation with the Chief Executive and the Chairman of the Board. Details of the terms of reference of the Remuneration Committee are available at the website of the Company www.damasjewellery.com. The Committee held its first meeting on 25 March, 2009 and all the Committee Members were present therein. Nomination Committee The Board of Directors has constituted the Nomination Committee with the following members:

1. Dr Gaetano Cavalieri- Independent Director 2. Mr John Harper- Independent Director 3. Mr. Ammar A Alkhudairy- Independent Director 4. Mr. Tawfique Abdullah – Director and Chairman of the Board 5. Mr. Tawhid Abdullah – Managing Director

Dr Gaetano Cavalieri is the Chairman of the Committee and the Company Secretary acts as the Secretary to the Committee. As per the terms reference of the Committee the Chief Executive and Human Resources Manager of the Company have right to attend and speak at meetings of the Committee. The Committee reviews the structure, size and composition of the Board and makes recommendations to the Board with regard to any adjustments that are deemed necessary, makes recommendations to the Board as regards plans for succession, in particular, of the Chairman and Chief Executive of the Company, as regards the re-appointment of any non-executive director at the conclusion of his or her specified term of office, concerning the re-election by shareholders of any director under the retirement by rotation provisions in the Company's Articles of Association, concerning any matters relating to the continuation in office of any directors at any time and related issues. Details of the terms of reference of the Nomination Committee are available at the website of the Company www.damasjewellery.com. The Committee held its first meeting on 25 March, 2009. All the Committee Members except Mr. Tawhid Abdullah were present at the Meeting. Other Committees In addition to the above committees, the Company has formed the following Committees of Directors and/ or Executives for smooth functioning of the Group Committee for Development of Corporate Strategic Plan Present Committee Members

i. Mr Tawfique Abdulla - Chairman of the Committee ii. Dr Mariam Matar

The Committee was formed to frame corporate strategic plan including Corporate Social Responsibilities. Risk Management Committee Present Committee Members

i. Mr Tawhid Abdulla - Chairman of the Committee ii. Mr Ammar A. Alkhudairy iii. Mr PK Dutta, CFO

The Committee was formed to assess from time to time the impact of gold price volatility, changing conditions of financial markets etc on the Group’s Business. The Committee held one meeting during the Financial Year on 08 February, 2009 where all the Members of the Committee were present. The details of risk management process for the group are given under “Management Discussion and Analysis”.

3 (xi)

Committee for making Damas Shares more Liquid

Present Committee Members

i. Mr Tawhid Abdulla, ii. H.E. Aamer Abdul Jalil Mohammed Al Fahim

The Committee was formed to explore the possibility of dual listing to make the shares of the Company more liquid. Executive Committee Present Committee Members

i. Mr Tawhid Abdulla, ii. Mr Tamjid Abdulla iii. Mr Ammar A. Alkhudairy iv. Mr Essam Abdulkadir Al Muhaidib

The Committee was formed to approve and authorize new investments or projects in excess of AED 15,000,000/- but not exceeding AED 50,000,000/- involving one transaction or a series of transactions. Shares buy back Committee Present Committee Members 1. Mr. Tawhid Abdullah – Chairman of the Committee 2. Mr. Tawfique Abdullah 3. Mr. Tamjid Abdullah 4. Mr. Ammar A. Alkhudairy This Ad hoc Committee was formed by the Board to consider and whenever possible to implement the decision of the Directors and Shareholders to buy back the shares of the Company. The Committee held its meeting on 11th March, 2009 where all the Members of the Committee were present. General Meetings During the Financial Year the Company held six Extra Ordinary General Meetings on 12 May, 2008, 28 May, 2008, 1 June, 2008, 8 June, 2008 (two meetings) and 8 February, 2009. The Board has decided to hold the Annual General Meeting on 9 September, 2009 wherein all the Directors will submit themselves for re appointment by the Shareholders of the Company. Financial Reporting and disclosure The Board of Directors strives to ensure a sound system of internal control to safeguard the Company’s assets and shareholders interest. The Company has a separate internal audit department with qualified personnel and the department is headed by a Senior Manager who directly reports to the Managing Director/ Chief Executive Officer of the Company. The Audit Committee and Board of Directors reviews the functions of the internal audit department. The Board further strives to present an understandable assessment when carrying any financial reporting or disclosures to different stake holders. Insider Trading The Company takes all reasonable steps to avoid the risk of insider trading. The Company’s Directors and staffs are well aware about the Company’s policy in handling of insider information.

3 (xii)

Listing information Date of Listing 8 July, 2008 Stock Exchange where Company’s shares are listed

NASDAQ Dubai (Formerly Dubai International Financial Exchange)

Trade symbol DAMAS ISIN AEDFXAOQ3724 Registrar NASDAQ Dubai Limited (formerly Dubai

International Financial Exchange Limited) Status of Listing fees Paid up to date Share holding pattern as on 31 March, 2009 Category of Shareholders Number of

Shares held % of shares

held Principal Shareholders 698,018,659 70.56 NASDAQ Dubai Guardian Ltd. As bare nominee of CSD Account Holders

291,209,350

29.44

Communications/ Relations with Shareholders The Company regularly disseminate relevant information, both financial and non financial, to the shareholders through appropriate means including market announcement through CANDI System of the Stock Exchange. It published its Un-audited Interim Condensed Consolidated Financial Statement for the period of six months ended on 30 June, 2008. The report was reviewed by the Auditors of the Company and published in the month of August, 2008. Your Directors encourage Shareholders participation in the General Meetings of the Company wherein they can directly interact with the Directors of the Company. More over the Company has established a separate Legal and Secretarial Department. The investors may contact the following official for information and/ or grievances. Mr. Prodyut Banerjee Investors’ Relations Officer Damas Corporate Finance Building 1st, Floor, Post Box- 1522 Dubai- UAE Ph-04 2015537 Fax- 04 2295195 E-mail: [email protected] Brief profile of the Directors: Mr. Tawfique Abdullah, Chairman, has been serving as Director of the Company since 14 April 2005. He has also been serving as Chairman of the Board of Damas LLC, the Wholly Owned Subsidiary of the Company, since 1980 and is responsible for monitoring Group strategies and mentoring the Executive Committee. Mr Abdullah is also a qualified gemologist and goldsmith. Mr Abdullah currently holds professional and active memberships with various reputable organisations such as the Dubai Gold & Jewellery Group, the World Diamond Council and the World Federation of Jewellery. Mr Abdullah has also served as Chief Executive Officer of the Dubai Metals and Commodities Centre and has been bestowed with the title of “Knighthood of Belgium”. In addition to his directorships of the Company, Damas LLC and Damas Jewellery LLC, Mr Abdullah is currently a member of the boards of several of the Group’s subsidiaries, associates and jointly controlled entities. He also serves as Vice Chairman of the Dubai Multi Commodities Centre. Mr. Abdullah, a Non Executive Director, is presently serving as the Chairman of the Board of Directors of the Company. He is holding 168,500,820 Ordinary Shares and 1 Deferred Share in the Company.

3 (xiii)

Mr. Tawhid Abdullah, Managing Director, has been serving as Director of the Company since 14 April 2005. He has also been serving as Managing Director of Damas LLC, the Wholly Owned Subsidiary of the Company for over 10 years and is responsible for finance and corporate functions as well as marketing and the gold wholesale business. Mr Abdullah, who has been instrumental in expanding Damas’s retail network and enhancing the “Damas” brand for over 25 years, is also a qualified gemologist. He has held various senior positions at jewellery companies, including Managing Director of Dubai Gold & Jewellery Group. Mr Abdullah was awarded “Best Entrepreneurial Mentor” by the Mohammad Bin Rashid Awards for young business leaders in June 2007. In addition to his directorships of the Company, Damas LLC and Damas Jewellery LLC, Mr Abdullah is currently a member of the boards of several of the Group’s subsidiaries, associates and jointly controlled entities. He is Currently Serving as the Managing Director and Chief Executive Officer of the Company. He is holding 177,685,023 Ordinary Shares and 1 Deferred Share in the Company. Mr.Tamjid Abdullah, Deputy Managing Director, has been serving as Director of the Company since 14 April 2005. He has also been serving as Deputy Managing Director of Damas LLC, the Wholly Owned Subsidiary of the Company for over 10 years and is responsible for the diamond division as well as the retail network. He has been instrumental in establishing the quality control and customer service departments of Damas Jewellery LLC. Mr Abdullah is also a qualified gemologist. For over three decades, Mr Abdullah has been recognised with numerous awards for jewellery design and craftsmanship including the De Beers Millennium Award for the Best Jewellery piece in 2000 and in 2004. He is also responsible for the Damas private jewellery brands such as Boudoor, Romance, Hayati and Jawaher. In addition to his directorships of the Company, Damas LLC and Damas Jewellery LLC, Mr Tamjid Abdullah is currently a member of the boards of several of the Group’s subsidiaries, associates and jointly controlled entities. He is currently serving as the Deputy Managing Director of the Company. He is holding 168,500,820 Ordinary Shares and 1 Deferred Share in the Company. H.E Mohamed Alabbar has been serving as Director of the Company since July 2008. He has also been serving as Director of Damas LLC, wholly owned subsidiary of the company since July 2005. Mr Alabbar is a graduate in Finance and Business Administration from Seattle University in the U.S. and was awarded an honorary doctoral degree in humanities from Seattle University in recognition of his notable achievements in business, economic development and public service in Dubai and throughout the Middle East region. Also in recognition of his achievements, FDI magazine, published by the Financial Times Group, recently named Mr Alabbar “Middle East Personality of the Year”. Mr Alabbar was ranked second in Arabian Business’ March 2007 list of the 100 Most Influential Arabs in the World, and Fortune magazine named Mr Alabbar among the top 30 in power positions globally in their December 2007 issue. In addition to his directorship of the Company, Mr Alabbar is the founding member and Chairman of Emaar Properties PJSC. He is also the Director General of the Dubai Department of Economic Development and a member of the Dubai Executive Council. Mr Alabbar serves on the board of directors of the Investment Corporation of Dubai, the investment arm of the Government of Dubai, and is a board member of Noor Investment Group, an affiliate of Dubai Group, the leading diversified financial company of Dubai Holding. Mr. Alabbar is a Non Executive Director. H.E. Aamer Abdul Jalil Mohammed Al Fahim has been serving as Director of the Company since July 2008. H.E. Al Fahim is a member of the executive committee of Damas LLC. H.E. Al Fahim is also the executive director of the Al Fahim Group and serves as a member of the UAE Federal National Council. H.E. Al Fahim is the chairman of Aradi Properties P.J.S.C. and serves as a director on the following boards: the Abu Dhabi Chamber of Commerce & Industry; Abu Dhabi Commercial Bank; Al Wathba Insurance Company; Al Qudra Holdings; Al Safwa Islamic Financial Services; and International Investment Bank (Bahrain). H.E. Al Fahim obtained a Master of Business Administration (Banking and Finance) from the University of Hull. Dr Gaetano Cavalieri has been serving as Director of the Company since July 2008. Dr Cavalieri has over 37 years of experience in the jewellery business, having served as President of his family jewellery company since 1972 and as President of the Italian Gold and Jewellery Wholesaler Federation since 1993. He also currently serves as Chief Financial Officer of the World Diamond Council. He has also served as a consultant to the Huadu Authority District People’s Government of Guangzhou and the China Chamber of Commerce for Precious Metals and Gemstones, and has served as a member of the Advisory Board of the Italian Institute of Foreign Trade and Commerce since 2001. Dr Cavalieri received his Ph.D. in Economics and Economic Policy from Catania University in 1979, and his master’s degree in Multi-criteria Decision Theory from Catania University and in Business Administration, Finance and International Marketing from Rotterdam University in 1986. Dr Cavalieri has received several industry awards, including the “Most Advanced Jewellery Marketing Project” from the Japanese Ministry of Industry, “The Best Programme to Penetrate the German Jewellery Market” award from the German Ministry of Commerce, and the “Youngest Foreign Managing Director” award from the Australian Ministry of Foreign Trade. Dr Cavalieri also serves on the board of the Italian General Trade Confederation and Mondimpresa S.c.r.l. Mr. Cavalieri is an Independent Director.

3 (xiv)

John Harper has been serving as Director of the Company since July 2008. Mr Harper has over 41 years of experience in the banking industry, having worked for HSBC Bank plc (“HSBC”) in various positions. When Mr Harper retired from HSBC at the end of 2006, he was Global Co-Head of the Retail Sector, Corporate, Investment Banking and Markets. He worked in the retail banking sector at HSBC for eight years, prior to which he served as Head of Property and Construction, Corporate Finance Director of the Oil and Energy Group, Manager of the Crocker Integration Project, Manager of Syndicated Loans in Hong Kong, and various other positions with HSBC in Bermuda, Beirut and Bahrain. Mr Harper became an Associate of the Chartered Institute of Bankers in 1969. He also currently serves as Trustee and Treasurer of HSBC Bank (UK) Pensioners’ Association Benevolent Fund and as Governor and Chairman of the Premises and Finance Committee of Eastbury Farm JMI School in Northwood, England. Mr. Harper is an Independent Director. Dr Maryam Matar has been serving as Director since July 2008. Dr Matar has over 10 years’ experience in the field of Health and Social Development. She is the founder and Executive Director of the UAE Genetic Disease Association (since 2005), and the founder and Executive Director of the UAE Down Syndrome Association (since 2006). Dr Matar also served as Executive Director of the Dubai Social Development Strategic Plan 2015, and was the Executive Team Leader for the Ministry of Health Strategy 2008-2012. From 2006 to 2008, Dr Matar served as Undersecretary to the Minister of Health for Public Health and Primary Health Care. Dr Matar obtained a bachelor’s degree in Medicine and Surgery from the Dubai Medical College in 1998. In recognition of her achievements, Dr Matar received the “Sheikh Rashid Award for Education Excellence” from the Dubai Faculty of Medicine in 1999, the “Dubai Quality Award for Best Employee” from the Dubai Department of Health in 2003, the “Best Community Project Award” from the Sheikh Mohammed Bin Rashid Leadership Programme in 2004 and the “Emirate Business Women Award for Professional Excellence” from the Dubai Quality Group in 2005.Mrs. Matar is an Independent Director. Mr Essam Abdulkadir Al Muhaidib has been serving as Director of the Company since July 2008. Mr Al Muhaidib is the Group Managing Director of A.K. Al Muhaidib and Sons Group, one of the major conglomerates in Saudi Arabia. Mr Al Muhaidib, who holds a bachelor’s degree in Statistics from King Saud University in Saudi Arabia, is also on the board of directors of several companies in the areas of banking and insurance, retail, construction and real estate, including Emmar Middle East, United Sugar Company (THIMAR), Amwal Al Khaleej and Middle East Paper Company. Mr Al Muhaidib is also on the board of several educational and charitable organisations. Mr. Al Muhaidib in an Independent Director Mr Ammar A. Alkhudairy has been serving as Director of the Company since July 2008. Mr Alkhudairy has over 20 years of management experience, principally in the fields of merchant, investment and corporate banking and venture capital. Mr Alkhudairy is a founding partner of Amwal Al Khaleej Commercial Investment Company in Saudi Arabia, and currently serves as its Managing Director. Prior to his position with Amwal Al Khaleej, Mr Alkhudairy served as Regional Manager of Banque Saudi Fransi from October 2001 to September 2004. Before his position with Banque Saudi Fransi, Mr Alkhudairy served as Manager of the Riyadh Corporate Bank for United Saudi Bank from April 1995 to May 1999, and Vice President and Chief Operating Officer of Tawteen Trading Company, a venture capital firm in Saudi Arabia, from January 1992 to March 1995. Before working with Tawteen Trading Company, Mr. Alkhudairy held the position of Assistant Manager in the Equity Investment Department of the Riyad Bank and High Commission for Development of Riyadh. Mr Alkhudairy received his master’s degree in Engineering Administration from George Washington University in Washington, D.C. in 1984, and his B.Sc. in Civil Engineering from George Washington University in 1983.Mr. Alkhudairy is an Independent Director.

For and on behalf of the Board

Dubai (Tawhid Abdullah) 27 July, 2009 Managing Director

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF DAMAS INTERNATIONAL LIMITED Report on the Financial Statements We have audited the accompanying consolidated financial statements of Damas International Limited (“the Company”) and its subsidiaries, associates and joint ventures (collectively referred to as “the Group”), which comprise the consolidated balance sheet as at 31 March 2009, and the consolidated income statement, consolidated cash flow statement and consolidated statement of changes in equity for the period then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the applicable provisions of the Companies Law pursuant to DIFC Law No. 3 of 2006. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of 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 financial statements based on our audit. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the shareholders of the company as a body, for our audit work, for this report, or for the opinions we have formed. 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 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 financial statements in order to design audit procedures that are appropriate for 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 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 at 31 March 2009, and its financial performance and its cash flows for the period then ended in accordance with International Financial Reporting Standards. Report on Other Legal and Regulatory Requirements We also confirm that, in our opinion, the consolidated financial statements include, in all material respects, the applicable requirements of the Companies Law pursuant to DIFC Law No. 3 of 2006. We have obtained all the information and explanations which we required for the purpose of our audit and, to the best of our knowledge and belief, no violations of the Companies Law pursuant to DIFC Law No. 3 of 2006 have occurred during the period which would have had a material effect on the business of the Company or on its financial position. Ernst & Young 27 July, 2009 Dubai

Damas International Limited and its Subsidiaries CONSOLIDATED INCOME STATEMENT For the period ended 31 March 2009

The attached notes 1 to 34 form part of these consolidated financial statements. 6

1 January 1 January 2008 to to 31 March 31 December 2009 2007 (15 months) (12 months) Notes AED’000 AED’000 (restated) Revenue 6,032,876 3,553,269 Cost of sales (4,916,386) (2,910,173) ────── ────── GROSS PROFIT FOR THE PERIOD / YEAR 1,116,490 643,096 General administration, selling and distribution expenses 6 (759,925) (431,984) Finance costs 7 (175,953) (107,620) Finance income 55,888 33,830 Share of results of equity accounted investments 8 46,326 42,261 (Loss) / gain on fair value of investments carried at fair value through profit or loss 13(b) (102,315) 12,459 Impairment loss on goodwill 11 (2,294) - Other income 9 48,696 17,084 ────── ────── PROFIT FOR THE PERIOD / YEAR 226,913 209,126 ══════ ══════ Attributable to: Shareholders of the Company 217,346 204,051 Minority interests 9,567 5,075 ────── ────── 226,913 209,126 ══════ ══════ Basic and diluted earnings per share (EPS) in AED 26 0.25 0.28 ══════ ══════

Damas International Limited and its Subsidiaries CONSOLIDATED BALANCE SHEET At 31 March 2009


2009 2007 Notes AED’ 000 AED’ 000 (restated) ASSETS Non current assets Property, plant and equipment 10 482,999 264,888 Goodwill 11 556,969 558,510 Intangible assets 12 74,818 56,223 Investments accounted for using the equity method 13(a) 398,180 376,798 Other financial assets 13(b) 72,928 181,351 Long term loans to related parties 17 102,964 111,701 ────── ────── 1,688,858 1,549,471 ────── ────── Current assets Inventories 14 2,023,202 1,497,704 Margin to trade payables against unfixed gold 14 440 9,339 Accounts receivable and prepayments 15 457,243 489,396 Bank balances and cash 16 1,081,495 1,364,679 Due from related parties 17 433,387 140,392 Other financial assets 19 558,816 21,081 ────── ────── 4,554,583 3,522,591 ────── ────── TOTAL ASSETS 6,243,441 5,072,062 ══════ ══════

Damas International Limited and its Subsidiaries CONSOLIDATED BALANCE SHEET (continued) At 31 March 2009


2009 2007 Notes AED’ 000 AED’ 000 (restated) EQUITY AND LIABILITIES Equity Share capital 20 3,633,932 2,699,131 Statutory reserve 21 99,064 72,564 Currency translation reserve 21 2,879 5,923 Retained earnings 409,075 309,067 Less: Equity transaction costs (7,006) - Less: Merger reserve (1,278,128) (1,278,128) ────── ────── Attributable to shareholders of the Company 2,859,816 1,808,557 Minority interests 23,751 51,264 ────── ────── Total equity 2,883,567 1,859,821 ────── ────── Non-current liabilities Interest bearings loans and borrowings 22 545,792 1,209,591 Long term loans from directors 23 150,000 150,000 Employees’ end of service benefits 23,679 16,672 ────── ────── 719,471 1,376,263 ────── ────── Current liabilities Interest bearings loans and borrowings 22 800,737 661,912 Accounts payable and accruals 24 1,597,060 818,444 Margin from trade receivables against unfixed gold 14 214,874 260,379 Due to related parties 17 27,732 95,243 ────── ────── 2,640,403 1,835,978 ────── ────── Total liabilities 3,359,874 3,212,241 ────── ────── TOTAL EQUITY AND LIABILITIES 6,243,441 5,072,062 ══════ ══════ The consolidated financial statements were authorised for issue on 27 July, 2009 by: On behalf of the Board of Directors Mr. Tawhid Abdulla Managing Director

Damas International Limited and its Subsidiaries CONSOLIDATED CASH FLOW STATEMENT For the period ended 31 March 2009


1 January 1 January 2008 to to 31 March 31 December 2009 2007 (15 months) (12 months) Notes AED’000 AED’000 (restated) OPERATING ACTIVITIES Profit for the period/year 226,913 209,126 Adjustments to reconcile profit before tax to net cash flows Non cash: Depreciation 10 54,645 31,408 Impairment loss on goodwill 11 2,294 - Intangible assets amortised 12 24,820 8,772 Provision for inventories 6 10,964 8,332 Provision for doubtful debts 6 14,908 - Provision for employees’ end of service benefits (net) 7,007 3,925 Advances / bad debts written off 6 14,746 1,703 Finance income (55,888) (33,830) Finance costs 7 175,953 107,620 Share of results of equity accounted investments 8 (46,326) (42,261) Unrealized gain on revaluation of forward contracts (231,988) (1,881) Loss/ (gain) on fair value of investments designated as fair value through profit or loss 13(b) 102,315 (12,459) Gain on disposal of investments designated as fair value through profit or loss 9 (251) (2,307) Dividend income from investments designated as fair value through profit or loss 9 (899) - Dividend income from available for sale investments 9 (1,808) - Loss / (profit) on disposal of property, plant and equipment 3,074 (95) Profit on sale of available for sale investments 9 (26) (390) Provision for Director’s sitting fees 1,105 - ────── ────── 301,558 277,663 Working capital adjustments: Inventories 355,785 272,968 Accounts receivables and prepayments (214) 76,438 Margin to trade payables against unfixed gold 8,900 152,443 Due from related parties (111,730) (51,636) Due to related parties (66,395) 11,573 Accounts payable and accruals (95,424) (1,078,806) Margin from trade receivables against unfixed gold (45,504) 183,602 ────── ────── Cash from (used in) operations 346,976 (155,755) Interest paid (168,086) (102,010) ────── ────── Net cash from (used in) operating activities 178,890 (257,765) ────── ────── INVESTING ACTIVITIES Purchase of property, plant and equipment (112,860) (84,708) Acquisition of vault business 4(iii) (17,767) - Additions to intangibles 12 (32,318) (21,604) Acquisition of subsidiaries, net of cash acquired (1,147) (4,093) Change in status to subsidiary, net of cash acquired 4(iv) (11,750) - Interest in joint ventures and associates acquired during the period/year (13,811) (12,749) Purchase of available for sale investments (1,377) (41,615) Purchase of held to maturity investments (1,000) - Purchase of investments designated as fair value through profit and loss account 13(b) (15,084) (97,474)

Damas International Limited and its Subsidiaries CONSOLIDATED CASH FLOW STATEMENT (continued) For the period ended 31 March 2009


1 January 1 January 2008 to to 31 March 31 December 2009 2007 (15 months) (12 months) Notes AED’000 AED’000 (restated) INVESTING ACTIVITIES (continued) Proceeds from disposal of property, plant and equipment 1,039 262 Proceeds from disposal of equity accounted investments - 918 Proceeds from disposal of available for sale investments 169 2,348 Proceeds from disposal of investments designated as fair value through profit and loss account 4,071 7,586 Proceeds from disposal of investments held to maturity 18,758 - Dividends received from investments designated as fair value 899 - through profit or loss Dividends received from available for sale investments 1,808 - Dividends received from equity accounted investments 33,139 4,228 Changes in the status to associate - 4,839 Corporate loan granted 19 (293,878) - Net foreign exchange differences 4,819 3,466 ────── ────── Net cash used in investing activities (436,290) (238,596) ══════ ═════ FINANCING ACTIVITIES Proceeds from issuance of ordinary shares net of equity transaction costs 927,795 - Term loans availed during the period/year 142,090 1,872,688 Term loans repaid during the period/year (797,880) (611,268) Net movement in trust receipts 83,323 (14,114) Net movement in local bills discounting 18,044 (5,733) Interest on fixed deposit 42,661 32,629 Fixed deposits placed under lien 357,423 (132,836) Directors’ drawings (311,076) (64,009) Dividend paid to shareholders 29 (90,839) (42,237) Net movement in minority interests (38,965) 8,433 Net movement in long term loan to related parties (2,846) (63,381) ────── ────── Net cash from financing activities 329,730 980,172 ────── ────── INCREASE IN CASH AND CASH EQUIVALENTS 72,330 483,811 Cash and cash equivalents at the beginning of the period/year 299,321 (184,490) ────── ────── CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD / YEAR 16 371,651 299,321 ══════ ══════

Damas International Limited and its Subsidiaries CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the period ended 31 March 2009


Attributable to share holders of the Company ────────────────────────────────────────────────────────────────────────────────────────────────

Currency Equity Share Statutory translation Retained transaction Merger Minority Total capital reserve reserve earnings costs reserve Total interests equity AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 At 1 January 2008 2,699,131 72,564 5,923 309,067 - (1,278,128) 1,808,557 51,264 1,859,821 ────── ────── ────── ────── ────── ────── ────── ────── ────── Currency translation adjustment - 1 (3,044) - - - (3,043) - (3,043) ────── ────── ────── ────── ────── ────── ────── ────── ────── Total income and expense for the period recognised directly in equity - 1 (3,044) - - - (3,043) - (3,043) Profit for the period - - - 217,346 - - 217,346 9,567 226,913 ────── ────── ────── ────── ────── ────── ────── ────── ────── Total income and expense for the period - 1 (3,044) 217,346 - - 214,303 9,567 223,870 Transfer to Statutory reserve 26,499 - (26,499) - - - - - Minority interest acquired on business combination - - - - - - - 1,885 1,885 Proceeds from issue of share capital 934,801 - - - (7,006) - 927,795 - 927,795 Other movements, net - - - - - - - (38,965) (38,965) Dividends paid (refer note 29) - - - (90,839) - - (90,839) - (90,839) ────── ────── ────── ────── ────── ────── ────── ────── ────── At 31 March 2009 3,633,932 99,064 2,879 409,075 (7,006) (1,278,128) 2,859,816 23,751 2,883,567 ========= ========= ========= ========= ========= ========= ========= ========= =========

Damas International Limited and its Subsidiaries CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) For the period ended 31 March 2009


Attributable to shareholders of the company ────────────────────────────────────────────────────────────────────────────────────────────────

Currency Share Statutory translation Retained Revaluation Merger Minority Total capital reserve reserve earnings reserve reserve Total interests equity AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 At 1 January 2007 3 - - - - - 3 - 3 Acquisition of Damas LLC (note 5(i)) 2,699,128 52,240 (766) 224,735 1,119 (1,278,128) 1,698,328 25,369 1,723,697 ────── ────── ────── ────── ────── ────── ────── ────── ────── At 1 January 2007, as restated 2,699,131 52,240 (766) 224,735 1,119 (1,278,128) 1,698,331 25,369 1,723,700 Currency translation adjustment - - 6,878 - - - 6,878 - 6,878 Fair value adjustment on business combination - 75 5 - - - 80 - 80 Change in status to associate - - (194) - (1,119) - (1,313) - (1,313) ────── ────── ────── ────── ────── ────── ────── ────── ────── Total income and expense for the year recognised directly in equity - 75 6,689 - (1,119) - 5,645 - 5,645 Profit for the year - - - 204,051 - - 204,051 5,075 209,126 ────── ────── ────── ────── ────── ────── ────── ────── ────── Total income and expense for the year - 75 6,689 204,051 (1,119) - 209,696 5,075 214,771 Transfer to statutory reserve - 20,249 - (20,249) - - - - - Minority interest acquired on business combination - - - - - - - 327 327 Other movements, net - - - - - - - 20,493 20,493 Dividends paid (refer note 29) - - - (99,470) - - (99,470) - (99,470) ────── ────── ────── ────── ────── ────── ────── ────── ────── At 31 December 2007 2,699,131 72,564 5,923 309,067 - (1,278,128) 1,808,557 51,264 1,859,821 ════════ ════════ ════════ ════════ ════════ ════════ ════════ ════════ ════════

Damas International Limited and its Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2009

13

1 ACTIVITIES Damas International Limited (“the Company”) is a company limited by shares and incorporated in the Dubai International Financial Center (the “DIFC”) on April 14, 2005 as per certificate of incorporation no. 0038 issued by the Registrar of Companies, the DIFC. The Company and its subsidiaries constitute the Group (‘the Group’). The Company's registered office is at P.O. Box 1522, 3rd Floor, New Gold Center, Suite No. 57/58, Deira, Dubai, UAE. The Group is primarily involved in the business of trading in gold and gold jewellery, diamond jewellery, pearls, watches, silver and precious stones on wholesale and retail basis. The consolidated financial statements of the Company as at 31 March 2009 comprise the Company and the subsidiaries (together referred to as the "Group") and the Group's interest in associates and jointly controlled entities. On 8 June, 2008 Damas LLC former parent company of the Group controlled by the Founding Shareholders and trading under the name “Damas” underwent a corporate reorganisation, whereby Damas LLC became a subsidiary of the Company through the exchange of shares of the Company for shares held by the Founding Shareholders and minority shareholders in the Company (the “Share Swap”). (Refer note 5(i)). The Share Swap was effected primarily in order to establish the Company as the parent company of the Group in preparation for a listing of the Company’s shares on the DIFX. The Company made an initial public offer of 233,845,546 shares of USD 1 each to the public and green shoe option of 20,625,980 shares of USD 1 each; The Company was listed on the Dubai International Financial Exchange (“DIFX”) with effect from 8 July 2008. On 22 December 2008, the Board of Directors of the Company passed a resolution to change the financial year end from December to March. Consequently, the current period financial statements have been prepared for a 15 month period from January 2008 to March 2009. Accordingly, amounts for the consolidated income statement, consolidated balance sheet, consolidated cash flow statement and statement of changes in equity and related notes are not directly comparable. 2.1 BASIS OF PREPARATION Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as issued by International Accounting Standards Board (IASB). Accounting convention The consolidated financial statements have been prepared under the historical cost convention modified to include the measurement at fair value of: • Derivative financial instruments; • Financial instruments at fair value through profit or loss; and • Available for sale financial assets. Functional and presentation currency The presentation currency of the consolidated financial statements is United Arab Emirates Dirhams (AED), as a significant proportion of the Group’s assets, liabilities, income and expenses are AED or denominated in United States Dollars (USD), to which the AED is pegged. However, certain subsidiaries have functional currencies other than AED, in which case the respective local currency is the functional currency and the AED is the presentation currency. The consolidated financial statements are presented in AED and all values are rounded to the nearest thousand (AED ’000) except where otherwise stated. Basis of consolidation Subsidiaries The consolidated financial statements incorporate the financial statements of the Company and each of its controlled subsidiaries as at 31 March 2009. The financial statements of subsidiaries are prepared for the same reporting period as the Company and where necessary, adjustments are made to the financial statements of the Group’s subsidiaries to bring their accounting policies into line with those of the Group. The Group’s investments in certain subsidiaries are held by certain directors and related parties for the beneficial interest of the Group.


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2.1 BASIS OF PREPARATION (continued) Basis of consolidation (continued) Subsidiaries (continued) Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the group. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group balances and transactions, including unrealised profits, have been eliminated in full on consolidation. When a partial disposal of a subsidiary is made, the minority interests is increased by the carrying amount of the net identifiable assets that are attributable to the minority interest due to a decrease in the Company’s interest. A gain or loss is recognised as the difference between the proceeds of the sale, net of the incidental costs, and the amount of net assets attributed to the minority interest. Minority interests represent the portion of profit or loss and net assets not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from the Group’s equity and income statement. Losses attributable to minority interests in excess of the minority’s interest in the net assets of the subsidiary are adjusted against the interest of the group unless there is a binding obligation on the part of the minority to contribute additional investment in the subsidiary. Where the Company acquires minority interest in subsidiaries, the Company uses the parent entity extension method under which the transaction is treated as an equity transaction. Under this method, the assets and liabilities of the subsidiary are not remeasured to reflect their fair values at the date of the transaction but goodwill is adjusted for the change in the minority interests share in the net assets of the subsidiary. Refer to note 33 for details of subsidiaries. Equity accounted associates not carried at fair value through profit or loss The Group’s investment in its associates and jointly controlled entities is accounted for using the equity method of accounting. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. A jointly controlled entity is one, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. Investments in associates and jointly controlled entities are carried in the balance sheet at cost, plus post-acquisition changes in the Group’s share of net assets of the associate or the jointly controlled entity, less any impairment in value. The income statement reflects the Group’s share of the results of its associates and jointly controlled entities. Where there has been a change directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised gain and losses resulting from transactions between the Group and associate and joint controlled entities are eliminated to the extent of the interest in the associate and joint controlled entities. The financial statements of the associate and joint controlled entities are prepared for the same reporting period as the parent company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each balance sheet date whether there is any objective evidence that the investment in the associate/joint controlled entity is impaired. If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate /joint controlled entity and its carrying value and recognises the amount in the income statement. The Group’s investment in certain associates and jointly controlled entities is held by certain Directors and related parties for the beneficial interest of the Group. Details of the Group’s associated companies and jointly controlled entities are given in note 34.


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2.1 BASIS OF PREPARATION (continued) Statement of compliance The consolidated financial statements of the Company and its subsidiaries are prepared in accordance with International Financial Reporting Standards (IFRS) and include International Financial Reporting Interpretation Committee (IFRIC) interpretations. Changes in accounting policies and disclosures The accounting policies adopted are consistent with those used in the previous financial year except for the adoption of new standards and interpretations as noted below: Early adoption of Standards and Interpretations IAS 23 Borrowing Costs The Group has early adopted IAS 23 (Revised) Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009). The principal change to the Standard, which was to eliminate the previously available option to expense all borrowing costs when incurred, has no impact on these consolidated financial statements because it has always been the Group’s accounting policy to capitalise borrowing costs incurred on qualifying assets. Standards, amendments and interpretations effective in 2008 but not relevant to the Group’s operations The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 January 2008 but they are not relevant to the Group’s operations: - 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 Requirements and their

Interaction’ IASB Standards and Interpretations in issue but not yet effective and not early adopted by the Group The following IASB Standards and Interpretations were in issue as of 31 March 2009 but are not yet effective, and have not been early adopted by the Group: IFRS 2 ‘Share-based Payment – Vesting Conditions and Cancellations’ The IASB issued an amendment to IFRS 2 in January 2008 and becomes effective for annual periods commencing on or after 1 January 2009. The standard has been amended to clarify the definition of a vesting condition and prescribes the treatment for an award that is effectively cancelled. The amendment will have no impact on the financial position or performance of the Group. IFRS 3 Business Combinations and IAS 27 Consolidated and separate financial statements A revised IFRS 3 Business Combinations and a revised IAS 27 Consolidated and separate financial statements are effective from 1 July 2009. These revisions to IFRS 3 and IAS 27 impact the manner in which business combinations are identified and accounted for. The revised IAS 27 will impact the Group, when its percentage holdings in subsidiaries decrease or increase without resulting in a loss of control, by taking the gains and losses directly to equity instead of through the consolidated income statement. Further, there is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The revisions will have no impact on the financial position or performance of the Group. IFRS 8 Operating Segments IFRS 8 Operating Segments was issued in November 2007 and becomes effective for annual periods commencing on or after 1 January 2009. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. The new standard may require changes in the way the Group discloses information about its operating segments.


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2.1 BASIS OF PREPARATION (continued) IASB Standards and Interpretations in issue but not yet effective and not early adopted by the Group (continued) IAS 1 Revised Presentation of Financial Statements The revised standard was issued in September 2007 and becomes effective for financial years beginning on or after 1 January 2009. The standard separates owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with non-owner changes in equity presented as a single line. In addition, the Standard introduces the statement of comprehensive income: it presents all items of recognised income and expense, either in one single statement, or in two linked statements. The Group is still evaluating whether it will have one or two statements. The application of the standard will result in amendments to the presentation of consolidated financial statements. IAS 20 Accounting for Government Grants and Disclosure of Government Assistance An amended IAS 20 Accounting for Government Grants and Disclosure of Government Assistance was issued in May 2008 and becomes effective for annual periods commencing on or after 1 January 2009. The standard has been amended to include the benefit of a below market rate government loan to be measured as the difference between the carrying amount in accordance with IAS 39, ‘Financial instruments: Recognition and measurement’, and the proceeds received with the benefit accounted for in accordance with IAS 20. The amendment will have no impact on the financial position or performance of the Group. IAS 27 Consolidated and separate financial statements The amendment to IAS 27 requires all dividends from a subsidiary, jointly controlled entity or associate to be recognised in the income statement in the separate financial statement. This revision will be effective for financial years beginning on or after 1 January 2009. The revision will have to be applied prospectively. The amendment will have no impact on the financial position or performance of the Group. IAS 29 Financial reporting in hyperinflationary economies The amendment to the standard was issued in May 2008 and becomes effective for annual periods commencing on or after 1 January 2009. The standard has been amended to reflect the fact that a number of assets and liabilities are measured at fair value rather than historical cost. The amendment will have no impact on the financial position or performance of the Group. IAS 32 (Amendment), ‘Financial instruments: Presentation’, and IAS 1 (Amendment), ‘Presentation of financial statements’ – ‘Puttable financial instruments and obligations arising on liquidation’ An amended IAS 32 Financial Instruments: Presentation and IAS 1, Presentation of financial statements - Puttable Financial Instruments and Obligations Arising on Liquidation were issued in February 2008 and become effective for annual periods commencing on or after 1 January 2009. The standards have been amended to allow a limited scope exception for puttable financial instruments to be classified as equity if they fulfill a number of specified criteria. The amendment will have no impact on the financial position or performance of the Group. IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items These amendments to IAS 39 were issued in August 2008 and become effective for financial years beginning on or after 1 July 2009. The amendment addresses the designation of a one-sided risk in a hedged item, and designation of inflation as a hedged risk or portion in particular circumstances. It clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. The amendment will have no impact on the financial position or performance of the Group. IFRIC 13 Customer Loyalty Programmes IFRIC Interpretation 13 was issued in June 2007 and becomes effective for annual periods beginning on or after 1 July 2008. This interpretation requires customer loyalty award credits to be accounted for as a separate component of the sales transaction in which they are granted and therefore part of the fair value of the consideration received is allocated to the award credits and deferred over the period that the award credits are fulfilled. The amendment will have no impact on the financial position or performance of the Group.


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2.1 BASIS OF PREPARATION (continued) IASB Standards and Interpretations in issue but not yet effective and not early adopted by the Group (continued) IFRIC 16 Hedges of a net investment in a foreign operation IFRIC Interpretation 16 was issued in July 2008 and becomes effective for annual periods beginning on or after 1 October 2008. The interpretation clarifies the accounting treatment in respect of net investment hedging and includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the Group. The requirements of IAS 21, ‘The effects of changes in foreign exchange rates’, do apply to the hedged item. The interpretation is not expected to have a material impact on the financial position or performance of the Group. Improvements to IFRSs In May 2008 the International Accounting Standards Board issued its first omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. IAS 1 Presentation of Financial Statements Assets and liabilities classified as held for trading in accordance with IAS 39 Financial Instruments: Recognition and Measurement are not automatically classified as current in the balance sheet. This did not result in any reclassification of financial instruments. IAS 8 Accounting Policies, Change in Accounting Estimates and Errors Clarification that only implementation guidance that is an integral part of an IFRS is mandatory when selecting accounting policies. IAS 10 Events after the Reporting Period Clarifications that dividends declared after the end of the reporting period are not obligations. IAS 16 Property, Plant and Equipment Replaces the term “net selling price” with “fair value less costs to sell”. The Group amended its accounting policy accordingly, which did not result in any change in the financial position. IAS 16 Property, plant and equipment (and consequential amendment to IAS 7, ‘Statement of cash flows’) Entities whose ordinary activities comprise renting and subsequently selling assets present proceeds from the sale of those assets as revenue and should transfer the carrying amount of the asset to inventories when the asset becomes held for sale. A consequential amendment to IAS 7 states that cash flows arising from purchase, rental and sale of those assets are classified as cash flows from operating activities. The amendment will have no impact on the financial position or performance of the Group. IAS 18 Revenue Replaced the term 'direct costs' with 'transaction costs' as defined in paragraph 9 of IAS 39. This amendment removed an inconsistency for costs incurred in originating financial assets and liabilities that should be deferred and recognised as an adjustment to the underlying effective interest rate. Direct costs as previously defined, did not require such costs to be incremental. The amendment will have no impact on the financial position or performance of the Group. IAS 19 Employee Benefits Revised the definition of ‘past service costs’, ‘return on plan assets’ and ‘short term’ and ‘other long-term’ employee benefits. Amendments to plans that result in a reduction in benefits related to future services are accounted for as curtailment. Deleted the reference to the recognition of contingent liabilities to ensure consistency with IAS 37. This amendment will have no impact on the financial position or performance of the Group. IAS 23 Borrowing costs The definition of borrowing costs is revised to consolidate the two types of items that are considered components of ‘borrowing costs’ into one – the interest expense is calculated using the effective interest rate method determined in accordance with IAS 39. This amendment will have no impact on the financial position or performance of the Group as the Group’s accounting policy is already in line with the amendment.


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2.1 BASIS OF PREPARATION (continued) Improvements to IFRSs (continued) IAS 27 Consolidated and separate financial statements Where an investment in a subsidiary that is accounted for under IAS 39, ‘Financial instruments: recognition and measurement’, is classified as held for sale under IFRS 5, ‘Non-current assets held-for-sale and discontinued operations’, IAS 39 would continue to be applied. The amendment will have no impact on the financial position or performance of the Group. IAS 28 Investment in Associates If an associate is accounted for at fair value in accordance with IAS 39, only the requirement of IAS 28 to disclose the nature and extent of any significant restrictions on the ability of the associate to transfer funds to the entity in the form of cash or repayment of loans applies. An investment in an associate is a single asset for the purpose of conducting the impairment test. Therefore, any impairment test is not separately allocated to the goodwill included in the investment balance. This amendment will have no impact on the financial position or performance of the Group. IAS 28 Investments in associates (with consequential amendments to IAS 32, ‘Financial Instruments: Presentation’, and IFRS 7, ‘Financial instruments: Disclosures’) An investment in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment are recorded as an adjustment to the investment balance to the extent that the recoverable amount of the associate increases. The group will apply the IAS 28 (Amendment) to impairment tests related to investments in associates and any related impairment losses from 1 January 2009. IAS 31 Interest in Joint Venture If a joint venture is accounted for at fair value, in accordance with IAS 39, only the requirements of IAS 31 to disclose the commitments of the venturer and the joint venture, as well as summary financial information about the assets, liabilities, income and expense will apply. This amendment has no impact on the Group as it does not account for its joint ventures at fair value in accordance with IAS 39. IAS 36 Impairment of Assets When discounted cash flows are used to estimate ‘fair value less cost to sell’ additional disclosure is required about the discount rate, consistent with disclosures required when the discounted cash flows are used to estimate ‘value in use’. This amendment has no immediate impact on the consolidated financial statements of the Group because the recoverable amount of its cash generating unit is currently estimated using ‘value in use’. This amendment will have no impact on the financial position or performance of the Group. IAS 38 Intangible Assets Expenditure on advertising and promotional activities is recognised as an expense when the Group either has the right to access the goods or has received the service. This amendment will have no impact on the financial position or performance of the Group. IAS 39 Financial Instruments: Recognition and Measurement With effect from 1 January 2009, the standard has been amended to include the following:

• This amendment clarifies that it is possible for there to be movements into and out of the fair value through profit or loss category where a derivative commences or ceases to qualify as a hedging instrument in cash flow or net investment hedge.

• The definition of financial asset or financial liability at fair value through profit or loss as it relates to items that are held for trading is also amended. This clarifies that a financial asset or liability that is part of a portfolio of financial instruments managed together with evidence of an actual recent pattern of short-term profittaking is included in such a portfolio on initial recognition.


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2.1 BASIS OF PREPARATION (continued) Improvements to IFRSs (continued)

• The current guidance on designating and documenting hedges states that a hedging instrument needs to

involve a party external to the reporting entity and cites a segment as an example of a reporting entity. This means that in order for hedge accounting to be applied at segment level, the requirements for hedge accounting are currently required to be met by the applicable segment. The amendment removes the example of a segment so that the guidance is consistent with IFRS 8, ‘Operating segments’, which requires disclosure for segments to be based on information reported to the chief operating decision-maker. Currently, for segment reporting purposes, each subsidiary designates contracts with group treasury as fair value or cash flow hedges so that the hedges are reported in the segment to which the hedged items relate. After the amendment is effective, the hedge will continue to be reflected in the segment to which the hedged items relate (and information provided to the chief operating decision-maker), but the group will not formally document and test this relationship.

• When remeasuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge accounting ceases) are used.

The amendments are not expected to have a material impact on the financial performance or position of the entity. IFRS 7 Financial Instruments: Disclosures Removal of the reference to ‘total interest income’ as a component of finance costs. 2.2 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES The preparation of the Group's financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. 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: Useful lives and depreciation of property, plant and equipment and investment properties The management periodically reviews estimated useful lives and depreciation method to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from these assets.

Impairment of accounts receivable An estimate of the collectible amount of trade accounts receivable is made when collection of the full amount is no longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates. At the balance sheet date, gross trade accounts receivable were AED 344.8 million (2007: AED 353.7 million), and the provision for doubtful debts was AED 27.5 million (2007: AED 12.6 million). Any difference between the amounts actually collected in future periods and the amounts expected will be recognised in the income statement. Impairment of inventories Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the degree of ageing or obsolescence, based on historical selling prices. At the balance sheet date, gross inventory was AED 2,062.5 million (2007: AED 1,526.1 million) with provision required for aged and obsolete inventories of AED 39.3 million (2007: AED 28.4 million).


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2.2 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (continued) Impairment of non-financial assets The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill is tested for impairment annually and at other times when such indicators exist. Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. For details of the projections refer note 11. Determination of fair values: A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement purposes based on the following methods: (a) Investments in equity and debt securities Quoted investments carried at fair value through profit or loss are equity investments in publicly quoted companies that are listed on a recognised stock exchange and are traded on a regular basis in organised markets. The fair value of such investments is determined by reference to the bid price of the listed instruments as of the balance sheet date. The fair value of unquoted private equity and venture capital investments is determined in the first instance using valuations implied by material financing events for the specific investment in question that involves a third party. An example of a material event would be where a sale is imminent and credible bids have been received from third parties wherein the fair value would be established with reference to the range of bids received, based on management’s assessment of the most likely realisation value within the range. Another example of a material event would be where an arm’s length financing transaction has occurred recently that is (i) material in nature; (ii) involves third parties; and (iii) attaches an implicit value to the company. As a second step, in the event that such third party evidenced recent measure of specific fair value for an individual investment is not available, the fair value is determined by following valuation techniques using a multiples-based approach applied to the most recent and relevant operating performance metric of the underlying company, typically earnings before interest, tax, depreciation and amortisation (EBITDA) and sometimes sales. The choice of the appropriate multiple to be used is taken from a universe of comparable publicly listed companies, recent merger and acquisition transactions involving comparable companies, and multiples implied by discounted cash flows. Management will exercise its judgment in choosing the most appropriate multiple from within the universe established above. As indicated above, the Group’s management uses its best judgment in determining the fair values for unquoted private equity and venture capital investments from within a range of fair values implied by market comparables based on management’s knowledge and experience of the relevant industry. The fair values of debt securities held-to-maturity financial assets are based on the quoted market value of similar assets. The fair value of held-to-maturity investments is determined for disclosure purposes only. The fair value of unquoted infrastructure investment fund is based on the independent valuation of the fund. (b) Property, plant and equipment The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. (c) Trade and other receivables / payables The fair value of trade and other receivables and trade and other payables approximates to book value due to the short term maturity of these instruments. (d) Derivatives The fair value of derivative financial instruments is discounted to the net present value using prevailing market rates and foreign currency rates at the balance sheet date. The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate. The fair value of interest rate swaps is based on broker quotes.


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2.2 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (continued) Determination of fair values (continued) (e) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes only, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements. For floating rate interest bearing loans and borrowings, the fair value normally approximates to their carrying value. The fair value of cash and bank overdrafts approximates to the book value due to the short-term maturity of the instruments. 2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Revenue recognition Sale of goods Revenue from the sale of traded goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer, recovery of consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Interest income Interest revenue is recognised as the interest accrues using the effective interest method, under which the rate used exactly discounts the estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Dividends Revenue is recognised when the Group’s right to receive the payment is established. Borrowing costs Borrowing costs include interest and direct costs such as underwriting, stamp duty, legal and other related costs in connection with borrowings. All borrowing costs are recognised in the consolidated income statement using the effective interest method. Borrowing costs, net of interest received on term deposits that are directly attributable to acquisition, construction or production of an asset, are included in the cost of that asset, until such time as the asset is substantially ready for its intended use or sale. Borrowing costs also include the effect of interest payable or receivable on any interest rate swaps and collars entered into by the Group to hedge its exposure to interest rate risk. Other borrowing costs are recognised as an expense in the year in which they are incurred. Investments and other financial assets Financial assets within the scope of IAS 39 are classified as either financial assets at fair value through profit or loss, available-for-sale investments, held-to-maturity investments, cash and cash equivalents, trade and other receivables, loans and advances or others, as appropriate. (a) Investments carried at fair value through profit or loss Investments carried at fair value through profit or loss includes financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Gains or losses on investments held for trading are recognised in profit or loss. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis or other valuation models.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Investments and other financial assets (continued) (b) Available-for-sale financial investments Available-for-sale investments are designated as such or are not classified as (a) investments carried at fair value through profit or loss, (b) held-to-maturity investments or (c) loans or receivables. Available-for-sale investments are recognised and derecognised, on a trade date basis, when the Group becomes, or ceases to be, a party to the contractual provisions of the instrument. Investments designated as available-for-sale investments are initially recorded at cost and subsequently measured at fair value, unless this cannot be reliably measured. Gains and losses arising from changes in fair value are recognised directly in statement of recognised income and expense with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in consolidated income statement. Upon impairment any loss, or upon derecognition any gain or loss, previously reported as “cumulative changes in fair value” within statement of recognised income and expense is included in the consolidated income statement for the year. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in statement of recognised income and expense. c) Held-to-maturity investments Where the Group has a positive intent and ability to hold debt securities to maturity, then these are classified as held-to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses. Gains and losses are recognised in the consolidated income statement when the investments are derecognised or impaired, as well as through the amortisation process. d ) Trade and other receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within ‘general and administrative expenses’. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against ‘general and administrative expenses’ in the consolidated income statement. (e) Other financial assets Other financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Cash and cash equivalents For the purpose of the consolidated cash flow statement, cash and cash equivalents consists of cash at hand and bank and short-term deposits with an original maturity of three months or less, net of outstanding bank overdrafts, deposits under lien and restricted cash. Inventories The cost of diamond jewellery, pearl jewellery and watches is determined based on specific identification method. The cost of gold owned by the Group is determined on the basis of 15 months average purchase price. The making charges related to inventory of own and unfixed gold jewellery is included in period-end inventories. Inventories are stated at the lower of cost and net realizable value. Costs are those expenses incurred in bringing each product to its present location and condition. Net realisable value is based on estimated selling price less any further costs expected to be incurred on completion and disposal.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Land and capital work in progress are not depreciated. Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows: Building over 20 to 25 years Vehicles over 4 years Furniture and fixtures over 4 years Office equipment over 3 to 4 years Machinery and accessories over 4 years Assets costing less than AED 5,000 are depreciated fully in the year of purchase. In respect of additions made during the period, full year’s depreciation is charged for all assets purchased in the first half of the year and half year’s depreciation is charged for all additions made in the second half of the year. Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the income statement as the expense is incurred. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year the asset is derecognised. The assets’ residual values, useful lives and depreciation method are reviewed at each financial year end with the effect of any changes in estimate accounted for on a prospective basis. Fully depreciated fixed assets are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these assets. Acquisitions from entities under common control Acquisitions arising from transfers of interests in entities that are under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established. For this purpose comparatives are restated where applicable. The assets and liabilities acquired are recorded at their respective carrying values. Business combinations and goodwill Business combinations are accounted for using the purchase method. The cost of business combination is measured as the fair value (at the date of exchange) of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair values at the date of acquisition, irrespective of the extent of any minority interest. Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events of changes in circumstances indicate that the carrying value may be impaired.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Business combinations and goodwill (continued) For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or group of units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes. Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Stepped acquisition When an acquisition is completed by a series of successive transactions, each significant transaction is considered individually for the purpose of determination of fair value of the identifiable assets, liabilities and contingent liabilities acquired and hence for the goodwill associated with the acquisition. The fair values of the identifiable assets and liabilities acquired can vary at the date of each transaction. When a transaction results in taking control over the entity, the interest previously held in the entity is revalued on the basis of fair values of the identifiable assets and liabilities at that date. The contra posting for this revaluation is recorded directly in shareholders equity under revaluation reserve. Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial period end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. Operating lease premium Operating lease premium, included in intangible assets, represents the amount paid as premium to obtain key locations on rent. Such amounts are initially recognised at cost and in subsequent years these are stated at cost less accumulated amortisation and impairment losses, if any. Amortisation is charged to the income statement on a straight-line basis over the estimated useful life of intangible assets. Amortisation of these intangible assets is carried out over a period of 10 years from the date of initial recognition.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Intangible assets (continued) Distribution rights Distribution rights are being amortised over a period of 5 years which represents the period over which the Group has contractually agreed the distribution rights with the principal. Brand acquisition cost Brand acquisition costs are amortised over a period of 15 years and relates to amount paid by the Group for purchase of rights to manufacture and distribute a brand of jewellery. Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. Goodwill The Group assesses whether there are any indicators that goodwill is impaired at each reporting date. Goodwill is tested for impairment, annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating units, to which the goodwill relates. Where the recoverable amount of the cash-generating units is less than their carrying amount an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as at each reporting period. Intangible assets Intangible assets with indefinite useful lives are tested for impairment annually as of 31 March /December either individually or at the cash generating unit level, as appropriate. Investment in associates and joint ventures After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss of the Group’s investment in its associates and joint ventures. The Group determines at each balance sheet date whether there is any objective evidence that the investment is impaired. If this is the case the Group calculates the amount of impairment as being the difference between the fair value of the associate or joint venture and the acquisition cost and recognises the amount in the income statement.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of financial assets The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. Assets carried at amortised cost If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (ie the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss shall be recognised in the income statement. 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, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in the income statement. In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible. Available-for-sale financial investments If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from equity to profit or loss. Reversals in respect of equity instruments classified as available-for-sale are not recognised in profit or loss. Reversals of impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in profit or loss. Derivative financial instruments The Group holds derivative financial instruments to hedge its gold price risks and interest rate risk exposures. All derivative financial instruments are recognised initially at cost; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition derivative financial instruments are stated at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The fair values of gold futures and interest rate swap contracts are determined by reference to market values for similar instruments. Any gains or losses arising from changes in fair value on derivatives during the period that do not qualify for hedge accounting are taken directly to profit or loss. For the purposes of hedge accounting, hedges are classified as: • fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability; or • cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular

risk associated with a recognised asset or liability or a highly probable forecast transaction. The Group formally designates and documents the relationship between the hedging instrument and the hedged item at the inception of the transaction, as well as its risk management objectives and strategy for undertaking various hedge transactions. The documentation also includes identification of the hedging instrument, the hedged item or transaction, the nature of risk being hedged and how the group will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in the hedging transactions are highly effective in offsetting changes in fair values or cash flows of the hedged items.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Derivative financial instruments (continued) The treatment of gains and losses arising from revaluing derivatives designated as hedging instruments depends on the nature of hedging relationship, as follows: Fair value hedges For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged; the derivative is remeasured at fair value and gains and losses from both are taken to the income statement. For hedged items carried at amortised cost, the adjustment is amortised through the income statement such that it is fully amortised by maturity. The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the group revokes the designation. Cash flow hedges For cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in the income statement. Amounts taken to equity are transferred to the income statement when the hedged transaction affects the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss existing 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 reported in equity is immediately transferred to the income statement. Accounts receivable Accounts receivable are stated at original invoice amount less a provision for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery. Financial liabilities Interest bearing loans and borrowings All loans and borrowings are initially recognised at fair value less directly attributable transaction costs, and have not been designated ‘as at fair value through profit or loss’. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process. Accounts payable and accruals Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance costs. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Derecognition of financial assets and financial liabilities i) Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where: a) the rights to receive the cash flows from the asset have expired; or b) the Group has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the

received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and c) either (i) the Group has transferred substantially all the risks and rewards of the asset, or (ii) the Group has

neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. (ii) Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the consolidated income statement Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. Group as a lessee (i) Operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the consolidated income statement on a straight-line basis over the period of the lease. (ii) Finance lease Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current other liabilities. The interest element of the finance cost is charged to the consolidated income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Employees’ end of service benefits The Group provides end of service benefits to its expatriate employees. The entitlement to these benefits is based upon the employees’ final salary and length of service, subject to the completion of a minimum service period. The provision has been calculated in accordance with the provisions of the UAE Federal Labour Law. Employees of subsidiaries, associates and joint ventures operating outside UAE are provided with benefits as per their relevant labour laws.The expected costs of these benefits are accrued over the period of employment.


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2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Trade and settlement date accounting All “regular way” purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the market place. Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segments), or in providing products or services within a particular environment (geographical segment), which are subject to risks and return that are different from those of other segments. Segment information is presented in respect of the Group’s business and geographical segments. Foreign currencies Transactions and balances in foreign currencies The consolidated financial statements are presented in UAE Dirhams (AED), which is the Corporation's functional and presentation currency. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the consolidated income statement. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Foreign group companies The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that

balance sheet; (b) income and expenses for each income statement are translated at average exchange rates; and (c) all resulting exchange differences are recognised as a separate component of equity.

Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in statement of recognised income and expense. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate. When a foreign entity is partially disposed of or sold, exchange differences that were recorded in statement of recognised income and expense are recognised in the consolidated income statement as part of the gain or loss on sale.


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3 SEGMENT INFORMATION The Group’s operations are organised into six business segments: Gold bullion, gold jewellery (wholesale and retail), diamond jewellery (wholesale and retail), pearl jewellery, watches and silver, precious stones and others (wholesale and retail) categorised as others. The accounting policies of the segments are the same as those described in note 2 above. The Group accounts for inter-segment sales as if the sales were to third parties, that is, at current market prices. The Group evaluates the performance of its segments and allocates resources to them based on this evaluation. The Group’s secondary segment reporting format is geographical. Geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers. Business segments The following table’s present revenue and profit information and certain asset and liability information relating to the Group’s business segments for the period ended 31 March 2009 and year ended 31 December 2007. Included within the corporate, consolidation and eliminations columns are certain balances, which due to their nature, are not allocated to segments.


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3 SEGMENT INFORMATION (continued) Period ended 31 March 2009 Amount in AED’000 Unallocated Gold Gold Diamond Pearl and Consolidation Particulars Bullion jewellery jewellery jewellery Watches Others Corporate adjustments Total External revenue 275,762 3,871,745 1,304,427 60,775 200,397 319,770 - - 6,032,876 Internal revenue - 2,431,289 1,057,878 35,707 141,259 - - (3,666,133) - ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Total revenue 275,762 6,303,034 2,362,305 96,482 341,656 319,770 - (3,666,133) 6,032,876 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Segment results - 357,893 645,386 29,486 69,801 13,924 - - 1,116,490 Cash expenses - (18,556) (110,876) (1,676) (15,535) - (493,202) - (639,845) Non cash expenses - (481) (35,702) (446) (5,616) - (77,835) - (120,080) ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Profit before finance income/costs - 338,856 498,808 27,364 48,650 13,924 (571,037) - 356,565 Finance costs - - - - - - (175,953) - (175,953) Finance income - - - - - - 55,888 - 55,888 ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Operational profit - 338,856 498,808 27,364 48,650 13,924 (691,102) - 236,500 Income from investments accounted for using equity method - - - - - - 46,326 - 46,326 Impairment loss on goodwill - - - - - - (2,294) - (2,294) Loss on fair valuation of investments designated as fair value through profit or loss - - - - - - (102,315) - (102,315) Other income - - - - - - 48,696 - 48,696 ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Profit / (loss) for the period - 338,856 498,808 27,364 48,650 13,924 (700,689) - 226,913 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Assets and liabilities Segment assets - 31,598 565,505 20,274 37,601 - 5,588,463 - 6,243,441 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Segment liabilities - 7,930 236,061 9,366 19,381 - 5,970,703 - 6,243,441 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Other segment information Capital expenditure - 189 60,479 59 1,992 - 262,507 - 325,226 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════


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3 SEGMENT INFORMATION (continued)

Year ended 31 December 2007(restated) Amount in AED’000 Unallocated Gold Gold Diamond Pearl and Consolidation Particulars Bullion jewellery jewellery jewellery Watches Others Corporate adjustments Total External revenue 257,533 2,158,736 939,004 17,215 109,182 71,599 - - 3,553,269 Internal revenue - 1,349,178 381,897 18,655 76,821 - - (1,826,551) - ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Total revenue 257,533 3,507,914 1,320,901 35,870 186,003 71,599 - (1,826,551) 3,553,269 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Segment results - 193,384 386,712 13,599 35,143 14,258 - - 643,096 Cash expenses - (905) (72,222) (928) (6,404) - (301,314) - (381,773) Non cash expenses - (382) (13,870) (103) (5,201) - (30,655) - (50,211) ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Profit before finance income / costs - 192,097 300,620 12,568 23,538 14,258 (331,969) - 211,112 Finance costs - - - - - - (107,620) - (107,620) Finance income - - - - - - 33,830 - 33,830 ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Operational profit - 192,097 300,620 12,568 23,538 14,258 (405,759) - 137,322 Income from investments accounted for using equity method - - - - - - 42,261 - 42,261 Gain on sale of investments designated as fair value through profit or loss - - - - - - 12,459 - 12,459 Other income - - - - - - 17,084 - 17,084 ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Profit / (loss) for the year - 192,097 300,620 12,568 23,538 14,258 (333,955) - 209,126 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Assets and liabilities Segment assets - 37,176 594,528 9,430 24,240 - 4,406,688 - 5,072,062 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Segment liabilities - 23,393 352,108 3,187 22,774 - 4,670,600 - 5,072,062 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Other segment information Capital expenditure - 2,981 15,674 10 2,091 - 145,306 - 166,062 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════


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3 SEGMENT INFORMATION (continued) Geographical segments The following tables present revenue, assets and capital expenditure by geographical segments for the periods ended 31 March 2009 and year ended 2007. Period ended 31 March 2009 Amount in AED’000 Consolidation GCC adjustments and Particulars UAE countries Europe Others eliminations Total Segment revenue 8,724,653 519,538 148,947 305,871 (3,666,133) 6,032,876 Carrying amount of segment assets 5,934,653 35,735 199,444 73,609 - 6,243,441 Capital expenditure Property, plant and equipment 186,757 12,522 41,029 40,472 - 280,780 Intangibles 17,582 13,666 12,128 1,070 - 44,446 Year ended 31 December 2007 (restated) Amount in AED’000 Consolidation GCC adjustments and Particulars UAE countries Europe Others eliminations Total Segment revenue 4,757,879 340,018 129,083 152,840 (1,826,551) 3,553,269 Carrying amount of segment assets 4,772,379 25,346 202,083 72,254 - 5,072,062 Capital expenditure Property, plant and equipment 87,176 12,036 9,531 27,800 - 136,543 Intangibles 10,643 13,968 4,802 106 - 29,519


34

4 ACQUISITION/ DISPOSAL OF SUBSIDIARIES 2008-09 Acquisitions/Disposal: i. Acquisition of Glamour LLC On 3 January, 2008 the Group acquired a 60% interest in Glamour LLC, for a purchase consideration of AED 1.33 million. Glamour LLC is a jewellery retailer in Egypt. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date. Pre- Fair Recognised acquisition value values on carrying amount adjustments acquisition AED ’000 AED ’000 AED ’000 Property plant and equipment 4,874 - 4,874 Inventories 18,774 - 18,774 Trade receivables 546 - 546 Cash and cash equivalents 713 - 713 Trade and other payables (7,292) - (7,292) Due to related parties (15,390) - (15,390) ────── ────── ────── Net identifiable assets and liabilities 2,225 - 2,225 ══════ ══════ ══════ Net assets acquired (60%) 1,335 Goodwill on acquisition - ────── Consideration paid, satisfied in cash (A) 1,335 Cash acquired (100%) (B) 713 ────── Net cash out flow (A-B) 622 ══════ The values of assets and liabilities recognised on acquisition are their fair values. From the date of acquisition to 31 March 2009, Glamour LLC has contributed a net profit of AED 2,840 thousand to the overall net results of the Group.


35

4 ACQUISITION/ DISPOSAL OF SUBSIDIARIES (continued) ii. Acquisition of Emirates Jewellery Manufacturing LLC On 1 January, 2009 the Group acquired a further 52% shares in Emirates Jewellery Manufacturing LLC, in addition to 48% shares already held by the Group, for a deferred purchase consideration of AED 2.5 million. With this additional shareholding, the entity has become a subsidiary of the Group from its status as a joint controlled entity in the previous year. This entity is engaged in manufacturing of gold, diamond and other jewelleries. The share transfer has been effected through an agreement with the other venturer and other legal formalities for effecting the share transfer are imminent. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date. Pre- Fair Recognised acquisition value values on carrying amount adjustments acquisition AED ’000 AED ’000 AED ’000 Property plant and equipment 2,946 - 2,946 Inventories 4,737 - 4,737 Accounts receivable and prepayments 1,387 - 1,387 Due from related parties 1,116 - 1,116 Cash and bank balances 1,925 - 1,925 Trade and other payables (1,811) - (1,811) Long term loan from shareholder (10,000) - (10,000) ────── ────── ────── Net identifiable assets and liabilities 300 - 300 ══════ ══════ ══════ Net assets acquired (52%) 156 Goodwill on acquisition (refer note 11) 2,294 ────── Consideration paid, satisfied in cash (A) 2,450 Cash acquired (100%) (B) 1,925 ────── Net cash out flow (A-B) 525 ══════ The values of assets and liabilities recognised on acquisition are their estimated fair values. From the date of acquisition to 31 March 2009, Emirates Jewellery Manufacturing LLC has contributed a net loss of AED 4.5 million to the overall net results of the Group. As per the share transfer agreement, the Company is liable to pay to the other venturer a penalty of AED 2.5 million if the formalities for share transfer are not effected by April 2010.


36

4 ACQUISITION/ DISPOSAL OF SUBSIDIARIES (continued) iii. Acquisition of Vault Business On 12 March, 2008 the Group acquired a vault business from The Jewellery Store DMCC. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date. Pre- Fair Recognised acquisition value values on carrying amount adjustments acquisition AED ’000 AED ’000 AED ’000 Property plant and equipment 23,460 23,359 46,819 Inventories 2,031 - 2,031 ───── ───── ───── Net identifiable assets and liabilities acquired 25,491 23,359 48,850 ═════ ═════ Goodwill arising on acquisition - ───── Total consideration paid 48,850 ═════ Total cost of the combination was AED 48,850 thousand and it was settled as follows: AED ’000 Fair value of shares disposed in The Jewellery Store DMCC 9,279 Cash consideration paid 17,767 Adjusted against Due from related party 21,804 ───── Total consideration 48,850 ═════ The values of assets and liabilities recognised on acquisition are their estimated fair values. From the date of acquisition to 31 March 2009, Vault business has contributed a net loss of AED 3,255 thousand to the overall net results of the Group. iv. Acquisition of Damas Europe SPA On 11 September, 2008 the Group acquired further 29.09% fresh shares issued by Damas Europe SPA, in addition to the 36.73% shares already held by the Company, for a purchase consideration of AED 18.7 million (Euro 3.6 million). Damas Europe SPA is a jewellery retailer in Italy. As a result of this fresh investment and in addition to the existing 36.73% shares already held by the Company, the Company obtained controlling interest in this entity. With this additional shareholding, the entity has become a subsidiary of the Company from its status as an associate in the previous year. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date. Pre- Fair Recognised acquisition value values on carrying amount adjustments acquisition AED ’000 AED ’000 AED ’000 Property, plant and equipment 27,371 - 27,371 Intangible assets 12,127 - 12,127 Other financial assets 154 - 154 Inventories 26,293 - 26,293 Accounts receivable and prepayments 6,933 - 6,933 Cash and bank balances 339 - 339


37

4 ACQUISITION/ DISPOSAL OF SUBSIDIARIES (continued) iv. Acquisition of Damas Europe SPA (continued) Pre- Fair Recognised acquisition value values on carrying amount adjustments acquisition AED ’000 AED ’000 AED ’000 Trade and other payables (14,942) - (14,942) Bank borrowings (27,540) - (27,540) Due to related parties (11,013) - (11,013) ───── ────── ────── Net identifiable assets and liabilities 19,722 - 19,722 Less: Attributable to minority interest 995 - - Net assets acquired 18,726 ───── Consideration paid 18,726 ═════ The values of assets and liabilities recognised on acquisition are their estimated fair values. Consideration paid is settled as follows:- AED’000 Cash paid 12,089 Trade payable assumed 3,395 Cash paid by Executive Directors (refer note 18) 3,242 ───── Total 18,726 ═════ Net cash out flow Cash paid (A) 12,089 Net cash acquired with the subsidiary (B) 339 ───── Net cash outflow (A-B) 11,750 ═════ v. Disposal of investment in Carati Jewellery SAL As on 1 January 2008, the Group disposed of its share of 49% interest in the Carati Jewellery SAL at book value. The disposal did not impact the results for the period of the Group.


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4 ACQUISITION/ DISPOSAL OF SUBSIDIARIES (continued) 2007 Acquisitions/ disposals: i. Acquisition of Damas & Al Ghannam Jewellery, Co. WLL On 1 January, 2007 the Group acquired further 40% shares in Damas & Al Ghanam Jewellery, in addition to the 50% shares already held by the Group, for a purchase consideration of AED 7 million. Damas & Al Ghannam Jewellery, Co. WLL is a jewellery retailer in Kuwait. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date. Pre- Fair Recognised acquisition value values on carrying amount adjustments acquisition AED ’000 AED ’000 AED ’000 Property plant and equipment 5,835 - 5,835 Intangible assets 7,915 - 7,915 Inventories 9,765 - 9,765 Trade receivables 362 - 362 Prepayments and other receivables 7,975 - 7,975 Cash and cash equivalents 2,907 - 2,907 Bank borrowings (2,500) - (2,500) Trade and other payables (32,665) - (32,665) ────── ────── ────── Net identifiable assets and liabilities (406) - (406) ══════ ══════ ══════ Net assets acquired (40%) (162) Goodwill on acquisition (refer note 11) 7,162 ────── Consideration paid, satisfied in cash (A) 7,000 Cash acquired (100%) (B) 2,907 ────── Net cash out flow (A-B) 4,093 ══════ The values of assets and liabilities recognised on acquisition are their estimated fair values. ii. Disposal of Damas Europe SPA and Dria SRL As on 1 January 2007, the Group had restructured its investment in its subsidiaries Damas Europe SPA and Dria SRL by merging their operations with Adriano Facco SPA. As a result of the restructuring, the shareholding of the Group in Damas Europe SPA has decreased from 66% to 36.7% making the resulting entity an associate. The above restructuring did not impact the results for the period of the Group.


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5 ACQUISITION OF ENTITIES UNDER COMMON CONTROL i. Acquisition of Damas LLC

Effective 8 June, 2008, the Group acquired a 99.99% beneficial ownership interest in Damas LLC (Limited Liability Company registered in Dubai, United Arab Emirates (“UAE”), from the Founding Shareholders of the Group.

The carrying values of the assets and liabilities of these companies as of 1 January 2007 were as follows: AED’000 Assets Property, plant and equipment 169,380 Goodwill 551,144 Intangible assets 38,161 Investments accounted for using the equity method 231,440 Other financial assets 123,449 Long term loans to related parties 51,515 Inventories 1,225,390 Margin to trade payables against unfixed gold 161,782 Accounts receivable and prepayments 594,910 Bank balances and cash 864,769 Due from related parties 62,639 Shareholders current account 74,032 ──────── 4,148,611 ──────── Liabilities Bank borrowings 751,114 Long term loans from shareholders 150,000 Employees’ end of service benefits 12,747 Accounts payable and accruals 1,350,611 Margin from trade receivables against unfixed gold 76,777 Due to related parties 83,665 ──────── 2,424,914 ──────── Net assets 1,723,697 Less: Attributable to minority shareholders (25,369) ──────── Net assets 1,698,328 ═══════ Represented by Share capital 1,421,000 Statutory reserve 52,240 Currency translation reserve (766) Retained earnings 224,735 Revaluation reserve 1,119 ──────── Total 1,698,328 ═══════

The acquisition was effected by an exchange of shares based on the carrying value of the consolidated net assets of Damas LLC.

On June 8, 2008 the Company issued 734,756,483 ordinary shares of USD 1 each totaling to AED 2,699,128 thousand against Damas LLC’s 1,421,000 shares of AED 1,000/- each totaling to AED 1,421,000 thousand. The difference of AED 1,278,128 thousand is treated as a merger reserve.

As the transfer involved entities under common control, the provisions of IFRS 3 - Business Combinations are not applicable. Accordingly, the Company has applied the pooling of interests method in accounting for this acquisition. The comparative information has been restated to reflect financial statements as if the combination had occurred at the beginning of the comparative period being 1 January 2007 (i.e. the earliest period presented in the financial statements).


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5 ACQUISITION OF ENTITIES UNDER COMMON CONTROL (continued) ii Acquisition of Al Wasl DMCC Effective 25 March 2009, the group acquired a 100% beneficial ownership interest in Al Wasl DMCC, a Company incorporated under the regulation of the DMCC Authority, from the founding shareholders of the Group. The carrying values of the assets and liabilities of Al Wasl DMCC as of 1 January 2007 were as follows: AED’000 Assets Property, plant and equipment 46,000 Cash and Bank balances 200 ────── 46,200 Liability Due to shareholders 46,000 ────── Net assets 200 ══════ The above acquisition was made at the carrying value of net assets of Al Wasl DMCC. As the transfer involved an entity under common control, the provisions of IFRS 3 - Business Combinations are not applicable. Accordingly, the Company has applied the pooling of interests method in accounting for this acquisition. The comparative information has been restated to reflect as if the combination had occurred at the beginning of the comparative period being 1 January 2007 (i.e. the earliest period presented in the financial statements). 6 GENERAL ADMINISTRATION, SELLING AND DISTRIBUTION EXPENSES Included in general administration, selling and distribution expenses: 1 January 1 January 2008 to to 31 March 31 December 2009 2007 (15 months) (12 months) AED’000 AED’000 (Restated) Personnel expenses 227,280 137,864 Advertising, sales promotion/marketing and selling expenses 153,496 102,401 Administrative expenses 151,340 79,028 Rent 107,726 62,476 Depreciation (refer note 10) 54,645 31,408 Amortisation of intangible assets (refer note 12) 24,820 8,772 Provision for slow moving inventories 10,964 8,332 Provision for doubtful debts 14,908 - Advances / bad debts written off 14,746 1,703 ────── ────── 759,925 431,984 ══════ ══════


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7 FINANCE COSTS 1 January 1 January 2008 to to 31 March 31 December 2009 2007 (15 months) (12 months) AED’000 AED’000 Term loan interest 82,461 51,940 Gold loan interest 37,877 14,470 Standby LC commission 20,905 11,270 Overdraft interest 8,104 11,397 Other bank charges 20,815 11,272 Loss on interest rate swaps 5,791 7,271 ────── ────── 175,953 107,620 ══════ ══════ 8 SHARE OF RESULTS OF EQUITY ACCOUNTED INVESTMENTS 1 January 1 January 2008 to to 31 March 31 December 2009 2007 (15 months) (12 months) AED’000 AED’000

Share of income from jointly controlled entities (refer note 13(a)) 18,959 22,797 Share of income from associates * (refer note 13 (a)) 27,367 19,464 ────── ────── 46,326 42,261 ══════ ══════

* Income from associates is net of provision of AED 5.3 million (2007: AED 3.2 million) made for losses incurred by an associate in excess of contributed capital. For balance sheet presentation purposes the same has been presented as a provision against long term loans and due from this associate. Refer note 17.

9 OTHER INCOME 1 January 1 January 2008 to to 31 March 31 December 2009 2007 (15 months) (12 months) AED’000 AED’000 (restated) Exchange difference income 20,924 391 Discounts and commission from suppliers 6,071 2,366 Income on consignment ventures 7,334 6,162 Miscellaneous income 11,383 5,468 Dividend income from available for sale investments 1,808 - Dividend income from investments designated as fair value through profit or loss 899 - Gain on disposal of investments designated as fair value through profit or loss 251 2,307 Profit on sale of available for sale investments 26 390 ────── ────── 48,696 17,084 ══════ ══════


42

10 PROPERTY, PLANT AND EQUIPMENT Furniture Machinery Capital Land and and Office and work-in- buildings Vehicles fixtures equipment accessories progress Total AED’ 000 AED’ 000 AED’ 000 AED’ 000 AED’ 000 AED’ 000 AED’ 000 Cost: At 1 January 2008 152,669 9,605 123,493 18,174 20,324 44,907 369,172 Acquisition of a subsidiary 49,991 - 2,654 607 1,387 - 54,639 (refer note 4(i) to (iii)) Change in status to subsidiary 9,856 26 12,177 993 4,319 - 27,371 (refer note 4(iv)) Additions 14,257 1,221 45,641 12,760 2,961 121,931 198,771 Transfers 2,823 - 1,367 30 - (4,220) - Disposals - (334) (4,323) (243) (478) - (5,378) Written off - - (3,287) (339) - - (3,626) Exchange differences (2,098) (64) (2,505) (363) (1,474) (255) (6,759) ───── ───── ───── ───── ───── ───── ───── At 31 March 2009 227,498 10,454 175,217 31,619 27,039 162,363 634,190 ───── ───── ───── ───── ───── ───── ───── Depreciation: At 1 January 2008 4,755 7,851 66,146 11,805 13,727 - 104,284 Charge for the period 7,317 1,202 32,818 8,170 5,138 - 54,645 Disposals - (228) (1,230) (90) - - (1,548) Written off - - (3,287) (339) - - (3,626) Exchange differences (158) (8) (1,009) (161) (1,228) - (2,564) ───── ───── ───── ───── ───── ───── ───── At 31 March 2009 11,914 8,817 93,438 19,385 17,637 - 151,191 ───── ───── ───── ───── ───── ───── ───── Net book value: At 31 March 2009 215,584 1,637 81,779 12,234 9,402 162,363 482,999 ═════ ═════ ═════ ═════ ═════ ═════ ═════


43

10 PROPERTY, PLANT AND EQUIPMENT ( continued) Land and building amounting to AED 13 million (cost) (2007: AED 13 million) is held in the names of the Executive Directors/their relatives for the beneficial interest of the Group. Capital work-in-progress amounting to AED 7.6 million (cost) (2007: AED 6.7 million) is held in the name of Oriental Int. Co. for Gold and Jewellery Trade, a related party for the beneficial interest of the Group. The carrying value of property, plant and equipment includes assets under finance lease amounting to AED 10.3 million (2007: AED 1.8 million). Leased assets are pledged as security for the related finance lease. Capital work in progress mainly includes cost of building amounting to AED 85.8 million, cost of construction work related to ALMAS Tower 53A (office building) amounting to AED 9.6 million, ALMAS Tower 54A (office building) amounting to AED 9.5 million, AU Tower (office building) amounting to AED 9.3 million, Emirates Hills first (office buildings) amounting to AED 14 million. Property, plant and equipment amounting to AED 41.6 million (cost) (2007: AED 28 million) is mortgaged with banks against bank loans obtained by the Group. Also refer note 22.


44

10 PROPERTY, PLANT AND EQUIPMENT (continued) Furniture Machinery Capital Land and and Office and work-in- buildings Vehicles fixtures equipment accessories progress Total AED’ 000 AED’ 000 AED’ 000 AED’ 000 AED’ 000 AED’ 000 AED’ 000 Cost At 1 January 2007 (Restated) 46,068 8,854 87,119 14,261 14,351 74,962 245,615 Acquisition of a subsidiary - - 5,835 - - - 5,835 Acquisition of an entity under common control (refer note 5(ii)) 46,000 - - - - - 46,000 Additions 10,549 1,364 42,080 4,353 6,321 20,041 84,708 Transfers 49,679 - 447 214 (203) (50,137) - Disposals (43) (594) (2,311) - (287) - (3,235) Disposal of a subsidiary - (21) (9,987) (808) (5) - (10,821) Currency translation 416 2 310 154 147 41 1,070 ───── ───── ───── ───── ───── ───── ───── At 31 December 2007 152,669 9,605 123,493 18,174 20,324 44,907 369,172 ───── ───── ───── ───── ───── ───── ───── Depreciation At 1 January 2007 (Restated) 2,024 7,257 51,405 7,421 8,128 - 76,235 Charge for the year 2,755 1,150 17,606 4,234 5,663 - 31,408 Transfers - - - 192 (192) - - Disposals (43) (557) (2,267) - (201) - (3,068) Disposal of a subsidiary - (1) (696) (121) (2) - (820) Currency translation 19 2 98 79 331 - 529 ───── ───── ───── ───── ───── ───── ───── At 31 December 2007 4,755 7,851 66,146 11,805 13,727 - 104,284 ───── ───── ───── ───── ───── ───── ───── Net book value At 31 December 2007(restated) 147,914 1,754 57,347 6,369 6,597 44,907 264,888 ═════ ═════ ═════ ═════ ═════ ═════ ═════


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11 GOODWILL 2009 2007 AED’ 000 AED’ 000 Cost: As at 1 January 558,510 551,144 Additions during the period/year (refer note 4(ii)) 2,294 7,162 Currency translation reserve (1,541) 2,484 Goodwill related to subsidiaries disposed - (2,280) Impairment loss (refer note 1 below) (2,294) - ───── ───── Net book value as at 31 March/ December 556,969 558,510 ═════ ═════ Note 1 On 1 January, 2009 the Group acquired further 52% shares in Emirates Jewellery Manufacturing LLC, in addition to 48% shares already held by the Group, for a deferred purchase consideration of AED 2.5 million. On the acquisition date, the Group had recorded a goodwill amounting to AED 2.3 million. The management of the Group has undertaken an impairment review of the goodwill as at 31 March 2009. Based on the review the Group has decided to provide for the entire goodwill of AED 2.3 million owing to uncertainty of availability of future cash profits to recover the goodwill. Impairment test for goodwill The balance at the period end represents goodwill on the acquisition of Damas Jewellery LLC; DIT Group SPA, Italy (formerly Stefan Hafner SPA, Italy) and Damas & Al Ghannam Jewellery Co. WLL. Annual impairment testing for goodwill is carried by management at 31 March 2009. For the purpose of impairment testing goodwill has been allocated to the following cash generating units: 2009 2007 AED’ 000 AED’ 000 Damas Jewellery LLC 532,492 532,492 DIT Group SPA Italy (formerly Stefan Hafner SPA – Italy) 17,315 18,856 Damas & Al Ghannam Jewellery Co. WLL 7,162 7,162 ───── ───── Total 556,969 558,510 ═════ ═════ The impairment test is based on a “value in use” calculation. These calculations have used cash flow projections based on actual operating results and future expected performance. Key assumptions used in value in use calculations The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill.

• Growth rate • Profit margins • Discount rate

Growth rate: The Management has projected cash flows at a growth rate of 5% p.a for first three years and 4% p.a for the remaining years until a 5 year horizon. The growth rate is considered appropriate considering the nature of the industry and the general growth in the economic activity witnessed in the region where these entities operate. Profit margins: Estimates are based upon management’s assumption of achieving a stabilised level of performance following its first full year of operations. Margins have been adjusted for expected efficiency improvements, price fluctuations and manpower costs. Discount rate: Management has used discount rates of 10% per annum throughout the respective assessment periods, reflecting the current estimated weighted average cost of capital of the relevant industry. The discount rate has been calculated using an estimated risk free rate of return adjusted for the estimated equity market risk premium and the cost of debt.


46

11 GOODWILL (continued) Sensitivity to changes in assumptions Management believes that no reasonably possible changes in any of the key assumptions would cause the carrying value of the entity to exceed its recoverable amount, after giving due consideration to the economic outlook for the jewellery industry. 12 INTANGIBLE ASSETS 2009: Operating lease Brand Distribution premium acquisition costs rights Total AED’000 AED’000 AED’000 AED’000 Cost: As at 1 January 62,131 7,497 11,025 80,653 Additions during the period 32,318 - - 32,318 Change in status to subsidiary (refer note 4(iv)) 12,127 - - 12,127 Intangibles written off (3,824) - - (3,824) Currency translation (689) (518) - (1,207) ───── ───── ───── ───── As at 31 March 2009 102,063 6,979 11,025 120,067 ═════ ═════ ═════ ═════ Amortisation and impairment: As at 1 January 21,684 541 2,205 24,430 Amortisation 21,413 651 2,756 24,820 On write off (3,824) - - (3,824) Currency translation (90) (87) - (177) ───── ───── ───── ───── As at 31 March 2009 39,183 1,105 4,961 45,249 ═════ ═════ ═════ ═════ Net book value: As at 31 March 2009 62,880 5,874 6,064 74,818 ═════ ═════ ═════ ═════ 2007: Operating lease Brand Distribution premium acquisition costs rights Total AED’000 AED’000 AED’000 AED’000 Cost: As at 1 January 39,365 3,429 11,025 53,819 Additions during the period 17,536 4,068 - 21,604 Acquisition of subsidiary 7,915 - - 7,915 Disposal of subsidiaries (2,685) - - (2,685) ───── ───── ───── ───── As at 31 December 2007 62,131 7,497 11,025 80,653 ═════ ═════ ═════ ═════ Amortisation and impairment: As at 1 January 15,550 108 - 15,658 Amortisation 6,134 433 2,205 8,772 ───── ───── ───── ───── As at 31 December 2007 21,684 541 2,205 24,430 ═════ ═════ ═════ ═════ Net book value: As at 31 December 2007 40,447 6,956 8,820 56,223 ═════ ═════ ═════ ═════


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13(a) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD 2009 2007 AED’ 000 AED’ 000 Investments in jointly controlled entities (refer note 1 below) 222,975 204,929 Investments in associates (refer note 2 below) 175,205 171,869 ───── ───── Balance at 31 March/December 398,180 376,798 ═════ ═════ Note 1: The movement in investments in jointly controlled entities is as follows: 2009 2007 AED’ 000 AED’ 000 Balance as at 1 January 204,929 154,798 Investments made during the period/year - 27,334 Dividend received during the period/year (913) - Share of profit recognised during the period/year (refer note 8) 18,959 22,797 ───── ───── Balance as at 31 March / December 222,975 204,929 ═════ ═════ Summary financial information on jointly controlled entities – 100 percent 2009 (AED’000) Names of jointly controlled entities Assets Liabilities Equity* Revenue Profit/(loss) Premium Investments International LLC 82,912 4,090 78,822 42,822 9,183 Paspaley Pearl Jewellery LLC 29,989 28,063 1,926 17,848 1,481 Trading House Kristall DMCC 1,075 10 1,065 3,210 77 D’Damas Jewellery (India) Pvt. Ltd. 87,551 59,297 28,254 100,950 2,504 Al Manara 212,935 52,363 160,572 138,465 2,506 Al Zain Trading Co. WLL 204,888 122,209 82,679 108,384 11,622 Time Center LLC 48,025 40,685 7,340 56,348 2,706 Damas Toomban Pvt. Ltd 37,497 2,123 35,374 34,690 6,796 Damas Saudi Arabia Company Ltd. 137,275 8,882 128,393 283,195 (5,108) Deepu Jewellery DMCC 118,035 112,245 5,790 4,217 (852) Roberto Coin Middle East LLC 6,619 5,636 983 10,342 983 Flamingo Jewellery India Pvt Ltd 1,731 1,174 557 4,023 (369) 2007 (AED’000) Names of jointly controlled entities Assets Liabilities Equity* Revenue Profit/(loss) Premium Investments International LLC 100,651 40,849 59,802 33,773 7,998 Paspaley Pearl Jewellery LLC 23,405 22,913 492 12,120 607 Trading House Kristall DMCC 3,807 2,810 997 4,073 260 D’Damas Jewellery (India) Pvt. Ltd. 85,695 67,820 17,875 54,998 1,346 Al Manara 148,054 23,589 124,465 93,704 13,923 Al Zain Trading Co. WLL 163,431 86,460 76,971 79,146 8,975 Time Center LLC 36,393 31,737 4,656 37,410 3,431 Damas Toomban Pvt. Ltd 8,023 6,650 1,373 3,572 1,154 Damas Saudi Arabia Company Ltd. 117,061 7,520 109,541 107,018 (110) Deepu Jewellery DMCC 272,115 230,027 42,088 539,809 12,285 Roberto Coin Middle East LLC 11,529 11,466 63 1,380 (237) Flamingo Jewellery India Pvt Ltd 3,817 3,733 84 717 (200) * Equity includes retained earnings/(accumulated losses) Refer to note 34.1 for details of jointly controlled entities.


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13(a) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued) Note 2: The movement of investment in associates is as follows: 2009 2007 AED’ 000 AED’ 000 Balance at 1 January 171,869 76,642 Investments made during the period/year 13,811 71,279 Change in status to associate - 7,342 Disposed of during the period/year (10,732) (918) Change in status to subsidiary (144) - Dividend received (32,226) (5,135) Share of profit recognised during the period/year (refer note 8) 27,367 19,464 Share of losses of an associate in excess of contributed capital netted against long term loans due from this associate (refer note 17) 5,260 3,195 ───── ───── Balance at 31 March/December 175,205 171,869 ═════ ═════ Summary financial information on associates – 100 percent 2009 (AED’000) Names of associates Assets Liabilities Equity* Revenue Profit/(Loss) Damas & Chalco General Trading Co LLC 82,044 78,563 3,481 40,003 703 Damas Mucevherat 19,360 6,462 12,898 50,555 1,804 Style Avenue Middle East FZ Company 118,813 73,237 45,576 247,184 (2,142) Daiso Japan Value Stores LLC 13,701 8,332 5,369 36,414 1,434 LTC International General Trading Co 11,591 16,515 (4,924) 27,524 (295) LTC International Qatar LLC 23,312 22,051 1,261 75,399 3,740 Daiso Trading 4,026 1,030 2,996 6,980 1,204 DPG Diamonds DMCC 604 367 237 - - Al Mana Jewellery Co. - Damas WLL 11,811 2,544 9,267 219,714 16,720 Al Baraka Jewellery 12,200 4,561 7,639 24,913 2,328 Himo LLC 34,435 7,124 27,311 14,870 4,457 Lucci 2 SARL 10,393 1,443 8,950 6,586 2,782 Metamorph Real Estate WLL ** - - - - - Tanya collections limited 28,384 16,907 11,477 46,609 (2,311) Islanders Maldives Pvt Ltd 17,570 6,703 10,867 36,980 1,385 Felopateer Palace 137,171 57,407 79,764 130,266 31,271 Crescendo Jewellery Design Ltd 23,392 15,173 8,219 70,156 3,033 Style Avenue Bahrain Company WLL 60,316 43,550 16,766 11,233 (9,775) 2007 (AED’000) Names of associates Assets Liabilities Equity* Revenue Profit/(Loss) Damas & Chalco General Trading Co LLC 38,169 33,397 4,772 14,908 (333) Damas Mucevherat 31,677 20,047 11,630 46,276 739 Carati Jewellery S.A.L - - - - - Style Avenue Middle East FZ Company 86,982 38,065 48,917 137,799 12,493 Daiso Japan Value Stores LLC 11,706 8,161 3,545 25,560 3,420 LTC International General Trading Co. 14,823 29,268 (14,445) 32,165 (9,128) LTC International Qatar LLC 21,409 21,263 146 51,584 9,950 Daiso Trading 3,705 528 3,177 4,938 790 DPG Diamonds DMCC 604 367 237 - -


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13(a) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued) Summary financial information on associates – 100 percent (continued) 2007 (AED’000) Names of associates Assets Liabilities Equity* Revenue Profit/(Loss) Al Mana Jewellery Co. - Damas WLL 22,533 15,036 7,497 141,276 10,540 Al Baraka Jewellery 10,082 4,398 5,684 20,711 471 Himo LLC 17,550 261 17,289 6,077 3,704 Lucci 2 SARL 10,020 4,005 6,015 6,292 1,762 The Jewellery Stores DMCC 41,540 7,081 34,459 4,539 (4,424) Metamorph Real Estate WLL ** - - - - - Tanya collections limited 39,848 27,309 12,539 27,144 (1,894) Emirates Jewellery Manufacturing Company 4,002 3,702 300 - - Islanders Maldives Pvt Ltd 18,487 12,376 6,111 37,668 1,816 Felopateer Palace 97,061 67,785 29,275 94,681 16,034 Crescendo Jewellery Design Ltd 30,163 21,434 8,729 58,350 4,181 Damas Europe SPA 84,362 61,046 23,316 62,201 (9,688) Refer to note 34.2 for details of associates Details of new investments made in 2008 Style Avenue Middle East Bahrain During the period the Group has acquired 49 % of Style Avenue Middle East Bahrain, Bahrain. Style Avenue Middle East Bahrain is involved in selling fashion items. The Group recognised AED 0.9 million as its share of loss from this entity, for the period ended 31 December 2008. * Equity includes retained earnings/ (accumulated losses). **For the period ended 31 March 2009 and year ended 31 December 2007, the Group has not been able to obtain any financial information with respect to this associate. The Executive Directors of the Company have confirmed that the absence of financial information regarding this associate does not have a material impact on the financial statements of the Group. During the year 2006 the Group acquired a 30% investment in Metamorph Real Estate WLL (“Metamorph”) which was established in conjunction with other investors to develop a shopping & entertainment centre in Kuwait. During the year 2006, the Group recognised AED 12.72 million as its share of profit from the associate. The total income of the associate, in 2006, included AED 50.8 million earned from the assignment to a third party, in May 2006, of a portion of leasehold interest in land acquired by the associate on a long term lease (lease for 20 years). The one time premium of AED 50.8 million was settled to the associate and the third party has agreed to take over all the rights and obligations of Metamorph under the original lease. However, Metamorph’s agreement with the third party provides for the transfer of the leasehold interest to be only effective on the approval of the assignment by the original owner of the land and a department of the Kuwait government. These approvals are outstanding at the balance sheet date. The Directors of Damas Jewellery LLC have confirmed that on the basis of this understanding between the parties involved the necessary approvals for the assignment will be forthcoming and with the collection of the amount of the consideration, the transaction has been finalised and any uncertainty in respect of the collectability of the revenue removed. Accordingly, they have confirmed the inclusion of the above income in the financial statements of the Group in 2006. The Directors have also provided an indemnity to the Company to make good any loss to the Company if the necessary approvals are not obtained.


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13(b) OTHER FINANCIAL ASSETS 2009 2007 AED’ 000 AED’ 000 Investments designated as fair value through profit or loss (refer note 1, note 2 and note 3 below) 24,855 115,754 Investments available for sale (refer note 1 below) 48,073 46,865 Investments held to maturity - 18,732 ───── ───── Balance at 31 March/December 72,928 181,351 ═════ ═════ Note 1: As at 31 March 2009 and 31 December 2007, these investments are held by an Executive Director who has confirmed holding the same for the beneficial interest of the Group. Note 2: Investments designated as fair value through profit or loss represents shares in quoted equity securities. Note 3: Movement in investments designated as fair value through profit or loss are as follows: 2009 2007 AED’ 000 AED’ 000 Opening balance 115,754 11,713 Add: Purchase during the period/year 15,084 97,474 Less: Disposal during the period/year (3,668) (5,892) Less: Change in fair value (102,315) 12,459 ───── ───── Balance at 31 March/December 24,855 115,754 ═════ ═════ The fair value of the above investments is based on their period end closing bid prices in the respective markets. 14 INVENTORIES 2009 2007 AED’ 000 AED’ 000 Cost of inventory on hand (net of consignment inventory) (gold and gold jewellery, diamonds, pearls, watches, silver and other precious stones) 3,157,759 2,440,194 Gold unfixed with trade receivables 541,851 553,609 Gold unfixed with jointly controlled entities/associated companies 299,993 127,330 Provision for gold purchases (refer note 24) 1,101,640 261,232 Gold (unfixed) received on loan from banks (refer note 25) (2,945,410) (1,771,697) Gold unfixed from trade payables (67,421) (56,476) Gold unfixed from joint venturer’s contribution (25,862) (28,104) ────── ────── 2,062,550 1,526,088 Less: Provision for slow moving/ obsolete inventories (39,348) (28,384) ────── ────── Net inventories 2,023,202 1,497,704 ══════ ══════ Notes: In few cases, inventories are hypothecated to the banks against the borrowing facilities obtained by the Group (refer note 22).


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14 INVENTORIES (continued) Included in the inventory above is the making charges related to own and unfixed jewellery amounting to AED 142 million (2007: AED 129 million) The Group in the normal course of business borrows and buys gold on an unfixed basis which it converts into gold jewellery or trades as bullion. This jewellery and bullion is further used as stock in trade and is sold to various customers on a fixed or unfixed basis. The Group enters into forward purchases and forward sales to minimize the price risk which it is being exposed. Revaluation of open forward contracts at fair market value as at 31 March 2009 has resulted in an unrealised gain of AED 253.1 million (2007: AED 21.1 million ) (refer notes 19 and 27). This revaluation gain is grouped in prepayments and other receivables under current assets in the balance sheet. The Group monitors these forward contracts as part of its own/book stock as follows:

2009 2007 AED’ 000 AED’ 000

Net inventory (as above) 2,023,203 1,497,704 Provision for gold purchases (note 24) (1,101,640) (261,232) Forward purchases (at cost) (note 27) 1,816,880 634,605 Forward sales (at cost) (note 27) - (116,686) ────── ────── Economic position of Group’s inventory 2,738,443 1,754,391 ══════ ══════

The Group has received margins against gold unfixed with trade receivables, which has been separately presented as a current liability. The Group has paid margins against gold unfixed from trade payables and banks which have been disclosed separately as margin to trade payables against unfixed gold and bank balances and cash respectively.

The Group provides gold on an unfixed basis to customers against cash margin. As at 31 March 2009 the value of such gold at the spot rate was in excess of cash margin held by AED 147 million (2007: AED 196 million). The Executive Directors are confident that no loss will arise from these transactions and have provided personal guarantees against the associated credit risks (refer note 17).

Included under cost of inventory on hand is gold supplied on consignment basis amounting to AED 50.1 million (458,503 grams at the spot rate). Credit risks associated with the same are personally guaranteed by the Executive Directors (refer note 17).

Included under gold unfixed with trade receivables are balances amounting to AED 10.3 million (94,075 grams at the spot rate) of gold lying with certain parties. Credit risks associated with the same are personally guaranteed by the Executive Directors (refer note 17).

Further 130,275 grams of gold lying with certain parties on unfixed basis are secured by liens on personal properties of those parties. These liens are created in the names of minority interests within the Group who have confirmed beneficial interest in favour of the Group. 15 ACCOUNTS RECEIVABLES AND PREPAYMENTS 2009 2007 AED’ 000 AED’ 000 Trade receivables 344,751 353,705 Provision for doubtful debts (27,549) (12,641) ────── ────── 317,202 341,064 Dues from credit card companies 2,952 7,837 Prepaid expenses 34,271 28,055 Advances and other receivables (note 1 below) 87,484 103,895 Deposits 15,334 8,545 ────── ────── 457,243 489,396 ══════ ══════ In few cases, trade receivables are hypothecated to banks against the borrowing facilities (refer note 22).


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15 ACCOUNTS RECEIVABLES AND PREPAYMENTS (continued) As at 31 March 2009, trade receivables at nominal value of AED 27.5 million (2007: AED 12.6 million) were impaired. Movements in the allowance for impairment of receivables were as follows: 2009 2007 AED’000 AED’000 At 1 January 12,641 12,700 Charge for the period/year 14,908 - Changes due to exchange rate fluctuations - (59) ────── ─────── At 31 March/December 27,549 12,641 ══════ ═══════ As at 31 March/December, the ageing of unimpaired trade receivables is as follows: Past due but not impaired ──────────────────────────── <30 30-180 >180 Total days days days AED’000 AED’000 AED’000 AED’000 31 March 2009 317,202 126,812 74,540 115,850 31 December 2007 341,064 158,933 73,146 108,985 Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. Included in unimpaired receivables are debts amounting to AED 47.3 million (2007: AED 64.2 million) due from particular consignment debtors and AED 54.9 million (2007: AED 26.1 million) due from certain high net worth and important customers who are otherwise familiar and acquainted with the Executive Directors. Credit risks associated with these balances are secured by personal guarantees of the Executive Directors (refer note 17). Further trade receivables amounting to AED 17 million are secured by liens on personal properties of those parties. These liens are created in the names of minority interests with in the Group who have confirmed beneficial interest in favour of the Group. Trade receivables are non interest bearing and are generally on 90 -180 day terms. Note 1: Includes advances to suppliers amounting to AED 19.4 million (2007: AED 48.8 million). 16 CASH AND CASH EQUIVALENTS Cash and cash equivalents in the statement of cash flows consist of the following balance sheet amounts: 2009 2007 AED’ 000 AED’ 000 (restated) Fixed deposits and margins with banks 1,026,187 1,250,575 Bank balances and cash 55,308 114,104 ────── ────── Total bank balances and cash 1,081,495 1,364,679 ────── ────── Less: Bank overdraft (note 22) (102,237) (100,328) Fixed deposits and margins under lien (note 22) (596,521) (811,749) Long term fixed deposits (11,086) (153,281) ────── ────── Cash and cash equivalents 371,651 299,321 ══════ ══════


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16 CASH AND CASH EQUIVALENTS (continued) Fixed deposits carry interest rates from 1.2 % p.a. to 5.8 % p.a. depending on the tenure and maturity of deposits (2007: from 4% p.a. to 5.7% p.a.). 17 RELATED PARTY BALANCES AND TRANSACTIONS Related parties represent subsidiaries, associates, joint ventures, major shareholders, Executive Directors and key management personnel of the Group, and entities controlled, jointly controlled or significantly influenced by such parties. The sales to and purchases from related parties are made at normal market prices. Pricing policies and terms of these transactions are approved by the Group’s management. Significant transactions with related parties are as follows: 2009 Amount in AED’000 Purchase of Property, plant Fees for services Rental income Sales Purchases and equipment rendered charged Jointly controlled entities and associated companies 355,891 127,107 - 1,550 3,125 Directors (see note below) - - 85,851 - - ───── ───── ───── ───── ───── Total 355,891 635,713 85,851 1,550 3,125 ═════ ═════ ═════ ═════ ═════ Further to the above, the Directors have supplied 4,975,152 grams of gold during the period. 2007 Amount in AED’000 Expenses paid on behalf Fees for services Rental income Sales Purchases of related parties rendered charged Jointly controlled entities and associated companies 168,004 82,583 - 2,227 - ───── ───── ───── ───── ───── Total 168,004 82,583 - 2,227 - ═════ ═════ ═════ ═════ ═════ Balances with related parties included in the balance sheet are as follows: 2009 2007 Long Due from Due to Long Due from Due to term related related term related related loans parties parties loans parties parties AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 Jointly controlled entities and associate companies 104,696 177,391 27,732 114,896 105,581 95,243 Less: Provision for additional losses of an associate in excess of contributed capital (1,732) (3,528) - (3,195) - - Directors (refer note 18) - 259,524 - - 34,811 - ────── ────── ────── ────── ────── ────── 102,964 433,387 27,732 111,701 140,392 95,243 ══════ ══════ ══════ ══════ ══════ ══════


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17 RELATED PARTY BALANCES AND TRANSACTIONS (continued) Long term loans to related parties (associates and jointly controlled entities) represent loans which are interest free, unsecured and have no fixed terms of repayment and it is not clear when repayments will take place. The Directors of the Company have provided an undertaking that these amounts will not be called upon for repayment within a period of twelve months from the balance sheet date and therefore classified as long term. Compensation of key management personnel The remuneration of Executive Directors and other members of key management during the period was as follows: 2009 2007 AED’ 000 AED’ 000 Short-term benefits 1,192 720 Sitting fees 40 - ─────── ─────── 1,232 720 ═══════ ═══════ The Executive Directors have provided personal guarantees amounting to AED 150 million (2007: AED 198 million) in respect of risks associated with unfixed gold lying with certain parties, dues from particular consignment debtors and certain high net worth and important customers (refer notes 14 and 15). Outstanding balances at the period-end arise in the normal course of business. For the period ended 31 March 2009, the Group has recorded an impairment of AED 5.3 million (2007: AED 3.2 million) on amounts owed by related parties.

18 DIRECTORS’ CURRENT ACCOUNTS 2009 2007 AED’ 000 AED’ 000 (restated) Balance at 1 January 34,811 74,032 Net drawings during the period/year 314,318 64,212 Cost of property purchased from directors (85,851) - Cash paid by a director for acquisition of - interest in a subsidiary (refer note 4(iv) (3,242) Remuneration and sitting fees of directors (512) - Dividends - (57,233) On acquisition of entity under common control (refer note 5(ii)) - (46,200) ────── ────── Balance as at 31 March/December 259,524 34,811 ══════ ══════

19 OTHER FINANCIAL ASSETS 2009 2007 AED’ 000 AED’ 000 Corporate loan receivable* 304,747 - Unrealised gain on forward contracts (refer note 27) 253,069 21,081 Held to maturity 1,000 - ───── ───── Balance at 31 March/December 558,816 21,081 ═════ ═════ * The Company has provided a loan amounting to AED 294 million (USD 80 million) to Dubai Ventures LLC at a rate of interest of 6% p.a. Balance above includes accrued interest of AED 10 million.


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20 SHARE CAPITAL 2009 2007 AED’ 000 AED’ 000 (restated) Authorised capital 1,000,000,000 shares of USD 1 each 3,673,500 3,673,500 ══════ ══════ Issued and paid up capital: 989,228,009 ordinary shares of USD 1 each 3,633,932 - ────── ───── 734,756,483 ordinary shares of USD 1 each - 2,699,128 3 ordinary shares of USD 272.37 each - 3 ────── ────── 3,633,932 2,699,131 ══════ ══════ 21 RESERVES Statutory reserve In accordance with the Articles of Association of entities in the Group and UAE Company Law, 10% of the net profit for the period of the individual entities in the Group to whom this Law is applicable is transferred to statutory reserve which is non-distributable. Such transfer may be discontinued when the reserve equals 50% of the respective paid up share capital of the individual entities. Currency translation reserve The currency translation reserve represents all the foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries of the Group. 22 INTEREST BEARNING LOANS AND BORROWINGS 2009 2007 AED’ 000 AED’ 000 Current Bank overdrafts 102,237 100,328 Trust receipts 127,466 44,144 Short term loan* 533,330 497,780 Local bills discounting 37,704 19,660 ────── ────── 800,737 661,912 ────── ────── Non current Long-term loan* 545,792 1,209,591 ────── ────── Total 1,346,529 1,871,503 ══════ ══════

* (net of debt issuance costs of AED 5.1 million (2007: AED 7.9 million). Bank borrowings are secured as under: I. Partly secured against fixed deposits amounting to AED 596 million (refer note 16). II. Hypothecation of inventories and receivables on pari pasu basis with a few banks. (refer notes 14 & 15). III. Assignment of insurance policy on pari pasu basis. IV. Unconditional, continuing, joint and several guarantees of Mr. Tawfique Abdulla, Mr. Tawhid Abdulla and

Mr. Tamjid Abdulla on behalf of the Group. V. Mortgage of the properties, plant and equipments amounting to AED 41.6 million (refer note 10). VI. Subordination of directors’ long term loan (refer note 23). VII. Corporate cross guarantees from Group companies. VIII. Promissory notes given to banks.


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22 INTEREST BEARNING LOANS AND BORROWINGS (continued) The above mentioned borrowings are subject to certain financial related covenants which are specified in each individual loan agreement. One of the key covenants imposed by the syndication banks is that the Group must maintain a tangible net worth of not less than AED 1,250 million at any time. 23 LONG TERM LOANS FROM DIRECTORS 2009 2007 AED’ 000 AED’ 000 Balance as at 31 March/December 150,000 150,000 ══════ ══════ This represents long term loans from Mr.Tawfique Abdulla, Mr.Tawhid Abdulla and Mr.Tamjid Abdulla to the Company. This loan is interest free, unsecured and does not have a fixed repayment date. This loan is considered repayable on demand. However, the directors have provided an undertaking that the amount of the loan will not be called upon for repayment within twelve months from the balance sheet date. These loans are subordinated to banks against borrowings (refer note 22). 24 ACCOUNTS PAYABLE AND ACCRUALS 2009 2007 AED’ 000 AED’ 000 Trade payables 419,940 507,037 Accruals and provisions 1,177,120 311,407 ────── ────── 1,597,060 818,444 ══════ ══════ Accruals and provisions include an amount of AED 1,101.6.million (2007: AED 261.2 million) with respect to provisions for gold purchases. The Company has entered into forward contracts to cover its positions arising from these purchases (refer note 14). Accruals and provision include loss on fair valuation of interest rate swap amounting to AED 10 million (2007: AED 7 million). 25 CONTINGENCIES AND COMMITMENTS 2009 2007 AED’ 000 AED’ 000 Letters of credit 812 4,150 Corporate guarantees 54,955 54,023 Other bank guarantees 24,000 19,818 Stand-by letters of credit 2,161,938 1,398,495 ══════ ══════ Commitments Capital commitments 11,587 39,514 ══════ ══════ The stand-by letters of credit are provided by banks in favour of the suppliers of gold who have lent unfixed gold and which is deducted from the total inventory on hand in note 14 under the head “Gold (unfixed) received on loan from banks”.


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25 CONTINGENCIES AND COMMITMENTS (continued) Operating lease commitments as a lessee The Group leases various retail outlets, offices and warehouses under non-cancellable operating lease agreements. The lease terms are between five and 10 years, and the majority of lease agreements are renewable at the end of the lease period at market rate. 2009 2007 AED’ 000 AED’ 000 Future minimum lease payments: Within one year 41,159 41,044 After one year but not more than five years 41,310 23,234 More than five years 11,955 3,946 ─────── ─────── Total operating lease expenditure contracted for at the balance sheet date 94,424 68,224 ═══════ ═══════

Finance lease commitments The Group has finance leases and hire purchase contracts for various items of property, plant and equipment. These leases have terms of renewal and purchase options but no escalation clauses. Renewals are at the option of the specific entity that holds the lease. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows: Amount in AED’ 000 2009 2007 Minimum Present value Minimum Present value Payments of payments Payments of payments Within one year 1,142 560 1,842 1,528 After one year but not more than five years 3,633 1,771 4,575 2,329 More than 5 years 10,882 7,374 13,239 8,688

────── ─────── ─────── ─────── Total minimum lease payments 15,657 9,705 19,656 12,545 Less amounts representing finance charges 5,952 - 7,111 - ────── ─────── ─────── ─────── Present value of minimum lease payments 9,705 9,705 12,545 12,545 ══════ ═══════ ═══════ ═══════

Legal case Outstanding legal cases against the Group as at 31 March 2009 include a case under arbitration relating to its subsidiary in Italy, DIT group SPA (formerly Stefan Hafner SPA) (“the subsidiary”). In the earlier years, the Group acquired the business of Stefan Hafner SPA from the previous owner, Mr. Stefan Hafner for an agreed consideration. Subsequently, Mr. Stefan Hafner commenced arbitration proceedings against the subsidiary where he claimed to have not been paid a fair price for the sale of his business and claimed an additional consideration of AED 41.9 million (Euro 7.8 million). The subsidiary has rejected this claim and filed a counter claim against Mr. Stefan Hafner claiming an amount of AED 8.7 million (Euro 1.6 million) representing losses suffered by the subsidiary on the non recovery of outstanding receivables taken over from Mr. Stefan Hafner and certain expenses incurred by the subsidiary on behalf of Mr. Stefan Hafner. The arbitration panel appointed experts to look into the details of the case and submit their report and the final hearing of the arbitration proceedings took place on 11 May 2009. The Group legal counsel has confirmed they don’t forsee any liabilities arising as a result of these proceedings however, the outcome of the arbitration proceedings are not predictable. The management have represented that the price paid for the purchase of the business was a fair price and was mutually agreed between the parties. Management are also confident of the collectability of the amount of AED 6.1 million from Mr. Stefan Hafner and hold assets as security against this debt (this amount is currently recorded under advances and other receivables – refer note 15). Management is confident of defending the case and consider their arguments to be strong and possibility of any loss to be incurred by the Group not probable. Accordingly, no provision has been made against this claim in these consolidated financial statements.


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26 EARNINGS PER SHARE (EPS) Basic earnings per share is calculated by dividing profit for the period attributable to shareholders of the company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by dividing the profit by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. There were no potentially dilutive shares as at 31 March 2009. 2009 2007 Earnings: Profit for the period/year – AED’ 000 217,346 204,051 ────── ────── Shares: Weighted average number of shares outstanding for calculating basic EPS 883,524,452 734,756,486 ─────── ─────── Basic and diluted earning per share AED 0.25 0.28 ═══════ ═══════ 27 FORWARD GOLD CONTRACTS Open position - March 2009 Cost ────────────────────── Fair value Revaluation Between 3 Less than months 3 months to 1 year Total Total Gain/ (Loss) AED’000 AED’000 AED’000 AED’000 AED’000 Forward purchases 1,068,595 748,285 1,816,880 2,069,949 253,069 These forward contracts are measured at fair value as at 31 March 2009 which resulted in the recognition of gain in the income statement and a corresponding asset amounting to AED 253.1 million (2007: AED 21.1 million) (refer note 19). Open position - December 2007 Cost ────────────────────── Fair value Revaluation Between 3 Less than months 3 months to 1 year Total Total Gain/ (Loss) AED’000 AED’000 AED’000 AED’000 AED’000 Forward purchases 634,605 - 634,605 656,903 22,298 Forward sales 116,686 - 116,686 117,903 (1,217) ────── 21,081 ══════


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28 RISK MANAGEMENT The Group’s principal financial liabilities, other than derivatives, comprise bank borrowings, trade payables and other liabilities, margin from trade receivable against unfixed gold, long term loans from shareholders and dues to related parties. The main purpose of these financial liabilities is to raise finance for the Group’s operations. The Group has various financial assets such investments, cash in hand, bank current accounts, bank fixed deposit accounts, bank margin accounts, due from related parties, trade receivables, other receivables, directors’ current accounts and margin to trade payable against unfixed gold, which arise directly from its operations. The Group also enters into derivative transactions, primarily forward gold contracts and interest rate swaps The purpose is to hedge its gold price and interest rate risks. The main risks arising from the Group’s financial instruments are interest rate risk, credit risk, liquidity risk and foreign currency risk. The Board of Directors review and agree policies for managing each of these risks which are summarised below. Interest rate risk The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates. To manage this, the Group enters into interest rate swaps, in which the Group agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed upon notional principal amount. These swaps are designated to hedge underlying debt obligations. Interest rate risk table The following table demonstrates the sensitivity of the income statement to reasonably possible changes in interest rates, with all other variables held constant. There is no impact on the Group’s equity. Increase/ Effect on decrease profit for the in basis period/ year points AED ‘000 1 January 2008 to 31 March 2009 +10 (4,550) -10 4,550 1 January 2007 to 31 December 2007 +10 (2,607) -10 2,607 Credit risk The Group seeks to limit its credit risk with respect to customers by setting credit limits for individual customers and monitoring outstanding receivables. The Group sells its products to a large number of customers comprising the Group’s customer base. No single customer accounts for more than 10% of the total outstanding for the period ended 31 March 2009. With respect to credit risk arising from the other financial assets of the Group, including cash and cash equivalents, investments and derivative instruments with positive values, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. Liquidity risk The Group limits its liquidity risk by ensuring bank facilities and funds from shareholders are available. The Group’s terms for retail sales require amounts to be paid on delivery of jewellery and for wholesale sales within 30 to 180 days of the date of sale except on sales to consignment debtors, high net worth individuals and sales on approval basis. The table below summarises the maturities of the Group’s undiscounted financial liabilities at 31 March 2009, based on contractual payment dates and current market interest rates.


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28 RISK MANAGEMENT (continued) Liquidity risk (continued) At 31 March 2009 Less than 6 to 12 1 to 5 6 months months years >5 years Total AED’000 AED’000 AED’000 AED’000 AED’000 Term loan* 357,740 207,884 558,663 14,519 1,138,806 Trade payables 407,137 - - - 407,137 (excluding customer deposits AED12.8 million) Bank overdraft 102,237 - - - 102,237 Trust Receipts 127,580 - - - 127,580 Local Bills Discounted 37,704 - - - 37,704 ─────── ────── ────── ────── ─────── Total 1,032,398 207,884 558,663 14,519 1,813,464 ═══════ ══════ ══════ ══════ ═══════ At 31 December 2007 Less than 6 to 12 1 to 5 6 months months years >5 years Total AED’000 AED’000 AED’000 AED’000 AED’000 Term loan* 244,945 272,214 1,309,115 5,520 1,831,794 Trade payables 486,330 5,509 - - 491,839 (Excluding customer deposits AED 15.2 million) Bank overdraft 100,328 - - - 100,328 Trust Receipts 44,824 - - - 44,824 Local Bills Discounted 19,660 - - - 19,660 ────── ────── ─────── ───── ─────── Total 896,087 277,723 1,309,115 5,520 2,488,445 ══════ ══════ ═══════ ═════ ═══════ * includes future interest payable of AED 59.6 million on term loan outstanding as at 31 March 2009 (31 December 2007: AED 124.4 million) Foreign currency risk As a result of investment operations in Europe, the Group’s balance sheet can be impacted significantly by movements in the AED/Euro exchange rates. There is no other significant exchange rate risk as substantially all of the financial assets and financial liabilities are denominated in UAE Dirhams or USD to which the UAE Dirham is pegged. Foreign currency exposures to currencies other than USD are monitored and managed centrally by the Group by obtaining forward exchange covers. The Group accounts for gains and losses in the income statement arising from the utilisation of these forward exchange covers. There are no outstanding forward currency contracts as at 31 March 2009. The table below indicates the Group’s foreign currency exposure at 31 December, as a result of its monetary assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the AED currency rate against the Euro, with all other variables held constant, on the income statement (due to the fair value of currency sensitive monetary assets and liabilities).


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28 RISK MANAGEMENT (continued) Foreign currency risk (continued) Increase/ Effect on decrease profit in Euro rate before tax to the AED AED’000 2009 +5% 13,908 -5% (13,908) 2007 +5% 3,940 -5% (3,940) Capital management The primary objective of the Group's capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in business conditions. No changes were made in the objectives, policies or processes during the periods ended 31 March 2009 and 31 December 2007. Equity comprises share capital, retained earnings and other reserves and is measured at AED 2,859.8 million as at 31 March 2009 (2007: AED 1,808.6 million). 29 DIVIDENDS PAID During the period, dividends of USD 0.025 per share totalling AED 90.8 million relating to 2008 were declared and paid (2007: AED 70 per share totalling AED 99.5 million relating to 2006). 30 FAIR VALUES OF FINANCIAL INSTRUMENTS Financial instruments comprise of financial assets, financial liabilities and derivatives. Financial assets consist of cash and bank balances, due from related parties and receivables. Financial liabilities consist of bank overdrafts, term loans, due to related parties, and payables. Derivatives consist of forward gold contracts and interest rate swaps. The fair values of financial instruments, with the exception of certain available-for-sale investments carried at cost, are not materially different from their carrying values. 31 RESTATEMENT OF COMPARATIVES

The following restatements have been made in order to improve the quality of information presented:- 1) Credit card commission payable to banks on sales made reclassified from “revenue” to “advertising, sales

promotion/marketing and selling expenses” included under general administration, selling and distribution expenses. Comparative amounts totaling to AED 15.1 million have been reclassified accordingly.

2) Gain on fair valuation of investments designed as fair value through profit or loss has been reclassified

from ‘other income’ to ‘loss/gain on fair value of investments carried at through profit or loss’ disclosed on the face of income statement. Comparative amounts totaling to AED 12.4 million have been reclassified accordingly.

3) Unrealised gain on forward contract reclassified from “accounts receivables and prepayments” to “other

financial assets” disclosed on the face of balance sheet. Comparative amounts totaling to AED 21 million has been reclassified accordingly.


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32 EVENTS AFTER THE BALANCE SHEET DATE

Subsequent to the period end the Group has obtained the approval of the Foreign Investments Promotion Board, Ministry of finance, Government of India to set up an entity with 51% equity participation to undertake the business of single-brand retail trading in India. The venture will be partnered with the Gitanjali Jewellery Group in India. The equity contribution of the Group is expected to be around AED 135.9 million. Formal procedures for incorporating the venture are imminent and management has planned to make the investment in a phased manner.

33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements represent a line-by-line consolidation of operating results and financial position of the Company and its subsidiaries as set out below.

Name of the Company Country of incorporation 1. Damas Jewellery LLC UAE 2. Mukund Jewellery LLC UAE 3. Ocean Jewellery LLC UAE 4. Dhanak Jewellery LLC UAE 5. Armaan Jewellery LLC UAE 6. Al Mana Damas International LLC UAE 7. Gem Universe LLC Oman 8. Universe Jewellers Limited USA 9. Damas Company WLL Kingdom of Bahrain 10. Islanders Demas Pvt. Ltd. Maldives 11. DIT group SPA (formerly stefen hafner SPA) Italy 12. Stefan Hafner (NY) Inc USA 13. Tawhid & Muktasem Jewellery Jordan 14. Damas Jewellery SAL Lebanon 15. Damas Jewellery Company Egypt 16. Diminco Damas Diamond Manufacturing DMCC* UAE 17. Demas Jewellery Pvt. Ltd. India 18. Soir Jewellery Pvt. Ltd. India 19. Damas Gold Fields Jewellery Private Limited* India 20. Damas Hong Kong Ltd.* Hong Kong 21. Damas Thailand Co. Ltd. Thailand 22. Royal Jewellers Inc.* USA 23. 7816 3rd Avenue LLC* USA 24. Damas Jewellery DMCC UAE 25. Ayodhya Jewellers LLC UAE 26. Damas & Al Ghannam jewellery Co WLL Kuwait 27. Time art watches and optics trading LLC UAE 28. Damas Southall Limited UK 29. Damas Dis Ticarat A.S Turkey 30. Damas Uk Ltd UK 31. Al Nahrain Jewellers Factory LLC UAE 32. Tarek Soliman Guirguis – Glamour company Egypt 33. Damas Vault DMCC UAE 34. Al Wasl DMCC UAE 35. Emirates Jewellery Manufacturing Company UAE 36. Arshi Jewellery LLC UAE 37. Farhan Jewellery LLC UAE 38. Najma Jewellery LLC UAE 39. Ahlan Wa Marhaba Jewellers LLC UAE 40 Mangal Das Sunderji & Sons Jewellers LLC UAE 41 Al Maleekah Jewellers LLC UAE 42. Damas Europe SPA Italy 43. Damas LLC UAE *Dormant Subsidiaries


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.1 Damas Jewellery LLC - Dubai Damas Jewellery LLC - Dubai is a limited liability Company established on December 20, 1993 as per the commercial registration certificate no. 41342 issued by the Department Of Economic Development, Dubai. The following shareholders have contributed to the share capital of the Damas Jewellery LLC - Dubai and share profits and losses in the following ratios: Damas LLC UAE Company 99.998% 49,999 shares Damas SPV Jewellery LLC UAE Company 0.002% 1 share The share capital of Damas Jewellery LLC - Dubai is AED 50,000,000/- divided into 50,000 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds one share for the beneficial interest of Damas LLC. 33.2 Mukund Jewellery LLC – Dubai Mukund Jewellery LLC - Dubai is a limited liability company registered on July 18, 1979 - as per commercial registration certificate no. 47915 issued by the Department Of Economic Development – Dubai. Mukund Jewellery LLC - Dubai had been acquired by the Group on August 27, 1999. The following shareholders have contributed to the share capital of the Mukund Jewellery LLC - Dubai and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 38% 114 shares Damas SPV Jewellery LLC UAE Company 32% 96 shares Mr. Amratlal Vallabhdas Indian National 20% 60 shares Mr. Chetan Amratlal Vaya Indian National 10% 30 shares The share capital of Mukund Jewellery LLC - Dubai is AED 300,000/- divided into 300 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC. 33.3 Ocean Jewellery LLC – Dubai Ocean Jewellery LLC - Dubai is a limited liability company registered on August 2, 1992 - as per commercial registration certificate no.40500 issued by the Department Of Economic Development – Dubai. Ocean Jewellery LLC - Dubai had been acquired by the Group on 6 July, 1996. The following shareholders have contributed to the share capital of the Ocean Jewellery LLC - Dubai and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 28.00% 84 shares Damas SPV Jewellery LLC UAE Company 37.00% 111 shares Mrs. Sagar Kalavati Jayantilal Indian National 6.335% 19 shares Mr. Praveenkumar Jayantilal Indian National 12.665% 38 shares Mr. Mayur Jayantilal Indian National 16.00% 48 shares The share capital of Ocean Jewellery LLC - Dubai is AED 300,000/- divided into 300 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.4 Dhanak Jewellery LLC – Dubai Dhanak Jewellery LLC - Dubai is a limited liability company registered on January 1, 1964 - as per commercial registration certificate no. 47490 issued by the Department Of Economic Development – Dubai. Dhanak Jewellery LLC - Dubai was acquired by the Group on 7 August, 2001. The following shareholders have contributed to the share capital of the Dhanak Jewellery LLC - Dubai and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 18% 54 shares Damas SPV Jewellery LLC UAE Company 42% 126 shares Mr. Chandrakant Girdhar Dhanak Indian National 40% 120 shares The share capital of Dhanak Jewellery LLC - Dubai is AED 300,000/- divided into 300 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC. Dhanak Gold Smith – Dubai Dhanak Gold Smith - Dubai is registered as a Service Agent from July 21, 1997 - as per commercial registration certificate no. 500072 issued by the Department of Economic Development – Dubai having following shareholders. Mr. Tawhid Abdulla UAE National Mr. Chandrakant Girdhar Dhanak Indian National Mr. Paresh C. Dhanak Indian National As per a separate Memorandum of Understanding between Mr. Tawhid Abdulla, Mr. Chandrakant Girdhar Dhanak, Mr. Paresh C. Dhanak, with effect from January 1, 2003 the operating results and the share capital will be shared in the following ratio: Mr. Tawhid Abdulla 60% Jointly with: Mr. Chandrakant Girdhar Dhanak and Mr. Paresh C. Dhanak 40% Mr. Tawhid Abdulla holds 60% of the shares for the beneficial interest of Damas Jewellery LLC through a separate memorandum of understanding. 33.5 Armaan Jewellery LLC – Dubai Armaan Jewellery LLC - Dubai is a limited liability company registered as per commercial registration certificate no. 239943 issued by the Department Of Economic Development – Dubai. The following shareholders have contributed to the share capital of the Armaan Jewellery LLC -Dubai and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 18% 54 shares Damas SPV Jewellery LLC UAE Company 42% 126 shares Mr. Dinesh Dhanak Indian National 14% 42 shares Mr. Prakash Chandra Dhanak Indian National 13% 39 shares Mr. Sanjay Kumar Dhanak Indian National 13% 39 shares The share capital of Armaan Jewellery LLC - Dubai is AED 300,000/- divided into 300 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.6 Al Mana Damas International LLC - Dubai Al Mana Damas International LLC – Dubai is limited liability company established on April 21, 2002 as per the commercial registration certificate no. 59128 issued by the Department Of Economic Development, Dubai. The following shareholders have contributed to the share capital of the Al Mana Damas International LLC – Dubai and share profits and losses in the following ratios: Mr. Tawfique Abdulla UAE National 17% 51 shares Mr. Tawhid Abdulla UAE National 17% 51 shares Mr. Tamjid Abdulla UAE National 17% 51 shares Mr. Hisham Saleh H. Al Mana Qatari National 16.33% 49 shares Mr. Kamal Saleh H. Al Mana Qatari National 16.33% 49 shares Mr. Wissam Saleh H. Al Mana Qatari National 16.34% 49 shares The share capital of Al Mana Damas International LLC – Dubai is AED 300,000/- divided into 300 shares of AED 1,000/- each. Mr.Tawfique Abdulla, Mr. Tawhid Abdulla and Mr.Tamjid Abdulla hold shares for the beneficial interest of Damas Jewellery LLC. 33.7 Gem Universe LLC - Oman Gem Universe LLC - Oman is a Limited Liability Company registered on March 19, 2002 as per commercial registration certificate no. 1/12279/7 issued by the Ministry of Trade & Industry – Muscat. The following shareholders have contributed to the share capital of the Gem Universe LLC - Oman: Damas Jewellery LLC UAE Company 70% 105,000 shares Mr. Mohd. Bin Omer Abdul Rehman Oman National 30% 45,000 shares The share capital of Gem Universe LLC - Oman is Omani Riyals 150,000 divided into 150,000 shares of Omani Riyals 1/- each. Mr. Mohd. Bin Omer Abdul Rehman has represented that he holds shares for the beneficial interest of Damas Jewelley LLC. 33.8 Universe Jewellers Limited – USA Universe Jewellers Ltd – New York - USA is a limited company incorporated in state of New York – USA as per certificate dated March 30, 1999 issued as per the Provisions of the Business Corporation Law of the State of New York. The following shareholders have contributed to the share capital of Universe Jewellers Ltd – New York - USA and share profits and losses in the following ratios: Mr. Tamjid Abdulla UAE National 1% 2 shares Damas Jewellery LLC UAE Company 99% 198 shares The share capital of Universe Jewellers Ltd – New York - USA is divided into 200 shares with no par value. Mr. Tamjid Abdulla holds shares for the beneficial interest of Damas Jewellery LLC through a separate memorandum of understanding.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.9 Damas Company WLL - Bahrain Damas Company WLL - Bahrain is a limited liability company incorporated in Kingdom of Bahrain as per certificate no. 40554 dated April 29, 1998 issued by Ministry of Commerce – Kingdom of Bahrain. The following shareholders have contributed to the share capital of the Damas Company WLL - Bahrain and share profits and losses in the following ratios: Mr. Mohd. Tamjid Abdulla UAE National 0.10% 1shares Damas Jewellery LLC UAE Company 99.90% 999shares The share capital of Damas Company WLL - Bahrain is Bahraini Dinar 100,000 divided into 1,000 shares Bahraini Dinar 100/- each. Mr. Mohd. Tamjid Abdulla holds one share for beneficial interest of Damas Jewellery LLC through a separate memorandum of understanding. 33.10 Islanders Demas Pvt. Ltd. - Maldives Islanders Demas Pvt. Ltd. - Maldives is a private limited company incorporated in Republic of Maldives as per certificate no. C-36/2002 dated January 31, 2002 issued by Ministry of Trade and Industries – Republic of Maldives. The following shareholders have contributed to the share capital of Islanders Demas Pvt. Ltd. - Maldives and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 75% 7,500 shares Mr. Abdul Rasheed Maldivian National 12.50% 1,250 shares Mr. Hussein Waheed Maldivian National 12.50% 1,250 shares The share capital of Islanders Demas Pvt. Ltd. - Maldives is Maldivian Rufiyaa 10,000 divided into 10,000 shares of Maldivian Rufiyaa 1/- each. 33.11 DIT Group SPA (formerly Stefan Hafner SPA – Italy) DIT group SPA- Italy is a private limited company incorporated in Italy as per company registration no. 222300 – Alessandria bearing VAT no. 03175200249 dated August 5, 2004 issued by Ministry of Finance – Italy. The following shareholders have contributed to the share capital of DIT group SPA - Italy and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 71.58% 9,950,000 shares Demas Holding INC BVI Company 15.65% 2,175,000 shares LI.PRO.FIN. B.V Netherland Company 12.77% 1,775,000 shares The share capital of DIT Group SPA - Italy is Euro 13,900,000 includes 5,000,000 issued shares of Euro 1/- each and share application for 8,900,000 shares of Euro 1/- each. Demas Holding Inc holds shares in Stefan Hafner SPA for the beneficial interest of Damas Jewellery LLC. The name of the entity has been changed from Stefan Hafner SPA to DIT Group SPA in the previous year.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.12 Stefan Hafner (NY) Inc – USA Stefan Hafner (NY) Inc - USA is a private limited company incorporated in the State of New York, USA vide Registration number 041124000891 dated November 24, 2004 and amendment of the certificate of incorporation was made vide registration no. 050823000756 dated August 23, 2005. The following shareholders have contributed to the share capital of Stefan Hafner (NY) Inc - USA and share profits and losses in the following ratios: Common stock DIT group SPA Italian Company 85% 85 shares Ms. Peggy Grosz US National 15% 15 shares The Common stock capital of Stefan Hafner (NY) Inc - USA is US$ 50,000 divided into 100 shares of US$ 500 each. Preferred stock DIT group SPA Italian Company 100% 400 shares The Preferred stock capital of the Stefan Hafner (NY) Inc - USA is US$ 400,000 divided into 400 shares of US$ 1,000 each. 33.13 Tawhid & Muktasem Jewellery - Jordan Tawhid & Muktasem Jewellery, Jordan is registered under no. 58086 on January 7, 2001 in the Hashemite Kingdom of Jordan. The following shareholders have contributed to the share capital of the Tawhid & Muktasem Jewellery, Jordan in the following ratios, however the profit sharing ratios for each shop is governed by a separate memorandum of understanding: Mr. Tawhid Abdulla UAE National 50% JD 100,000 Mr. Al Muktasem Mohammes Jordanian National 50% JD 100,000 Bakheet Al Shayab The share capital of Tawhid & Muktasem Jewellery, Jordan is JD 200,000. Mr. Tawhid Abdulla holds shares for the beneficial interest of Damas Jewellery LLC through a separate memorandum of understanding. 33.14 Damas Jewellery SAL - Lebanon Damas Jewellery SAL, Lebanon was registered on November 5, 2003 in Lebanon Mount commercial register under No. 2002149 C.R. in accordance with Articles 26, 49 and 98 of the Law of Commerce of the Ministry of Justice in the Republic of Lebanon. The following shareholders have contributed to the share capital of Damas Jewellery SAL, Lebanon and share profits and losses in the following ratios: Mr. Tawhid Abdulla UAE national 96.66% 290 shares Mr. Joseph Hana Himo Lebanese national 1.67% 5 shares Mr. Bashir Hana Himo Lebanese national 1.67% 5 shares The share capital of Damas Jewellery SAL, Lebanon has been set at Lebanese Lira (LL) 30 million divided into 300 shares with a nominal value of LL 100,000 each. Mr. Tawhid Abdulla holds shares for the beneficial interest of Damas Jewellery LLC through a separate memorandum of understanding.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.15 Damas Jewellery Company - Egypt Damas Jewellery Company, Egypt is an Egyptian Joint stock company headquartered in the city of Cairo and registered in the Cairo commercial register 1871 dated November, 14 1998. The purpose for which the Company has been established is to trade in gold, precious stones, semi – precious stones, silver, watches, gifts and exports. The shareholding of the entity has been revised in 2007 with the following shareholders contributing to the share capital of Damas Jewellery Company, Egypt and sharing the profits and losses in the following ratios: Damas Jewellery LLC UAE Company 60% 10,800 shares Mr. Mohd Sayed Mohd Omar Egyptian national 9.50% 1710 shares Ms. Nourhan Mohd Sayed Mohd Omar Egyptian national 9.50% 1710 shares Ms. Reem Mohd Sayed Mohd Omar Egyptian national 9.50% 1710 shares Ms. Mai Mohd Sayed Mohd Omar Egyptian national 9.50% 1710 shares Mr. Maha Mahmoud Ahmed Musa Egyptian national 2% 360 shares The authorized capital is fixed at Egyptian Pound (EP) 90,000,000. The issued capital of Damas Jewellery Company, Egypt is EP 9,000,000 divided into 18000 shares, the value of each share is EP 500 and all of them are cash shares. The earlier shareholding of Damas Jewellery Company, Egypt was as under: Mr. Tawhid Abdulla UAE National 55% 275 shares Mr. Mohd Sayed Mohd Omar Egyptian national 40% 200 shares Mr. Maha Mahmoud Ahmed Musa Egyptian national 5% 25 shares 33.16 Diminco Damas Diamond Manufacturing DMCC Diminco Damas Diamond Manufacturing DMCC is a company incorporated in the Emirate of Dubai as per license no. 30063 dated May 22, 2004. The following shareholders have contributed to the share capital of Diminco Damas Diamond Manufacturing DMCC and share the profits and losses in the following ratios: Digico Holding Ltd. Hong Kong Company 47.50% 95 shares Damas Jewellery LLC UAE Company 52.50% 105shares The share capital of Diminco Damas Diamond Manufacturing DMCC is AED 200,000 divided into 200 equity shares of AED 1,000 each par value. 33.17 Demas Jewellery Pvt. Ltd. – India Demas Jewellery Pvt. Ltd. – India is a company incorporated in the State of Karnataka in India on February 6, 2007. The following shareholders have contributed to the share capital of Demas Jewellery Pvt. Ltd. – India and share the profits and losses in the following ratios: Mr. Mukund Vaya Indian National 7% 5,000 shares Mr. Chetan Vaya Indian National 93% 66,500 shares The authorized capital is fixed at Indian Rupees (INR) 1,000,000. The issued capital of the Demas Jewellery Pvt. Ltd. – India is INR 715,000 divided into 71,500 shares, the value of each share is INR 10 and all of them are cash shares. Mr. Mukund Vaya and Mr. Chetan Vaya hold the above shares for beneficial interest of Damas Jewellery LLC through separate memorandum of understanding.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.18 Soir Jewellery Pvt. Ltd. - India Soir Jewellery Pvt. Ltd. - India is a Company incorporated in the State of Maharashtra in India on March 28, 2007. The following shareholders have contributed to the share capital of Soir Jewellery Pvt. Ltd. - India and share the profits and losses in the following ratios: Damas LLC UAE Company 99.99% 1,994,640 shares Mr. Tamjid Abdulla UAE National 00.01% 100 share The authorized capital is fixed at INR 20,000,000. The issued capital of Soir Jewellery Pvt. Ltd. - India is INR 19,947,400 divided into 1,994,740 shares, the value of each share is INR 10 and all of them are cash shares. Mr. Tamjid Abdulla holds the above shares for beneficial interest of Damas LLC as per a separate memorandum of understanding. 33.19 Damas Gold Fields Jewellery Pvt. Ltd. – India Damas Gold Fields Jewellery Pvt. Ltd. - India is a company incorporated in the State of Maharashtra in India on May 26, 2007. The following shareholders have contributed to the share capital of Damas Gold Fields Jewellery Pvt. Ltd. - India and share the profits and losses in the following ratios: Soir Jewellery Private Limited Indian Company 99.99% 9,999 shares Mr. John Joy Indian National 00.01% 1 share The authorized capital is fixed at INR 500,000. The issued capital of Damas Gold Fields Jewellery Pvt. Ltd. - India is INR 100,000 divided into 10,000 shares, the value of each share is INR 10 and all of them are cash shares. Mr. John Joy holds one share for the beneficial interest of Soir Jewellery Pvt. Ltd. as per a separate memorandum of understanding. 33.20 Damas Hong Kong Limited – Hongkong Damas Hong Kong Limited - Hongkong is a company incorporated in Hong Kong as per license no. 1034325 dated March 28, 2007. Damas Jewellery LLC holds 100% of the equity of the company. The share capital of Damas Hong Kong Limited - Hongkong is Hong Kong Dollar 1,000 divided into 100 equity shares of Hong Kong Dollar 10 each par value. 33.21 Damas (Thailand) Co. Ltd. – Thailand Damas (Thailand) Co. Ltd - Thailand is a company incorporated in Bangkok as on March 14, 2003. The following shareholders have contributed to the share capital of the Damas (Thailand) Co. Ltd - Thailand and share profits and losses in the following ratios: Nithi Takviriyanun Thai National 50.95% 5,095 shares Panitta Saengchai Thai National 0.01% 1 shares Pokepiboon Aon-Eiam Thai National 0.01% 1 shares Preeyawan Luesuwanthad Thai National 0.01% 1 shares Srisamorn Kooyingrat Thai National 0.01% 1 shares Onruedee Mitcharoenthavorn Thai National 0.01% 1 shares Damas Jewellery LLC UAE Company 49.00% 4,900 shares The share capital of Damas (Thailand) Co. Ltd - Thailand is Thailand Bhat 1,000,000 divided into 10,000 equity shares of Thailand Bhat 100 each par value. The above share holders are holding shares for the beneficial interest of Damas Jewellery LLC through a separate Memorandum of Understanding.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.22 Royal Jewellers Inc. – USA Royal Jewellers Inc. – New York – USA is a limited company incorporated in State of New York – USA as per certificate dated March 30, 1999 issued as per the Provisions of the Business Corporation Law of the State of New York. The following shareholders have contributed to the share capital of Royal Jewellers Inc. – New York – USA and share profits and losses in the following ratios: Mr. Tamjid Abdulla UAE National 1% 2 shares Damas Jewellery LLC UAE Company 99% 198 shares The share capital of Royal Jewellers Inc. – New York – USA is divided into 200 shares with no par value. Mr. Tamjid Abdulla holds shares for the beneficial interest of Damas Jewellery LLC through a separate memorandum of understanding. 33.23 7816 3rd Avenue LLC – USA 7816 3rd Avenue LLC – New York – USA is a limited liability company incorporated in State of New York – USA as per certificate dated June 9, 2005 issued as per the Provisions of the Limited Liability Company Law of the State of New York. The following shareholders have contributed to the share capital of 7816 3rd Avenue LLC – New York – USA and share profits and losses in the following ratios: Royal Jewellers Inc USA Company 1% 1 units Damas Jewellery LLC UAE Company 99% 99 units The share capital of 7816 3rd Avenue LLC – New York – USA is divided into 100 units with no par value. 33.24 Damas Jewellery DMCC - Dubai Damas Jewellery DMCC - Dubai is a limited liability company registered on February 6, 2007 - as per commercial registration certificate no. 30411 issued by the Dubai Multi Commodity Centre – Dubai. The following shareholders have contributed to the share capital of Damas Jewellery DMCC - Dubai and share profits and losses in the following ratios: Damas LLC UAE Company 100% 36 shares The share capital of Damas Jewellery DMCC - Dubai is AED 3,600,000/- divided into 36 shares of AED 100,000/- each. 33.25 Ayodhya Jewellers LLC - Dubai Ayodhya Jewellers LLC - Dubai is a limited liability company registered on December 28, 1994 - as per commercial registration certificate no. 105327/94 issued by the Department Of Economic Development – Dubai. The following shareholders have contributed to the share capital of Ayodhya Jewellers LLC - Dubai and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 99% 297 shares Damas SPV Jewellery LLC UAE Company 1% 3 shares The share capital of Ayodhya Jewellers LLC - Dubai is AED 300,000/- divided into 300 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.26 Damas & Al Ghannam jewellery Co WLL, Kuwait Damas & Al Ghannam Jewellery Co WLL Kuwait is a limited liability company registered on July 21, 2003 - as per commercial registration certificate no. 95245 issued by the Ministry of Commerce & Industry – Kuwait. The following shareholders have contributed to the share capital of Damas & Al Ghannam jewellery Co WLL, Kuwait and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 90% 90 shares Kapico Group Holding Company Co., Kuwaiti National 10% 10 shares The share capital of Damas & Al Ghannam Jewellery Co WLL, Kuwait is KD 250,000/- divided into 100 shares of KD 2,500/- each. 33.27 Time art watches and optics trading LLC UAE Time art watches and optics trading LLC, UAE is a limited liability company registered on June 18, 2008 - as per commercial registration certificate no. 596870 issued by the Department of Economic Development – Dubai. The following shareholders have contributed to the share capital of Time art watches and optics trading LLC and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 99.997% 299 shares Damas SPV Jewellery LLC UAE Company 0.003% 1 shares The share capital of Time art watches and optics trading LLC, UAE is AED 300,000/- divided into 300 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC. 33.28 Damas Southall Limited UK Damas Southhall Limited UK is a private limited company incorporated under the Companies Act 1985 on August 14, 2007 - vide certificate of incorporation no. 5905292 issued by the Registrar of companies for England and Wales. The following shareholders have contributed to the share capital of Damas Southhall Limited UK and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 99% 99 shares Mr. Tawhid Abdulla UAE National 1% 1 shares The share capital of Damas Southhall Limited UK is GBP100/- divided into 100 shares of GBP 1/- each. Mr. Tawhid Abdulla holds one share for the beneficial interest of Damas Jewellery LLC. 33.29 Damas Dis Ticarat A.S Turkey Damas Dis Ticaret A.S. (Damas Foreign Trade Stock Company) is a stock company registered in accordance with Turkish Commercial Code on July 16, 2008 - vide certificate of incorporation no. 632885 issued by the Trade Registry Office, Istanbul. The following shareholders have contributed to the share capital of Damas Southhall Limited UK and share profits and losses in the following ratios: Mr. Tawfique Abdulla UAE National 1% 400 shares Mr. Tamjid Abdulla UAE National 1% 400 shares Mr. Tawhid Abdulla UAE National 1% 400 shares Damas Jewellery LLC UAE Company 96% 38,400 shares Mr. Mehmet Gokce Atuk Turkish National 0.5% 200 shares Mr. Mehmet Bulent Atuk Turkish national 0.5% 200 shares


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.29 Damas Dis Ticarat A.S Turkey (continued) The share capital of Damas Dis Ticaret A.S. is YTL (New Turkish Lira) 4,000,000/- divided into 40,000 shares of YTL 100/- each. Mr.Tawfique Abdulla, Mr. Tamjid Abdulla and Mr. Tawhid Abdulla hold the shares for the beneficial interest of Damas Jewellery LLC. 33.30 Damas Uk Ltd UK Damas UK Limited UK is a private limited company incorporated under the Companies Act 1985 on June 21, 2007 - vide certificate of incorporation no. 5852897 issued by the Registrar of companies for England and Wales. The following shareholders have contributed to the share capital of Damas UK Limited UK and share profits and losses in the following ratios: Damas Jewellery LLC UAE Company 99% 99 shares Mr. Tawhid Abdulla UAE National 1% 1 shares The share capital of Damas UK Limited UK is GBP100/- divided into 100 shares of GBP 1/- each. Mr. Tawhid Abdulla holds one share for the beneficial interest of Damas Jewellery LLC. 33.31 Al Nahrain Jewellers Factory LLC, UAE Al Nahrain Jewellers Factory LLC is a limited liability company registered on October 29, 2008 - as per commercial registration certificate no. 553721 issued by the Economic Development Department – Sharjah. The following shareholders have contributed to the share capital of Al Nahrain Jewellers Factory and share profits and losses in the following ratios: Damas SPV Jewellery LLC UAE Company 51% 153 shares Mr. Chimanlal Bhoota Sagar Indian National 25% 75 shares Mr. Hareshkumar Bhoota Sagar Indian National 24% 72 shares The share capital of Al Nahrain Jewellers Factory LLC - Dubai is AED 300,000 - divided into 300 shares of AED 1,000/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC. 33.32 Tarek Soliman Guirguis – Glamour company - Egypt Tarek Soliman Guirguis – Glamour, Egypt is an Egyptian Private Company Limited by Shares headquartered in the city of Cairo and registered in the Cairo commercial register. The purpose for which the Company has been established is to trade in gold, precious stones, and semi – precious stones, silver, watches, gifts and exports. The following shareholders have contributed to the share capital of Tarek Soliman Guirguis – Glamour Company, Egypt and sharing the profits and losses in the following ratios: Damas Jewellery LLC UAE Company 60% 36,000 shares Mr. Tarek Soliman Guirguis Egyptian national 40% 24,000 shares The authorized capital is fixed at US Dollar (USD) 20,000,000. The issued capital of Tarek Soliman Guirguis – Glamour Company, Egypt is USD 6,000,000 divided into 60,000 shares, the value of each share is $ 100 and all of them are cash shares. 33.33 Damas Vault DMCC - Dubai Damas Vault DMCC is a limited liability company registered on August 3,2008 as per license No:30915 dated August 17,2008 issued by the Dubai Multi Commodity centre- Dubai.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

33.33 Damas Vault DMCC – Dubai (continued) The following shareholder has contributed to the share capital of Damas Vault DMCC:

Damas LLC UAE Company 100% 10 shares

The share capital of Damas Vault DMCC is AED 1,000,000/- divided into 10 shares of AED 100,000/- each 33.34 Al Wasl DMCC - Dubai Al Wasl DMCC is a limited liability company incorporated in the Emirate of Dubai as per license No: 30729 dated July 12, 2007 issued by the Dubai Multi Commodity centre- Dubai.

The following shareholder has contributed to the share capital of Al Wasel DMCC:

Damas Jewellery DMCC UAE Company 100% 200 shares

The share capital of Al Wasl DMCC is AED 200,000/- divided into 200 shares of AED 1000/- each 33.35 Emirates Jewellery Manufacturing Company, UAE

Emirates Jewellery Manufacturing Company LLC is a limited Liability Company registered on 14th June 2007 with Department of Economic Development, Dubai – as per Industrial License No: 596742. Further the company has obtained a Branch of company – industrial license with Dubai Multi Commodities Centre under license No: 30758 dated 16th September 2007. The following shareholders have contributed to the share capital of Emirates Jewellery Manufacturing Company LLC – Dubai and share profits and losses in the following ratios:

Emaar Industries and Investments PJSC UAE Company 52% 156 Shares Damas Jewellery LLC UAE Company 48% 144 Share The Share capital of the company comprises of 300 Shares of AED 1,000 each, aggregating to AED 300,000/- Damas Jewellery LLC and Emaar have entered into a share transfer agreement for transferring Emaar’s shares to Damas Jewellery LLC. However other legal formalities for effecting the share transfer are imminent. 33.36 Arshi Jewellery LLC – Dubai Arshi Jewellery LLC – is a limited liability company registered on January 26, 2002 – as per commercial registration certificate no. 58358 issued by the Department of Economic Development – Dubai..

The following shareholders have contributed to the share capital of the Arshi Jewellery DMCC – Dubai and share profits and losses in the following ratios:

Damas Jewellery LLC UAE Company 48% 144 shares Damas SPV Jewellery LLC UAE Company 27% 81 shares Mr. Mohamed Akram Haji Ahmed Indian National 13% 39 shares Mrs. Rukhsana Haji Ahmed Merchant Indian National 12% 36 shares

The Share Capital of Arshi Jewellery LLC – Dubai is AED 300,000/- divided into 300 shares of AED 1000/-each. 33.37 Farhan Jewellery LLC – Dubai Farhan Jewellery LLC – Dubai is a limited liability company registered on May 16,1993 – as per commercial registration no: 40921 issued by the Department of Economic Development – Dubai.

The following shareholders have contributed to the share capital of Farhan Jewellery Company –Dubai and share profit and losses in the following ratios:


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.37 Farhan Jewellery LLC – Dubai (continued) Damas Jewellery LLC UAE Company 75% 225 shares Mrs. Shabana Naheed Miya Khan Indian National 25% 75 shares The Share Capital of Farhan Jewellery LLC – Dubai is AED 300,000/- divided into 300 shares of AED 1000/-each. 33.38 Najma Jewellery LLC – Dubai Najma Jewellery LLC – Dubai is a limited liability company registered on November 13, 1983 – as per commercial registration no: 216495 issued by the Department of Economic Development – Dubai The following shareholders have contributed to the share capital of Najma Jewellery Company - Dubai and share profit and losses in the following ratios: Damas Jewellery LLC UAE Company 90% 270 shares Mr. Dharamshi Narshi Vaya Indian National 10% 30 shares The Share Capital of Farhan Jewellery LLC – Dubai is AED 750,000/- divided into 300 shares of AED 2500/-each. 33.39 Ahlan Wa Marhaba Jewellers LLC ,UAE Ahlan Wa Marhaba Jewellers LLC is a limited liability company registered on Febrauary 9, 2004 – as per commercial registration no: 524629 issued by the Department of Economic Development – Sharjah. The following shareholders have contributed to the share capital of Ahlan Wa Marhaba Jewellers LLC and share profit and losses in the following ratios: Damas Jewellery LLC UAE Company 51% 77 shares Mr. Bharat Kumar Jamnadas Sagar Indian National 30% 45 shares Mrs. Krishna Bharat Kumar Indian National 19% 28 shares The Share Capital of Ahlan Wa Marhaba Jewellers LLC is AED 150,000/- divided into 150 shares of AED 1000/-each. 33.40 Mangal Das Sunderji & Sons Jewellers LLC, Sharjah Mangal Das Sunderji & Sons Jewellers LLC – Sharjah is a Limited Liability Company registered on 19th April 1976 as per commercial registration No. 1556 issued by Economic Development Department –Govt of Sharjah. The following shareholders have contributed to the share capital of Mangal Das Sunderji & Sons Jewellers LLC – Sharjah and shares profit & loss in the following ratios : Damas SPV Jewellery LLC UAE Company 51% 229,500 shares Ashok Mangaldas Indian National 17% 76,500 shares Mahendra Mangaldas Indian National 16% 72,000 shares Lalitha Mangaldas Indian National 16% 72,000 shares The Share Capital of Mangal Das Sunderji & Sons Jewellers LLC – Sharjah is AED 450,000/- divided into 450,000 shares of AED 1/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC. 33.41 Al Maleekah Jewellers LLC, Sharjah Al Maleekah Jewellers LLC – Sharjah is a Limited Liability Company registered on 31st Jul 2006 as per commercial registration No. 544349 issued by Economic Development Department – Govt of Sharjah.


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33 ENTITIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 33.41 Al Maleekah Jewellers LLC, Sharjah (continued) The following shareholders have contributed to the share capital of Al Maleekah Jewellers LLC- Sharjah and shares profit & loss in the following ratios. Damas SPV Jewellery LLC UAE Company 51% 76,500 shares Ashok Mangaldas Indian National 25% 37,500 shares Mahendra Mangaldas Indian National 24% 36,000 shares The Share Capital of Al Maleekah Jewellers LLC – Sharjah is AED 150,000/- divided into 150,000 shares of AED 1/- each. Damas SPV Jewellery LLC holds the shares for the beneficial interest of Damas LLC. 33.42 Damas Europe SPA - Italy Damas Europe SPA is a private limited company incorporated in Italy as per company registration no. 297727 – Vicenza, bearing VAT no. 03083320246 dated June 19, 2003 issued by Ministry of Finance – Italy. The following shareholders have contributed to the share capital of the company and share profits and losses in the following ratios: Damas Jewellery LLC U.A.E. Company 65.82% 5,168,420 shares Mr. Massimo Facco Italian National 15.21% 1,194,344 shares Mr. Mauro Facco Italian National 6.91% 542,513 shares Ms. Monica Facco Italian National 1.02% 80,000 shares Mr. Andrea Licio Facco Italian National 8.30% 651,395 shares Ms. Giulia Rosa Salvarese Italian National 1.73% 135,828 shares Damas Europe SPA Italian Company 1.02% 80,000 shares

The share capital of the company is Euro 7,852,500 divided into 7,852,500 shares of Euro 1/- each. 33.43 Damas LLC Damas LLC is a limited liability company incorporated in UAE established on April 14, 1994 as per commercial registration certificate no. 41717 issued by the Department of Economic Development. The following shareholders have contributed to the share capital of the company and share profits and losses in the following ratios: Damas International Limited U.A.E. Company 99.999% 1,420,999 shares Damas SPV Jewellery LLC U.A.E Company 0.001% 1 shares The share capital of the company is AED 1,421,000,000 divided into 1,421,000 shares of AED 1,000/- each. 34 INVESTMENTS IN EQUITY ACCOUNTED ENTITIES 34.1 Investments in jointly controlled entities The Group also holds investments in the following jointly controlled entities as at 31 March 2009: Name of the company Country of Ownership incorporation interest Premium Investments International LLC (note 1 below) UAE 50% Paspaley Pearl Jewellery LLC (notes 1 & 6 below) UAE 51% Trading House Kristall DMCC (note 2 below) UAE 50% D’Damas Jewellery (India) Private Ltd. (note 1 and 3 below) India 49%


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34 INVESTMENTS IN EQUITY ACCOUNTED ENTITIES (continued) 34.1 Investments in jointly controlled entities (continued) Name of the company Country of Ownership incorporation interest Al Zain Trading Co WLL (note 1 below) Bahrain 50% Al Manara (notes 1 and 3 below) UAE 49% Time Center LLC (note 1 below) UAE 50% Damas Toomban Pvt. Ltd (notes 1, 4 and 5 below) Pakistan 50% Damas Saudi Arabia Company Ltd. (notes 1 and 3 below) KSA 49% Deepu Jewellery DMCC (note 1 and 3 below) UAE 51% Flamingo Jewellery India Pvt Ltd (note 1 and 3 below) India 51% Roberto Coin Middle East LLC (notes 1 & 6 below) UAE 51% 1. The shares are held in the name of Damas Jewellery LLC. 2. The shares are held in the name of Damas LLC. 3. The investment is considered to be an investment in jointly controlled entity since the Company has joint

control over the financial and operating policies of these companies. 4. Mr. Tawhid Abdulla holds shares in this entity for the beneficial interest of Damas Jewellery LLC. 5. Mr. Tamjid Abdulla holds shares in this entity for the beneficial interest of Damas Jewellery LLC. 6. Damas share in profit is 50% 34.2 Investments in associates

The Group also holds investments in the following associates as at 31 March 2009:

Name of the company Country of Ownership incorporation interest Damas & Chalco General Trading Co LLC (note 4 below) UAE 51% Damas Mucevherat (notes 1, 2, 3, 4 & 5 below) Turkey 51% Style Avenue Middle East FZ Company UAE 31% Daiso (Japan) Value Stores LLC (note 4 & 5 below) UAE 51% LTC International General Trading Co. (note 1 below) Kuwait 35% LTC International Qatar LLC (notes 1& 4 below) Qatar 50% Daiso Trading (note 1 below) Bahrain 35% Al Mana Jewellery Co. - Damas WLL (note 1 below) Qatar 49% Al Baraka Jewellery WLL(note 1 below) Bahrain 33.33% Himo LLC (notes 1& 4 below) Lebanon 50% Lucci 2 SARL (notes 1& 4 below) Lebanon 50% Metamorph Real Estate WLL (note 1 below) Kuwait 30% Tanya Collections Ltd (note 6 below) Thailand 49% Islanders Maldives Pvt Ltd (notes 4 below) Maldives 50% Felopateer Palace (note 6 below) Egypt 45% Crescendo Jewellery Design Ltd Hongkong 27% Style Avenue Company Bahrain WLL (note 6 below)* Bahrain 36% Dormant DPG Diamonds DMCC (note 1 below) UAE 33.33% *New investments made during the current period. 1. Mr. Tawhid Abdulla holds shares in these entities for the beneficial interest of Damas Jewellery LLC. 2. Mr. Tamjid Abdulla holds shares in these entities for the beneficial interest of Damas Jewellery LLC. 3. Mr. Tawfique Abdulla holds shares in these entities for the beneficial interest of Damas Jewellery LLC. 4. The investment is considered to be an investment in associate since the Company does not have control over

the financial and operating policies of these Companies. 5. Damas share in profit is 50% 6. The shares are held in the name of Damas Jewellery LLC.

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