Dar Global PLC and its subsidiaries

London - United Kingdom

Notes to the condensed consolidated interim financial statements

(In United States dollar)

 

1          Legal status and business activities

 

1.1       Dar Global PLC (the "Company") is public limited company, limited by shares, incorporated, domiciled, and registered in England and Wales. The Company operates under a Company Number 14388348 issued by the registrar of the companies for England and Wales. The majority of shares of the Company is held by Dar Al Arkan Global Real Estate Development LLC ("Parent company") in United Arab Emirates ("UAE") and the Ultimate parent company is Dar Al Arkan Real Estate Development Company, KSA.

 

1.2       The registered address of the Company is located at Link Company Matters Limited 6th Floor, 65 Gresham Street, London, EC2V 7NQ, United Kingdom.

 

1.3     These condensed consolidated interim financial statements ("interim financial statements") represent the results of Dar Global PLC and its subsidiaries (the "Group"), set out in note 1.4.

 

1.4         The Company has the following subsidiaries over which it has control :

 

Name of subsidiary and domicile	Percentage of effective holding	Percentage of voting rights	License / Registration No.	Principal activities
M/s. Dar Al Arkan Properties L.L.C., Dubai - UAE *	100%	100%	Commercial license no. 791860	Development and sale of real estate.
Dar Al Arkan Global UK Holdings LTD - United Kingdom	100%	100%	Company registration no. 13881707	Development and sale of real estate.
Dar Al Arkan Holding UK PLC - United Kingdom	100%	100%	Company registration no. 14385758	Development and sale of real estate.
Dar Global UK No. 1 LTD - United Kingdom **	100%	100%	Company registration no. 14751868	Development and sale of real estate.
Dar Global UK No. 2 LTD - United Kingdom **	100%	100%	Company registration no. 14751750	Development and sale of real estate.
Dar Global UK No. 3 LTD - United Kingdom **	100%	100%	Company registration no. 14751915	Development and sale of real estate.
Dar Al Arkan Spain SL - Spain	100%	100%	Company registration no. B09896390	Development and sale of real estate.
Dar Benahavis I, S.L - Spain	100%	100%	Company registration no. B72530843	Development and sale of real estate.
Daranavis S.L - Spain	100%	100%	Company registration no. B72530850	Development and sale of real estate.
Dar Tabano, S.L - Spain	100%	100%	Company registration no. B72530835	Development and sale of real estate.

 

 

1.4         The Company has the following subsidiaries over which it will exercise effective control: (continued)

 

Name of subsidiary and domicile	Percentage of effective holding	Percentage of voting rights	License / Registration No.	Principal activities
M/s. Prime Real Estate D.o.o Sarajevo - Bosnia *	100%	100%	Company registration no. 65-01-0672-17	Development and sale of real estate.
M/s. Luxury Real Estate D.o.o. Sarajevo - Bosnia *	100%	100%	Company registration no. 65-01-0698-17	Development and sale of real estate.
M/s. Dar Al Arkan Property Development D.o.o Sarajevo  - Bosnia *	100%	100%	Company registration no. 65-01-0676-17	Development and sale of real estate.
M/s. Beijing Dar Al Arkan Consulting Co. Ltd. *	100%	100%	Company registration no. 91110105MA7 EQ79Y9Q	Economic and trade consulting, Engineering consulting, business management consulting, corporate planning, real estate information consulting, undertaking exhibition activities, advertising design, production, agency and release, development of real estate, technical consulting and technical services, computer and graphic design.
Aqtab Properties LLC -UAE (Formerly Dar Al Arkan Global Property Development LLC) *	100%	100%	Commercial license no. 997901	Purchase and sale of real estate

 

1.4         The Company has the following subsidiaries over which it will exercise effective control: (continued)

 

Name of subsidiary and domicile	Percentage of effective holding	Percentage of voting rights	License / Registration No.	Principal activities
Dar Al Arkan International Properties LLC - UAE *	100%	100%	Commercial license no. 997919	Purchase and sale of real estate
Dar Al Arkan International Property Development LLC - UAE *	100%	100%	Commercial license no. 997915	Purchase and sale of real estate
Dar Al Arkan Property Development SPC - Oman	100%	100%	Commercial license no. 1402786	Real estate development, Construction of buildings (general constructions of residential and non-residential buildings
Dar Al Arkan Holdings Ltd (ADGM) - UAE *	100%	100%	Commercial license no. 000008662	Development and sale of real estate.
Dar Al Arkan Properties L.L.C - Branch Of Abu Dhabi 1 - UAE **	100%	100%	Commercial license no. CN-4765091	Development and sale of real estate.

 

* These entities have become part of the group as on 25 January 2023 pursuant to the acquisition of Dar Al Arkan Holdings Ltd (ADGM) by the Company through issuance of shares to the Parent company (note 20).

 

** These entities have been formed by the Group during the year 2023.

 

 

2          Significant accounting policies

 

2.1       Statement of compliance

 

The interim financial statements have been prepared in accordance with the principles of IAS 34 Interim Financial Reporting as adopted for use in the UK.

 

All values are rounded to the nearest Unit in USD except where otherwise indicated. Each entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

 

This is the first reporting period, as the Company was incorporated on 30 September 2022. The first annual financial statements of the Company, which will be for the period ended 31 December 2023, will be prepared in accordance with UK adopted International Accounting Standards and in conformity with the requirements of the Companies Act 2006. The significant accounting policies are set out below. These accounting policies elected by the group is on the presumption that the group existed in the comparatives for the period in which it was under common control. The comparatives represent the results of Dar Al Arkan Global Real Estate Development LLC and those legal entities that Dar Al Arkan Global Real Estate Development LLC has transferred to Dar Global PLC. Forming part of the same group, the entities included in the comparatives are considered to be under common management. Management considers the combination is appropriate in view of the intention to show the comparatives.

 

The interim financial statements have been prepared on a historical cost basis except financial assets and financial liabilities that have been measured at fair value (note 28). Historical cost is generally based on the fair value of the consideration given in exchange for assets.

 

2.2       Basis of preparation

Basis of consolidation

 

The interim financial statements comprise the financial statements of the Company and the subsidiaries ('the Group'), plus the Group's share of the results and net assets of its joint ventures and associates.

 

The financial information contained within these interim results does not constitute full statutory accounts as defined in section 434 of the Companies Act 2006.

 

Subsidiaries

 

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The Financial Statements of subsidiaries are included in the consolidated Financial Statements from the date that control commences until the date that control ceases.

Joint ventures

 

A joint venture is a contract under which the Group and other parties undertake an activity or invest in an entity, under joint control. The Group uses equity accounting for such entities, carrying its investment at cost plus the movement in the Group's share of net assets after acquisition, less impairment.

Group restructure

 

A group restructuring exercise was carried out during the period as follows:

 

On 24 January 2023, the Parent company assigned the benet of certain shareholder loans to Dar Al Arkan Holdings Ltd (ADGM) - UAE in exchange for an issuance of new ordinary shares by Dar Al Arkan Holdings Ltd (ADGM) - UAE on a dollar for dollar basis.

 

On 25 January 2023, the entire issued share capital of Dar Al Arkan Holdings Ltd (ADGM) and its subsidiaries ("Trading Group") was transferred to the Company by the Parent company in consideration for the issuance of new ordinary shares by the Company.

The Trading Group and the Company were under common control by parent company at the time of the transaction.

 

The acquisition by the Company of the Trading Group is a common control transaction under IFRS 3. The consolidation of this Group has been prepared using the book value accounting. In the statement of financial position, the acquiree's identifiable assets, liabilities are recognised at their book values at the acquisition date. The results of merged operations following the Group's restructure in the period are included in the consolidated statement of comprehensive income as if the Group has always existed. Comparative figures are provided on the basis that the merged group always existed.

 

On 28 January 2023, the Company undertook a reduction of capital by cancelling certain ordinary shares, in order to create distributable reserves and reduce the number of ordinary shares in issue to 158,400,000 in aggregate.

Going concern

 

The Company listed on London Stock Exchange on 28 February 2023 and raised net proceeds of USD 72 million of new equity in order to fund the operations, working capital and continuing development work. The Group's forecasts and projections based on the current trends in sales and development and after taking account of the funds currently held, show that the Company and the Group will be able to operate within the level of cash reserves.

 

Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern.

 

The Directors therefore have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for a period of 12 months from the date of approval of these financial statements and consider the going concern basis to be appropriate.

Adoption of new and revised standards

 

The Group has adopted all relevant amendments to existing standards and interpretations issued by the International Accounting Standard Board (IASB) that are effective for the respective financial period ends presented, with no material impact on its consolidated interim results or financial position.

The Group's investment in joint ventures is accounted for using the equity method of accounting. Under the equity method of accounting, investments in joint ventures are carried in the consolidated statement of financial position at cost, plus post-acquisition changes in the Group's share of net assets of the joint venture companies, less any impairment in value.

 

The Group did not implement the requirements of any other standards or interpretations that were in issue but were not required to be adopted. No other standards or interpretations have been issued that are expected to have a material impact on the interim financial statements.

The preparation of the interim financial statement requires estimates and assumptions to be made that may affect the amounts reported in the interim financial statement and accompanying notes. Actual amounts could differ from the estimates included in the interim financial statements herein. The preparation of the interim financial statements on the basis set out, requires the use of certain critical accounting estimates. It also requires judgement to be exercised in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim financial statements, are disclosed in note 2.21.

 

2.3       Fair value measurement

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

-     In the principal market for the asset or liability, or

-     In the absence of a principal market, in the most advantageous market for the asset or liability.

 

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

 

2.4       Foreign currency

 

The transactions in currencies other than the Group's presentation currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

Exchange differences on monetary items are recognized in the consolidated statement of profit or loss in the period in which they arise.

 

In preparing the separate financial information of the individual subsidiaries, the transactions in currencies other than the subsidiaries functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Any gain or loss on translation from functional currency of subsidiaries to presentation currency of the Group is taken to statement of other comprehensive income.

 

Foreign exchange differences

 

Exchange differences on monetary items are recognized in consolidated statement of profit or loss in the period in which they arise except for exchange differences that relate to assets under construction for future productive use. These are included in the cost of those assets when they are regarded as an adjustment to interest costs on foreign currency borrowings.

 

Foreign exchange gains and losses

 

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period. Financial assets measured at amortized cost, exchange differences are recognized in the consolidated statement of profit or loss.

 

2.5       Property and equipment

 

Property and equipment is stated at cost less accumulated depreciation and identified impairment loss, if any. The cost comprise of purchase price, together with any incidental expense of acquisition.

 

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

 

Depreciation is spread over its useful lives so as to write off the cost of property and equipment, using the straight-line method over its useful lives as follows:

 

Assets	Life years
Leasehold improvements	3
Furniture and fixtures	5
Computers and office equipment	4-5

 

When part of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

 

The leasehold improvements are being depreciated over the period from when it became available for use up to the end of the lease term.

 

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

 

The gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the combined statement of profit or loss.

 

2.6       Leases

 

Leases are accounted for by recognising a right-of-use asset and a lease liability except for:

 

-   Leases of low value assets; and

-   Leases with a duration of 12 months or less.

 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

 

On initial recognition, the carrying value of the lease liability also includes:

·    amounts expected to be payable under any residual value guarantee;

·    the exercise price of any purchase option granted in favor of the group if it is reasonably certain to assess that option;

·   any penalties payable for terminating the lease, if the term of the lease has been estimated based on termination option being exercised.

 

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

·    lease payments made at or before commencement of the lease;

·    initial direct costs incurred; and

·   the amount of any provision recognized where the group is contractually required to dismantle, remove or restore the leased asset.

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

2.7       Joint operations

 

A significant portion of land plots, on which the Group's projects are located, is sourced through the contribution of land by the Group's joint development partners, which allows the Group to secure land for its projects with minimal upfront cash contributions. The Group adopts capital light model of Joint Development Agreement where the land is contributed by the joint development partner and also certain percentage of profit is shared. The entire project is controlled and managed by the Group which includes funding, sales, development, marketing, collections, loss absorption if any etc.

This arrangement under IFRS11 "Joint arrangements" has been classified as a joint operation where each party to the joint operation (or each "Joint operator") recognised its share of the assets, liabilities, revenue, and expenses of the joint arrangement. The share is determined based on the rights and obligation of each party as set out in the contractual terms.

2.8       Development properties

 

            Properties constructed or in the course of construction for sale in the ordinary course of business are classified as development properties and are stated at the lower of cost or net realizable value. Cost includes cost of acquisition of land, cost of construction including planning and design cost, commission, borrowing costs, cost of acquiring development rights and other direct costs attributable to the development.

 

            Net realizable value is the estimated selling price in the ordinary course of business, based on market prices at the reporting date and discounted for the time value of money, if material, less costs to completion and the estimated costs of sale.

 

   The management reviews the carrying values of the development properties on each reporting date.

 

2.9       Impairment of non-financial assets.

 

Non-financial assets of the Group mainly include development properties, advances to suppliers and contractors, right-of-use assets and property and equipment.  At the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

 

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

 

Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the condensed consolidated statement of profit or loss.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the condensed consolidated statement of profit or loss.

 

2.10     Financial instruments

 

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.

 

2.11     Financial assets

 

Classification

 

The Group classifies its financial assets at amortized cost.

 

Measurement

 

At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

Financial assets comprise of cash and cash equivalents, trade receivables, advances deposits and other receivables, due from related parties and other escrow retentions.

 

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

Trade and other receivables (including due from related parties)

 

Receivable balances that are held to collect are subsequently measured at the lower of amortized cost or the present value of estimated future cash flows. The present value of estimated future cash flows is determined through the use of value adjustments for uncollectible amounts. The Group assesses on a forward-looking basis the expected credit losses associated with its receivables and adjusts the value to the expected collectible amounts.

 

Receivables are written off when they are deemed uncollectible because of bankruptcy or other forms of receivership of the debtors. The assessment of expected credit losses on receivables takes into account credit-risk concentration, collective debt risk based on average historical losses, specific circumstances such as serious adverse economic conditions in a specific country or region and other forward-looking information.

 

For accounts receivable, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

 

Derecognition of financial assets

 

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another Group. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for the amounts, it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset.

 

2.12     Financial liabilities

 

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. All financial liabilities are recognized initially at fair value and, in the case of loans, borrowings and payables, net of directly attributable transaction costs.

 

The Group's financial liabilities include accounts payables and provisions, other payables, development property liabilities, advance from customers and due to related parties.

 

Accounts and other payables

 

Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer).  If not, they are presented as non-current liabilities. Accounts and other payables are recognized initially at fair value and subsequently are measured at amortized cost using effective interest method.

Loans and borrowings

Term loans are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the consolidated income statement when the liabilities are derecognised as well as through the amortisation process.

Development Property liabilities

Development Property liabilities represents the amount payable for the acquisition of development properties on a deferred payment plan basis including variable consideration. Initially, these amounts are stated at the fair value of the consideration payable. Subsequently, at each reporting date the development property liabilities are measured at fair value and the difference between the fair value and carrying value are recognised in the condensed consolidated income statement.

Advances from customers

Advances received from customers include instalments received from customers for properties sold either before the revenue recognition criteria have been met or in excess of the project's stage of completion. These funds are later recognized in the profit or loss statement once the revenue recognition criteria are satisfied. Additionally, advances from customers may be derecognized from the books when either the customer or the Group terminates the contract.

Derecognition of financial liabilities

The Group derecognizes financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. When 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 the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the combined statement of profit or loss.

Where the loan payable (or part thereof) is forgiven by a shareholder, the loan is derecognised at its carrying value, and an equity contribution is reflected at that same carrying value, this contribution is reflected as a loss absorbed by a shareholder. No gain or loss is recognised in profit or loss.

 

2.13     Offsetting financial instruments

 

Financial assets and liabilities are offset and the net amount reported in the statement of financial position, when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

 

2.14     Provisions

 

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

 

2.15     Revenue recognition

 

Revenue from contracts with customers

The Group recognizes revenue from contracts with customers based on a five step model as set out in IFRS 15 Revenue from contracts with customers.

 

Step 1.   Identify the contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met. This is evidenced by issuance of signed Sale and Purchase Agreement ("SPA") to the customer and meeting specified threshold of project completion and collection from the customers.

 

Step 2.   Identify the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer. The performance obligation for the Group is to deliver the constructed property to the customers along with the ancillary rights such as the right to use amenities and other related infrastructure facilities available. Accordingly, one performance obligation has been identified for each unit to be sold. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements.

 

Step 3.   Determine the transaction price: The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for delivering the property to its customers. The agreed transaction price is a part of signed SPA issued to each customer. Revenue excludes taxes and duty, and includes an adjustment for significant financing component ("SFC") as the payment plan for the projects extends beyond twelve months from the reporting period. No adjustment has been made for variable consideration as the group does not have any contracts with variable consideration.

 

Step 4.   Allocate the transaction price to the performance obligations in the contract: The Group allocates the transaction price to each unit sold, consistent with the performance obligation identified in Step 2.

 

Step 5.   Recognize revenue when (or as) the entity satisfies a performance obligation.

 

The Group satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:

 

1.        The customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs; or

2.           The Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

3.           The Group's performance does not create an asset with an alternative use to the Group and the entity has an enforceable right to payment for performance completed to date.

 

The Group determines the satisfaction of performance obligation separately for each of its contracts and recognize revenue accordingly.

 

For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which the performance obligation is satisfied.

 

When the Group satisfies a performance obligation by delivering the promised goods or services it creates a contract asset based on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognized this gives rise to a contract liability.

 

2.16     Cost of revenue

 

Cost of revenue represent cost for purchase of land, construction costs, consultant costs, utilities cost, and other related direct costs recognized to statement of profit or loss on percentage of completion.

 

2.17     Borrowing costs

 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds. All other borrowing costs are recognised in the consolidated statement of profit or loss in the year in which they are incurred.

 

 

2.18     Escrow Accounts

 

Escrow accounts represent bank accounts where money is held in with the bank, acting as an escrow agent, and available for use only if all the pre-determined conditions are fulfilled. The funds paid by customers for their apartments in off-plan sales are required to be deposited into escrow accounts held by banks accredited by the local governing bodies.

 

For Escrow retention, in line with UAE laws an escrow agent must retain five per cent. of the total value of each escrow account once the developer obtains the building completion certificate to ensure coverage of defects in the property post-handover. The retained amount will be released to the developer one year from the registration of the residential units in the name of purchasers of such units.

 

2.19     Equity and reserves

 

Share capital represents the nominal value of shares that have been issued. Share premium represents the excess consideration received over the nominal value of share capital upon the sale of shares, less any incidental costs of issue.

 

The retained earnings represent distributable reserves.

 

The foreign currency translation reserve is used to record exchange difference arising from translation of the financial statements of foreign subsidiaries, associates and joint ventures.

 

2.20     Statutory Reserve

 

According to Article 241 of the UAE Federal Law No. (2) of 2015, 10% of annual net profits after NCI are allocated to the statutory reserve for the entities registered in UAE. The transfers to the statutory reserve may be suspended when the reserve reaches 50% of the paid-up capital.

 

2.21     Significant accounting judgements, estimates and Assumptions

 

In the application of the Group's accounting policies, which are described in policy notes, the management are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

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

 

The significant judgments and estimates made by management, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below.

 

Critical judgements in applying accounting policies

 

In the process of applying the Group's accounting policies, which are described above, and due to the nature of operations, management makes the following judgment that has the most significant effect on the amounts recognized in the combined interim financial statements.

 

Identifying a contract

 

The group assesses for each development and for each customer the point in time at which a contract exists. This requires assessing the point in each the development where there is certainty that it will continue to completion, as well as assessing the point in time at which consideration from the customer is probable - this assessment takes into account the legal requirements and history of collections.

 

Timing of satisfaction of performance obligations

 

The Group is required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time in order to determine the appropriate method of recognizing revenue. The Group has assessed that based on the sale and purchase agreements entered into with customers and the provisions of relevant laws and regulations, where contracts are entered into to provide real estate assets to customer, the Group does not create an asset with an alternative use to the Group and usually has an enforceable right to payment for performance completed to date. In these circumstances the Group recognizes revenue over time.

 

Determination of transaction prices

 

The Group is required to determine the transaction price in respect of each of its contracts with customers. In making such judgment the Group assess the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component in the contract and any non-cash consideration in the contract.

 

Key sources of estimation uncertainty

 

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting 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.

 

Impairment of financial assets

 

The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group's past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in the relevant notes to the condensed consolidated financial statements.

Measurement of progress when revenue is recognized over time

 

The Group has elected to apply the input method to measure the progress of performance obligations where revenue is recognized over time. The Group considers that the use of the input method which requires revenue recognition on the basis of the Group's efforts to the satisfaction of the performance obligation provides the best reference of revenue actually earned. In applying the input method, the Group estimates the cost to complete the projects in order to determine the amount of revenue to be recognized.

 

Cost to complete the projects

 

The Group estimates the cost to complete the projects in order to determine the cost attributable to revenue being recognized. These estimates include the cost of providing infrastructure, potential claims by contractors as evaluated by the project consultant and the cost of meeting other contractual obligations to the customers.

 

Net realisable value of development properties

 

Development properties are stated at the lower of cost and estimated net realisable value. The cost of work-in-progress comprises construction costs and other related direct costs. Net realisable value is the estimated selling price in the ordinary course of business, less cost of completion and selling expenses.

 

Contingent consideration payable to joint developer

 

For each joint development agreement, the Group estimates the contingent consideration payable to the joint developer. In order to determine the contingent consideration, the Group estimates the total sales price, the total cost of development properties including potential claims by contractors and the estimated cost of meeting other contractual obligations.

 

3          New standards and amendments

 

3.1       New standards and amendments applicable as on January 01, 2023

 

The following standards and amendments apply for the first time to the financial reporting periods commencing on or after January 01, 2023.

 

-        IFRS 17 Insurance Contracts

-        Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2

-        Definition of Accounting Estimate - Amendments to IAS 8

-    Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12

 

The management believes that the adoption of the above amendments effective for the current accounting period has not had any material impact on the recognition, measurement, presentation, and disclosure of items in the condensed consolidated financial statements.

 

3.2       New standards and amendments issued but not effective for the current annual period

 

The following standards and interpretations had been issued but not yet mandatory for annual reporting periods ending June 30, 2023.

 

Description	Effective for annual periods beginning on or after
Non-current liabilities with Covenants - Amendments to IAS 1	January 1, 2024
Classification of Liabilities as Current or Noncurrent - Amendments to IAS 1	January 1, 2024
Lease liability in a Sale and Leaseback - Amendments to IFRS 16	January 1, 2024
Sale or Contribution of Assets between an investor and its Associate or Joint Venture - IFRS 10 and IAS 28	Effective date deferred indefinitely

 

Management anticipates that these new standards, interpretations and amendments will be adopted in the financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, may have no material impact on the financial statements in the period of initial application.

 

4          Segment Information

 

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

 

Business segment

 

The only business segment is Real estate development which represents 100% of the revenue and total assets.

 

Geographic segments

 

The following tables include revenue and other segment information for the six-month period ended 30 June 2023 and 30 June 2022. Certain assets information for geographic segments is presented as at 30 June 2023 and 31 December 2022.

 

The Group has divided its operations into two categories i.e. Domestic (UK) and International (all other countries where Group has its operations)

	Domestic	International
	USD	USD
Six-month period ended 30 June 2023:
Revenue	-	108,419,405
Profit for the period	(2,537,728)	23,335,519
Six-month period ended 30 June 2022:
Revenue	-	27,510,602
Profit for the period	(202,980)	3,894,602
As at 30 June 2023
Total assets	49,239,217	666,091,101
Total liabilities	1,730,490	313,967,500
As at 31 December 2022
Total assets	9,637,947	548,256,972
Total liabilities	1,373,566	275,119,765

 

5          Cash and cash equivalents

 

	As at June 30,	As at December
	2023	31, 2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Cash in hand	21,516	14,709
Cash at bank
-     Current accounts	29,534,635	40,936,094
-     Escrow retention accounts (refer to (a) below)	7,432,170	5,853,253
-     Escrow accounts (refer to (b) below)	103,869,247	71,661,582
-     Short-term deposits (refer to (c) below)	34,900,000	-
	----------------	----------------
	175,757,568	118,465,638
Less: Escrow retention accounts (note 9)	(7,432,170)	(5,853,253)
	----------------	---------------
	168,325,398	112,612,385
	=========	=========

 

 

a)   The above represents Escrow retention accounts maintained with a commercial bank in accordance with Law No. 8 of 2007 relating to Trust Accounts Regulation and Real Estate Regulatory Authority (RERA) requirements in Dubai - United Arab Emirates. The retention balance shall be released after one year from the completion of the project.

 

b)  The above represents Escrow accounts maintained with a commercial bank in accordance with the local laws issued by the governing body of the respective countries. This escrow account can be used for making payments directly related to the projects subject to the regulations. The significant increase in the balances during the period is mainly due to collections from customers as per the payment plan.

 

c)   The above represents term deposit held with commercial bank in United Kingdom with maturity period of less than 90 days. This deposit earns interest at the rate of 5.55% per annum.

 

Management has concluded that the Expected Credit Loss (ECL) for all bank balances is immaterial as these balances are held with banks/financial institutions whose credit risk rating by international rating agencies has been assessed as low.

 

6          Trade and unbilled receivables

 

	As at June 30,	As At December
	2023	31, 2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Unbilled receivables (refer to (a) below)	106,597,138	39,152,132
Trade receivables (refer to (b) below)	7,259,245	1,400,608
	----------------	----------------
	113,856,383	40,552,740
Less: Provision for impairment on trade receivables	-	-
	----------------	----------------
Net receivables	113,856,383	40,552,740
	=========	=========
Not more than 12 months outstanding	113,856,383	40,552,740
More than 12 months outstanding	-	-
	----------------	----------------
	113,856,383	40,552,740
	=========	=========

 

 

a)      Unbilled receivables are contract assets which relate to the Group's right to receive consideration for work completed but not billed as at the reporting date. These are transferred to trade receivables when invoiced as per milestones agreed in contracts with the customers.

 

b)         At reporting date, the ageing analysis of net trade and unbilled receivables is as follows:

 

	As at June 30,	As At December
	2023	31, 2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Current (Not past due)	106,597,138	39,164,419
Not more than 30 days	3,427,262	142,777
Between 31 to 60 days	282,930	368,428
Between 61 to 90 days	103,009	114,212
More than 90 days	3,446,044	762,904
	----------------	----------------
Total	113,856,383	40,552,740
	=========	=========

 

Refer note 29(d) on credit risks of trade and unbilled receivables, which explains how the Group manages and measures credit quality of trade and unbilled receivables that are neither past due nor impaired.

 

7          Advances, deposits and other receivables

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Prepayments (refer to (a) below)	42,940,885	44,540,626
Advances to suppliers and contractors	11,110,631	3,640,981
Margin deposit (refer to (b) below)	28,344,452	21,592,920
Other deposits	2,574,801	824,130
Other receivables	657,471	486,009
VAT refundable	9,637,878	10,047,183
	---------------	---------------
	95,266,118	81,131,849
	=========	=========

 

7          Advances, deposits and other receivables (continued)

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
Less than 12 months	30,914,369	38,543,988
More than 12 months	64,351,749	42,587,861
	----------------	----------------
	95,266,118	81,131,849
	=========	=========

 

a)         The above mainly includes incremental cost of obtaining a contract such as sales commission paid to brokers and employees for the sale of properties, amounting to USD 40,275,224 (2022: USD 36,413,568) and will be amortized consistent with the pattern of revenue in the future.

 

b)         The above represents margin deposits held with a bank against project guarantee (note 32).

 

c)         Prepayments includes USD 73,997 for commission paid to a related party (note 19)

 

8          Development properties

 

	As at June 30,	As at December
	2023	31,2022
	---------------	---------------
	(Unaudited)	(Unaudited)
Balance at the beginning of the period / year	302,274,899	176,796,423
Additions during the period / year	67,342,134	176,829,733
Cost of revenue	(62,698,442)	(51,351,257)
	---------------	---------------
Balance at the end of the period/year	306,918,591	302,274,899
	=========	=========

 

Properties acquired, constructed or in the course of construction for sale in the ordinary course of business are classified as development properties and include the costs of:           

 

·    Freehold and leasehold rights for land;

·  Amounts paid to contractors for construction including the cost of construction of infrastructure; and

·    Planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, borrowing costs, cost of acquiring development rights construction overheads and other related costs.

 

Common overhead cost (directly attributable to the projects) is allocated to various projects and forms part of the estimated cost to complete a project in order to determine the cost attributable to revenue being recognised.

 

The Group assesses the net realizable value of development properties for impairment on each reporting date and the management believes that the net realizable value of above development properties is higher than its carrying value as on the reporting date.

 

Development properties in the UAE include land provided by Joint Development Agreement (JDA) partner on December 9, 2021, under a JDA. On initial recognition the property has been recognized at fair value of the consideration payable i.e., at USD 29,875,519 which is computed based on a deferred payment plan as defined in the sale and purchase agreement ("SPA") (note 17). Under the arrangement with Uranus, profits will be shared equally between the parties.

 

Development properties include an amount of USD 95,302,927 (December 2022 : USD 95,302,927) which is registered as primary mortgage in the favour of commercial bank in Dubai against the borrowings (note 18).

 

The development properties are located in United Arab Emirates, United Kingdom, Bosnia, Spain and Oman.

 

9          Escrow retentions

 

	As at June 30,	As at December
	2023	31,2022
	---------------	---------------
	(Unaudited)	(Unaudited)
Escrow retention accounts - more than 12 months (note 5)	7,432,170	5,853,253
	========	========

10        Investment in joint venture

 

	As at June 30,	As at December
	2023	31,2022
	---------------	---------------
	(Unaudited)	(Unaudited)
149 OPL Ltd	5,129,139	4,681,667
	========	========

 

On 3 November 2022, the Group entered into joint venture for the purpose of acquiring, developing and selling the property under the name of 149 OPL Ltd ("joint venture") domiciled in the United Kingdom.

 

In accordance with the joint venture agreement, the Group and the other investor have subscribed to deep discount bonds issued by 149 OPL Ltd in the proportion of their respective ownership interest. On 3 November 2022, the Group has subscribed for bonds with nominal value of USD 5,919,512 at a discounted price of USD 4,932,926. Further, the discount rate is 10% per annum and maturity period for the bond is two years.

 

 

	June 30,	December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Revenue	-	-
Net loss	(41,903)	(439,221)
Other comprehensive income	-	-
	--------------	--------------
Total comprehensive loss	(41,903)	(439,221)
Group's share of loss	(31,553)	(330,733)
	========	========

 

The following table summarises the financial position of Group's joint venture for the period/year ended:

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
Total assets	21,473,995	18,837,517
Total liabilities	14,662,390	12,620,164
	--------------	--------------
Net assets	(6,811,605)	(6,217,353)
Group's share of net liabilities	(5,129,139)	(4,681,667)
	========	========

 

11        Loan to joint venture

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
149 OPL Ltd	2,098,027	1,991,953
	========	========

 

Loan to joint venture is unsecured, repayable on demand and do not carry any interest.

 

12        Property and equipment

 

	Leasehold improvements	Furniture and fixtures	Computers and office equipment	Capital work-in-progress	Total
Cost (unaudited)
As at January 1, 2022	451,483	326,252	368,281	-	1,146,016
Additions	599	24,457	227,550	576,016	828,622
Disposals	(201,073)	-	-	-	(201,073)
	------------	------------	-------------	------------	-------------
As at December 31, 2022	251,009	350,709	595,831	576,016	1,773,565
Additions	185,473	991,444	601,213	126,199	1,904,329
Transfer from Capital work-in-progress	196,008	399,120	-	(595,128)	-
	----------	------------	------------	------------	------------
As at June 30, 2023	632,490	1,741,273	1,197,044	107,087	3,677,894
	----------	------------	------------	-----------	------------
Accumulated depreciation (unaudited)
As at January 1, 2022	193,888	246,590	325,745	-	766,223
Charge for the period	62,115	66,391	41,699	-	170,205
Disposals	(4,994)	-	-	-	(4,994)
	----------	----------	------------	------------	------------
As at December 31, 2022	251,009	312,981	367,444	-	931,434
Charge for the period	49,650	120,496	158,155	-	328,301
	----------	------------	------------	------------	------------
As at June 30, 2023	300,659	433,477	525,599	-	1,259,735
	----------	------------	------------	------------	------------
Carrying value as
At June 30, 2023	331,831	1,307,796	671,445	107,087	2,418,159
	======	======	======	=======	=======
As at December 31, 2022	-	37,728	228,387	576,016	842,131
	======	======	======	=======	=======

 

13        Right-of-use assets and Lease liabilities

 

The carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the year:

 

Right-of-use assets	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Balance at the beginning of the period/year	2,643,470	-
Additions during the period/year	5,094,849	3,510,427
Depreciation charge for the period/year	(843,822)	(866,957)
Foreign exchange gain	13,363	-
	--------------	--------------
Balance at the end of the period/year	6,907,860	2,643,470
	========	========

 

Lease liabilities	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Balance at the beginning of the period/year	2,743,815	-
Additions during the period/year	5,094,849	3,510,427
Interest expense for the period/year	155,993	161,790
Payments for the period/year	(1,021,679)	(928,402)
Foreign exchange loss	(13,225)	-
	------------	------------
Balance at the end of the period/year	6,959,753	2,743,815
	=======	=======
Less than 12 months	2,681,168	1,054,322
More than 12 months	4,278,585	1,689,493
	------------	------------
	6,959,753	2,743,815
	=======	=======

 

14        Trade and other payables

           

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Trade payables	5,573,899	1,823,906
Accruals	17,158,422	28,601,037
Other payables	1,587,991	266,341
	--------------	--------------
	24,320,312	30,691,284
	========	========

 

Less than 12 months	24,320,312	30,691,284
More than 12 months	-	-
	-------------	-------------
	24,320,312	30,691,284
	========	========

 

15        Advance from customers

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Balance at the beginning of the period/year	94,456,096	33,999,178
Revenue recognized during the period/year	(62,698,442)	(90,565,312)
Advances received from the customers during the period/year - Net	107,249,371	151,022,230
	---------------	--------------
Balance at the end of the period/year	139,007,025	94,456,096
	=========	========

 

The above represent contractual liabilities arising from the property sales agreement with the customers including advance consideration received from them.

 

The aggregate amount of the sale price allocated to the performance obligations of the Group that are fully or partially unsatisfied as at 30 June 2023 is USD 117,966,983 (31 December 2022: USD 125,492,668). The Group expects to recognise these unsatisfied performance obligations as revenue over a period of 1 to 5 years.

 

16        Retention payable

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Retention payable for construction works - not more than 12 months	4,410,940	4,038,203
Retention payable for construction works - more than 12 months	-	-
	------------	------------
	4,410,940	4,038,203
	=======	=======

 

17        Development property liability

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Long term liability - Land	75,457,098	72,467,693
	--------------	--------------
	75,457,098	72,467,693
	========	========

 

The above represents amount payable for the land contributed by joint development partner under the JDA. This liability is secured against development property (note 8). The property has been purchased on a deferred payment plan with the final instalment due on the completion of the project i.e. on or before December 31, 2025.  The interest cost is capitalized which represents a difference between the fair value at the date of initial recognition and the discounted value as at the period ended June 30, 2023.

 

18        Loans and borrowings

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Balance at the beginning of the period/year	69,668,662	-
Add: Drawdown during the period/year	2,224,527	69,668,662
Less: Repayments during the period/year	(8,167,613)	-
	--------------	--------------
	63,725,576	69,668,662
	========	========

 

18        Loans and borrowings (continued)

 

Loans and borrowings maturity profile:	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
Not more than 12 months	6,798,747	4,482,821
More than 12 months	56,926,829	65,185,841
	--------------	--------------
	63,725,576	69,668,662
	========	========

 

The Group has following secured interest-bearing borrowings:

 

-     During the year 2022, the Group entered into a financing facility with a commercial bank for an amount of USD 87,134,105 of which the Group had drawn down USD 65,350,579. This facility is secured against development property (note 8) in United Arab Emirates, carries interest at 3 months EIBOR plus 2.55% per annum and is repayable by November 2027.The facility is presented in the consolidated financial statements at USD 56,926,829.

 

-     During the year 2022, the Group entered into a USD 4,574,220 financing facility with a commercial bank in Spain which has been fully drawn. This facility carries interest at 3 months EURIBOR plus 2.449% per annum and is repayable by September 2023.

 

-   Additionally, during the current period, the Group entered into a USD 2,224,557 financing facility with a commercial bank in Spain which has been fully drawn. This facility carries interest at 3 months EURIBOR plus 2.50% per annum and is repayable by October 2023.

 

-    The Group has an undrawn facility from a commercial bank in UAE, obtained on 25 April 2023 in the amount of USD 204 million, which is guaranteed by Dar Al Arkan Global Real Estate Development and Dar Al Arkan Real Estate Development Company.

 

19        Related party transactions

 

The Group enters into transactions with other entities that fall within the definition of a related party as contained in IAS 24, Related party disclosures. Related parties comprise entities under common ownership and/or common management and control; their partners and key management personnel.

 

The management decides on the terms and conditions of the transactions and services received/rendered from/to related parties as well as other charges, if applicable.

 

 

a)         Due from related party

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Entity under common control
Dar Al Arkan For Real Estate Development W.L.L, Qatar	6,978,473	5,310,572
	========	========

These above balances are interest bearing at the rate of 6% per anum and shall be repayable by 21 November 2026.

 

b)         Due to related party

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
Parent company	(Unaudited)	(Unaudited)
Dar Al Arkan Global Real Estate Development LLC, UAE	1,506,825	2,101,668
	========	========

These balances are unsecured, interest free and is repayable on demand.

 

c)         Transactions with key management personnel

	As at June 30,	As at June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Short term benefits	1,386,312	126,404
Employees' end-of-service benefits	216,953	-
	------------	-------------
	1,603,265	126,404
	=======	=======

 

d)         Other related party transactions

	As at June 30,	As at June 30,
	2023	2022
	----------------	----------------
Issuance of shares for acquisition of subsidiary
Parent company	282,670,733	-
Issuance and redemption of preference shares
Parent company	61,900	-
Loan granted/(received)
Entity under common control of Ultimate parent company	1,667,901	-
Parent company	594,842	(58,991,879)
Share of loss
Joint venture	31,553	-

 

 

	As at June 30,	As at June 30,
	2023	2022
	----------------	----------------
Interest income
Entity under common control of Ultimate parent company	303,166	-
Joint venture	258,274	-
Professional fees
Ultimate parent company	81,688	-
Prepayments
Entity under common control of Ultimate parent company	73,997	-

 

During February 2023, the Company entered into revolving credit agreement of USD 200 million with the Ultimate parent entity to finance the general corporate purposes of the Group. As at June 30, 2023 the entire facility is undrawn.           

 

20        Share capital

			As at June 30, 2023 (Unaudited)		As at December 31, 2022  (Unaudited)
Ordinary shares			Number	Amount	Number	Amount
Called up and fully paid-up share capital
Opening			2,239,510,913	22,395,109	-	-
Issuance of shares for acquisition of subsidiary*			366,666,594	3,666,666	2,239,510,913	22,395,109
Issuance of ordinary shares*			21,621,612	216,216	-	-
Capital reduction**			(2,447,777,507)	(24,477,775)	-	-
			---------------	--------------	-----------------	--------------
			180,021,612	1,800,216	2,239,510,913	22,395,109
			=========	========	==========	========

 

* On 25th January 2023, the Company issued 366,666,594 ordinary shares to Parent entity for acquisition of Dar Al Arkan Holdings Ltd (ADGM) - UAE.

 

Additionally, on 28th February 2023, the Company issued 21,621,612 ordinary shares at a price of USD 3.33 by way of a private placement on the London Stock Exchange to qualified investors.

 

**On 30th January 2023, the Company completed a capital reduction, reducing the issued share capital by USD 24,477,775 through the cancellation of 2,447,777,507 shares, this amount and its related share premium has been transferred to retained earnings as it is distributable.

 

21        Share premium

 

	As at June 30,	As at December
	2023	31,2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Share premium	88,781,078	259,263,179
	--------------	---------------
	88,781,078	259,263,179
	========	=========

 

Additional net assets of USD 279,004,068 received on 25th January 2023 for the issuance of 366,666,594 shares of USD 0.01 each to the Parent entity in exchange of acquisition of shares in Dar Al Arkan Holdings Limited (ADGM) - UAE amounting to USD 282,670,732 (Note 20).

 

On 30th January 2023, the Company completed a capital reduction, reducing the issued share capital by USD 24,477,775 through the cancellation of 2,447,777,507 shares, the share premium relating to this reduction amounting to USD 262,664,624 has been transferred to retained earnings as it is distributable.

 

Additionally, share premium includes an amount of USD 71,783,588 premium received on 28th February 2023, on issuance of 21,621,612 ordinary shares of USD 0.01 each at a price of USD 3.33 (Note 20).

 

22        Revenue

 

	Six-month period ended
	June 30,	June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Revenue is recognised over time as provided below:
Sale of residential units	108,196,392	27,510,602
Other revenue:
Interest income from customer contracts	223,013	-
	---------------	--------------
	108,419,405	27,510,602
	=========	========

 

Cost of revenue

 

Cost of residential units	62,698,442	15,130,428
	=========	========

 

Revenue from sale of residential units is net of discount against transaction prices for certain units sold with a significant financing component and Dubai Land Department (DLD) fee waiver amounting to USD 5,906,542 (2022: USD 941,013).

 

23        Other income

 

	Six-month period ended
	June 30,	June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Income from termination of units (note (i) below)	1,057,294	-
Foreign exchange gain	668,350	-
Others	17,361	-
	---------------	--------------
	1,743,005.00	-
	=========	========

 

(i) This represents instalments collected from customers that have been forfeited due to termination of contracts on account of cancellation of units booked.

 

24        Selling and marketing expenses

 

	Six-month period ended
	June 30,	June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Sales commission	10,119,319	1,215,820
Marketing expenses	3,066,063	715,995
	--------------	--------------
	13,185,382	1,931,815
	========	========

 

25        General and administrative expenses

	Six-month period ended
	June 30,	June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Salaries and related benefits	7,358,332	3,079,291
Legal and professional expenses (note (i) below)	1,645,372	424,094
Depreciation on right-of-use assets (note 13)	843,822	-
IT related expenses	518,061	-
Bank charges	333,737	157,125
Utilities	361,049	72,604
Depreciation on property and equipment (note 12)	328,301	77,268
Rent	311,429	554,091
Board of Directors Fees	259,167	-
Travelling expenses	257,262	16,452

 

 

	June 30,	June 30,
	2023	2022
	----------------	---------------
	(Unaudited)	(Unaudited)
Other expenses	712,361	171,612
	--------------	--------------
	12,928,893	4,552,537
	========	========

 

(i) This includes professional fees amounting to USD 81,688 (June 30, 2022: Nil) payable to the Ultimate parent entity.

 

26        Net finance costs

 

	Six-month period ended
	June 30,	June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Finance costs
Interest expense on bank borrowings	1,697,297	-
Interest on lease liability (note 13)	155,994	-
Interest expense on un-winding of loans received from related parties	-	2,219,259
	------------	--------------
	1,853,291	2,219,259
	=======	========

 

Finance income
Interest income	771,502	15,059
Interest income from loan to related party (note 19)	303,166	-
Income from investment in bonds of joint venture	258,274	-
	--------------	--------------
	1,332,942	15,059
	========	========
Net finance costs	520,349	2,204,200
	========	========

 

27        Earning Per Share

 

Basic earnings per share amounts are calculated by dividing net profit or loss for the year attributable to the owners of the Company by the weighted average number of ordinary shares outstanding during the year.

 

Diluted earnings per share amounts are calculated by dividing the net profit or loss attributable to the owners of the Company (after adjusting for interest on the convertible notes) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

 

The information necessary to calculate basic and diluted earnings per share is as follows:

 

 

	Six-month period ended
	June 30,	June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Earnings:
Profit/(loss) attributable to the owners of the Company for basic earnings	20,797,791	3,691,622
	========	=======
Number of shares in thousands
Weighted-average number of ordinary shares for basic/diluted earnings per share	269,916,428	300,000
	=========	=======

 

Earnings per share:
-   basic and diluted earnings per share (USD)	0.08	12.31
	========	========

 

28        Financial instruments

 

a)  Significant accounting policies

 

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset and financial liability are disclosed in note 2 to the interim financial statements.

 

b) The Group considers that the carrying amount of financial assets and liabilities are reasonable approximation of fair values.

			As at		As at
			June 30, 2023	December 31, 2022	June 30, 2023	December 31, 2022
Financial assets			Carrying amount		Fair Value
Cash and cash equivalents			168,325,398	112,612,385	168,325,398	112,612,385
Trade and unbilled receivables			113,856,383	40,552,740	113,856,383	40,552,740
Advances, deposits and other receivables			31,576,724	22,903,059	31,576,724	22,903,059
Escrow retentions			7,432,170	5,853,253	7,432,170	5,853,253
Due from related party			6,978,473	5,310,572	6,978,473	5,310,572
Loan to joint venture			2,098,027	1,991,953	2,098,027	1,991,953
			---------------	---------------	---------------	---------------
			330,267,175	189,223,962	330,267,175	189,223,962
			=========	=========	=========	=========

 

Financial liabilities
Trade and other payables		22,732,321	30,424,943	22,732,321	30,424,943
Retention payable		4,410,940	4,038,203	4,410,940	4,038,203
Loans and borrowings		63,725,576	69,668,662	63,725,576	69,668,662
Development property liability		75,457,098	72,467,693	75,457,098	72,467,693
Due to related party		1,506,825	2,101,668	1,506,825	2,101,668
Lease liabilities		6,959,753	2,743,815	6,959,753	2,743,815
		---------------	---------------	---------------	---------------
		174,792,513	181,444,984	174,792,513	181,444,984
		=========	=========	=========	=========

 

Financial instruments comprise of financial assets and financial liabilities.

 

Financial assets consist of accounts receivable, cash and cash equivalents, due from related parties, loan to joint venture and other receivables excluding prepayments, advances to suppliers and contractors and VAT refundable. Financial liabilities consist of other payables, interest bearing loans and borrowings, development property liabilities, lease liabilities and accounts payables and provisions excluding VAT payable.

 

29        Financial risk management objectives

 

The Group management set out the Group's overall business strategies and its risk management philosophy. The Group's overall financial risk management program seeks to minimize potential adverse effects on the financial performance of the Group. The Group policies include financial risk management policies covering specific areas, such as market risk (including foreign exchange risk, interest rate risk), liquidity risk and credit risk. Periodic reviews are undertaken to ensure that the Group's policy guidelines are complied with.

 

There has been no change to the Group's exposure to these financial risks or the manner in which it manages and measures the risk.

 

The Group is exposed to the following risks related to financial instruments. The Group has not framed formal risk management policies, however, the risks are monitored by management on a continuous basis. The Group does not enter into or trade in financial instruments, investment in securities, including derivative financial instruments, for speculative or risk management purposes.

 

a)   Foreign currency risk management

 

The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise.

 

The Group's significant monetary assets and liabilities denominated in foreign currencies are in AED which is pegged to USD. As the AED is currently pegged to the USD, balances are not considered to represent significant currency risk.

 

b)   Interest rate sensitivity analysis

 

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative financial instruments as at 30 June 2023. The analysis is prepared assuming the amount of liabilities outstanding at the reporting date was outstanding for the whole year.

 

A 50-basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

 

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the change in Group's profit for the period ended 30 June 2023 would not have material change. This is mainly attributable to the Group's exposure to variable rate financial instruments.

 

c)   Liquidity risk management

 

Ultimate responsibility for liquidity risk management rests with the management which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

 

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and equity from shareholders.

 

c)         Liquidity risk management (continued)

 

The table on the following page summarizes the maturity profile of the Group's financial liabilities. The contractual maturities of the financial liabilities have been determined on the basis of the remaining period at the condensed consolidated statement of financial position date to the contractual maturity date. The maturity profile of these liabilities at the condensed consolidated statement of financial position date based on contractual repayment arrangements are shown in the table below:

				Contractual Cashflows
	Carrying amount	Total	Less than 1 year		1-2 years	2-5 years	More than 5 years
30 June 2023
Financial liabilities
Payables	22,732,321	22,732,321	22,732,321		-	-	-
Retention payable	4,410,940	4,410,940	-		-	4,410,940	-
Loans and borrowings	63,725,576	77,641,275	11,380,929		16,454,225	49,806,121	-
Development property liability	75,457,098	92,579,986	-		-	92,579,986	-
Lease liabilities	6,959,753	7,693,792	2,681,168		2,475,885	2,425,805	110,934
Due to related party	1,506,825	1,506,825	1,506,825		-	-	-
	--------------	--------------	-------------		-------------	-------------	----------
	174,792,513	206,565,139	38,301,243		18,930,110	149,222,852	110,934
	========	========	========		========	========	======

 

31 December 2022
Financial liabilities
Payables	30,424,943	30,424,943	30,424,943	-	-	-
Retention payable	4,038,203	4,038,203	-	-	4,038,203	-
Loans and borrowings	69,668,662	86,742,249	10,499,907	9,530,293	66,712,049	-
Development property liability	72,467,693	92,579,986	-	-	92,579,986	-
Lease liabilities	2,743,815	3,000,489	1,054,322	932,719	780,380	233,068
Due to related party	2,101,668	2,101,668	2,101,668	-	-	-
	---------------	---------------	-------------	-------------	---------------	----------
	181,444,984	218,887,538	44,080,840	10,463,012	164,110,618	233,068
	=========	=========	========	========	=========	======

 

d)         Credit risk management

 

        Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties. The Group's exposures are continuously monitored and their credit exposure is reviewed by the management regularly.

 

            The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

 

           The carrying amounts of the financial assets recorded in the condensed consolidated financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risks.

 

30        Capital risk management

 

The capital structure of the Group consists of cash and cash equivalents, debt, which includes interest-bearing loans and borrowings as disclosed in note 18 and equity as disclosed in the condensed consolidated financial statements.

 

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the equity balance. The Group's overall strategy remains unchanged from prior year. The Group is not subject to any externally imposed capital requirements.

 

31        Contingent liabilities

 

	As at June 30,	As at December
	2023	31, 2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Letters of guarantee	28,344,452	21,592,920
	========	========

 

Under the Real Estate Regulatory Agency (RERA) regulations, the Group is required to provide letters of guarantees to the Dubai Land Department for all of its projects located in the United Arab Emirates in the amount of 20 per cent. of the construction costs for such projects. The Group holds margin deposits equivalent to the amount of the letters of guarantee at the bank providing such letters of guarantee. The guarantee margin deposit is refundable on completion of the project.

 

Except for the above and ongoing business obligations which are under normal course of business, there has been no other known contingent liability on Group's condensed consolidated financial statements as of reporting date.

 

 

32        Commitments

 

	As at June 30,	As at December
	2023	31, 2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Contracted commitments for development properties (note 8)	134,517,699	21,780,570
	=========	=========

 

Except for the above and ongoing business obligations which are under normal course of business, there has been no other known commitment on Group's co financial statements as of reporting date.

 

33        Auditors Remuneration

	Six-month period ended
	June 30,	June 30,
	2023	2022
	----------------	----------------
	(Unaudited)	(Unaudited)
Audit fees	437,587	-
RERA Audit - UAE	2,722	1,634
Review of the Quarterly financial statements	-	2,723
	---------------	---------------
	440,309	4,357
	=========	=========

 

34        Events after the reporting period

 

Subsequent to 30 June 2023, there have been no events that require disclosure or adjustment to these condensed consolidated financial statements

 

 Alternative performance measures

 

The Group uses a number of alternative performance measures (APM) which are not defined within IFRS. The Directors use the APMs, along with IFRS measures to assess the operational performance of the Group. Definitions and reconciliations of the financial APMs used compared to IFRS measures, are included below:

 

 Adjusted performance metrics

 

Adjusted performance metrics reconciled to statutory reported measures are shown below. The Directors consider these performance metrics provide additional information regarding the Group's core operations and business performance.

 

		(In US$)
Particulars	January 1, 2023 to June 30, 2023	January 1, 2022 to June 30, 2022
Gross Profit	45,720,963	12,380,174
Gross Profit %	42%	45%
Net Finance costs	(520,349)	(2,204,200)
Share of loss from joint venture	(31,553)	-
Profit / (Loss) for the year before tax	20,797,791	3,691,622
Profit / (Loss) for the year %	19%	13%
Depreciation on property and equipment and right-of-use assets	1,172,123	77,268
Net Finance costs	520,349	2,204,200
EBITDA	22,490,263	5,973,090
Profits attributable to owners of the company for basic earnings	20,797,791	3,691,622
Weighted average number of ordinary shares for basic/diluted earnings per share	269,916,428	300,000
Earnings per share attributable to owner of the Company: - Basic and Diluted Earnings per share (USD)	0.08	12.31