TIDMDAR
RNS Number : 9061N
Dar Global PLC
28 September 2023
Dar Global PLC
(Incorporate in England and Wales)
Company Number: 14388348
ISIN: GB00BQXNJY41
LEI: 213800XRFXQ1KEWACW80
28 September 2023
DAR GLOBAL PLC ('Dar Global', or the 'Company', or the
'Group')
Half-year results for the six-month period ended 30 June
2023
Strong financial performance in milestone period, following
successful IPO
Dar Global, the luxury international real estate developer,
today announces its unaudited interim results for the six months
ended 30 June 2023.
Ziad El Chaar, Chief Executive, commented:
"2023 has been a milestone year for the Company with our
successful listing on the London Stock Exchange in February
representing a significant step forward in supporting our ambitious
growth trajectory.
"We are delighted to have delivered a strong first half
performance. The launch of our first project in continental Europe
in June with Tierra Viva in conjunction with legendary Automobili
Lamborghini, with a Gross Development Value (GDV) in excess of
EUR280 million and comprising 53 grand villas overlooking the
Mediterranean sea, was a pivotal moment for Dar Global. Off plan
sales in AIDA, our largest active project, have generated
significant interest with 115 units already contracted and further
strong demand expected as subsequent phases are launched.
Additionally, we announced our debut in the hospitality industry in
the Maldives as we unveiled our long-term strategic partnership
with Dolce & Gabbana.
"These developments along with our portfolio of brand
partnerships and our global presence across eight sales offices
covering key markets underscores a highly differentiated
international business model serving an affluent customer base less
sensitive to prevailing macro-economic conditions.
"The second half has started strongly and we are well positioned
to weather some of the challenges facing the sector through the
strength of our balance sheet, building partnerships with other
global luxury brands and further expanding our pipeline of
opportunities."
Financial Highlights
-- Profit before tax for the period HY 2023 at US$20.8 million
(HY 2022: US$3.7 million), as both the Urban Oasis Tower and
DaVinci Tower by Pagani progress towards completion
-- Revenue for the period of US$108.4 million (HY 2022: US$27.5
million) with a gross profit of US$45.7 million (HY 2022: US$12.4
million) - resulting in a gross profit margin of 42%
-- Portfolio GDV increased to US$5.0 billion as of 30 June 2023
across 11 active projects in the UK, Spain, UAE, Oman, Qatar and
Bosnia (31 December 2022: 10 active projects with GDV of US$4.7
billion), including projects with a GDV of US$2.2 billion which had
been launched by 30 June 2023
-- Customer demand for both newly launched and existing projects
remain strong with contracted sales rising to 1,281 units as of 30
June 2023, amounting to a total sales value of c. US$839 million
(c. 17% of the total portfolio GDV of US$ 5.0 billion and c. 38% of
total launched GDV of c. US$2.2 billion)
-- Strong balance sheet with cash position of US$175.7 million,
comprising free cash of c. US$64.4 million, restricted escrow cash
of US$103.9 million and escrow retention balance of US$7.4
million
-- Increased net asset value of US$400 million at 30 June 2023
vs. US$281 million at 31 December 2022, a growth of c. 42%
-- Total liquidity of c. US$290.2 million (including undrawn
debt facilities ([1]) ), providing a platform to pursue
opportunistic growth and expand the current portfolio of assets
Half year summary financials:
Summary Profit & Loss HY 2023 (US$M) HY 2022 (US$M) Change
(%)
------------------------- -------
Unaudited Unaudited
------------------------- --------------- --------------- -------
Revenue 108.4 27.5 294%
Gross profit 45.7 12.4 269%
Gross profit margin [2] 42% 45% -
------------------------- --------------- --------------- -------
EBITDA 22.5 5.9 281%
EBITDA margin 20.8% 21.5% -
------------------------- --------------- --------------- -------
Profit before tax 20.8 3.7 462%
Summary Financial Position As of 30 June As of 31 December Change
2023 (US$M) 2022 (US$M) (US$M)
-------------------------------- --------
Unaudited Unaudited
-------------------------------- -------------- ------------------ --------
Assets
Cash and cash equivalents 175.7 118.5 +57.2
Trade and unbilled receivables 113.8 40.6 +73.2
Advances, deposits and other
receivables 95.3 81.1 +14.2
Development properties 306.9 302.3 +4.6
Liabilities
Trade and other payables 24.3 30.7 -6.4
Advance from customers 139.0 94.5 +44.5
Loans and borrowings 63.7 69.7 -6.0
Development property liability 75.5 72.5 +3.0
Equity
Net asset value 399.6 281.4 +118.2
Net asset value per share
(in US$)* 2.2 1.6 +0.6
*Net asset value per share based on share capital as on
30-June-2023
Highlights during the period
-- Dar Global was admitted to the Main Market of the London Stock Exchange on 28 February 2023
-- The Company launched its first project in continental Europe
on 21 June 2023 - Tierra Viva, in collaboration with Automobili
Lamborghini. This architectural jewel is set within the
ultra-exclusive locality of Benahavis, close to Marbella on the
south coast of Spain. With a GDV of c. EUR282 million, it comprises
of 53 grand villas with panoramic views of the Mediterranean sea
and is inspired by the iconic design of Automobili Lamborghini.
Tierra Viva marks a significant milestone for the Company as its
entry into the European ultra-luxury market, as well as for
Automobili Lamborghini being its first residential project on its
home continent
-- Off-plan sales in AIDA, Dar Global's largest active project,
commenced in Q2 and have generated significant interest from
customers worldwide, resulting in contracted sales of 115 units in
the three months from the launch of Phase 1 till 30 June 2023. The
Company expects continued strong demand as subsequent phases are
launched
-- In April 2023, Dar Global unveiled its partnership with the
world-renowned luxury brand, Dolce & Gabbana, for the Company's
debut in the hospitality industry in the Maldives. This partnership
marks the launch of a bespoke hospitality project that seamlessly
merges the unrivalled style and sophistication of Dolce &
Gabbana with Dar Global's unparalleled attention to detail and
world-class standards.
-- Since the period end, Dar Global announced the launch of
Marea, interiors by Missoni - its second residential development
project along the Costa del Sol in the south of Spain bringing the
Company's launched Spanish portfolio GDV to c. EUR350 million. This
launch showcases the Company's commitment to Europe and further
progress in delivering on its ambitious growth strategy across
international markets
About Dar Global
Dar Global PLC is a highly differentiated international real
estate business. It focuses predominantly on developing real estate
projects comprising second homes for internationally mobile
customers, in some of the most desirable locations across the
Middle East and Europe, including downtown Dubai, Muscat in Oman
and the Costa del Sol region in the South of Spain.
Dar Global was originally established to house and develop the
international (based outside the Kingdom of Saudi Arabia) assets of
Dar Al Arkan Real Estate Development PJSC ("DAARE"), a leading real
estate developer in the Kingdom of Saudi Arabia. Listed on the
Saudi Stock Exchange since 2007, Dar Al Arkan has delivered over
15,300 residential units with total assets of c. US$8.3
billion.
The Company intends to expand its focus to hospitality assets.
The aim is to acquire or build hotels and sell them after a period
of three to five years of operation once the hotels or resorts'
revenue streams stabilise. Target markets include Spain, Dubai,
Maldives, Athens and London.
Dar Global was admitted to the Main Market of the London Stock
Exchange on 28 February 2023.
Please visit www.DarGlobal.co.uk
For further information, please contact:
Dar Global
Abhilash Paul, Head of Investor Relations +44 (0) 20 8156 5573
apaul@darglobal.co.uk
ir@darglobal.co.uk
Powerscourt +44 (0) 20 7250 1446
Justin Griffiths / Nick Dibden / Louisa darglobal@powerscourt-group.com
Henry
Company Secretary
Link Company Matters
6(th) Floor, 65 Gresham Street, London
EC2V 7NQ
Management Presentation
The Company's half year results presentation will be available
on the Investor Relations section of Dar Global's website
(https://darglobal.co.uk/investor/) shortly after 7:00am on 28
September 2023.
Chief Executive's Review / Group Overview
At Dar Global, the strategic priorities are anchored in its
commitment to becoming a leading force in the global luxury real
estate market. Building on its key strengths and established
strategies, the Company is poised to achieve sustainable growth and
value creation.
The Company remains focused on second / vacation homes in prime
locations across the Middle East and Europe. As of 30 June 2023,
the Company has successfully expanded its project portfolio to
eleven projects spread across six jurisdictions including the UAE,
Spain, Oman, Qatar, the United Kingdom and Bosnia. Its unique
ability to tap into global wealth super trends and attract affluent
customers underscores its commitment to offering exceptional
properties to a discerning clientele.
Emphasizing capital efficiency, the Company has leveraged joint
development agreements (JDA) to optimize project financing and
enhance its return profile. By partnering with landowners through
innovative payment structures for some of its larger projects in
Oman, Qatar and the UAE, it avoids the need to obtain funding to
purchase land for these projects, effectively financing the
projects from payments made by customers purchasing residential
units on an off-plan basis. This reduction in capital expenditure
requirements for JDAs allows the Company to accelerate its growth
and simultaneously develop a larger number of projects than in the
circumstances when it purchases land for all its projects.
Dar Global continues to expand its portfolio of co-branded
projects with the launch of Tierra Viva, in partnership with
Automobili Lamborghini situated in Benahavis, next to Marbella
along the Costa del Sol in the south of Spain. The ultra luxury
villas in Tierra Viva represent Automobili Lamborghini's first real
estate project in Europe and have generated significant interest
worldwide since its launch at the end of June 2023. The Company
also unveiled its partnership with the world-renowned luxury brand,
Dolce & Gabbana for its debut in the hospitality industry. This
partnership extends Dar Global's geographical footprint into the
Maldives and extends its growth strategy beyond residential
projects, with a newfound focus on hospitality assets. The Company
envisions a diverse revenue stream through the acquisition or
construction of hotels, capitalizing on its expertise in real
estate development. With target markets including Maldives, Dubai,
Athens and London, the Company aims to introduce hospitality
experiences that align with its reputation for excellence.
The Company's global distribution network is a key
differentiator and central to its success. It continues to expand
its reach with sales offices in eight global cities and
collaborations with brokers across 63 countries. Strategic
additions to its internal marketing and sales capabilities further
enhance this network. By nurturing these relationships and
expanding its sales team, the Company aims to sell a majority of
its residential units through its own channels, enhancing
profitability and customer engagement. This sales model is
especially effective given a portion of the Company's customers may
consider purchasing more than one property across different
locations for investment purposes or for personal use. Marketing
all project launches in new geographies to a captive customer base
allows the Company to spread the customer acquisition cost across a
number of units, further improving its return profile.
Looking ahead, Dar Global remains steadfast in its pursuit of
excellence, confident that its strategic priorities and long-term
goals will continue to shape its success and define its legacy,
despite the macro-economic uncertainties. The Company is
well-positioned to benefit from the challenges faced by its
competitors and the broader real estate market.
Business Performance and Project Update
Dar Global's commitment to excellence has yielded positive
results in a challenging economic landscape. Despite prevailing
macroeconomic headwinds, the Company has continued its growth
trajectory and sales momentum across all active projects, while
maintaining a prudent and discerning approach to ongoing investment
decisions.
The Company is pleased to provide an update on its development
projects and contracted sales for HY 2023.
UAE - Four active projects
Dubai's prime residential market remains strong in 2023 with 13%
of transactions (by total value) taking place within this segment
of the broader residential real estate market in Dubai, according
to Knight Frank. The demand for prime residential property has been
so intense that Dubai experienced a record 44% increase in prime
home prices in 2022 - the highest level globally. Knight Frank saw
an 11.6% increase in the average transacted price in Q2 of this
year, taking the annualised rate of price growth for 2023 to
48.8%.
Despite the surging demand for prime property in the city and
the rapid increase in prices, Dubai remains one of the world's most
affordable luxury home markets, which adds to the city's appeal
amongst international buyers. Limited new inventory, coupled with a
continued influx of ultra-high net worth individuals acquiring
second / vacation homes in Dubai's prime neighbourhoods should
continue to support additional growth in property prices. As of 30
June 2023, Dar Global has four projects in Dubai with a total GDV
of US$1,017 million comprising 1,156 units, of which 980 units have
been sold resulting in 69% of the total GDV being sold.
Urban Oasis Tower - The Urban Oasis Tower is a 34-storey
residential development located on the Dubai Canal and will contain
bespoke apartments with interiors designed in collaboration
Missoni, the Italian fashion designer. Construction is 88%
completed with expected project completion in Q1 2024.
DaVinci Tower by Pagani - The refurbishment stage of the DaVinci
Tower project, in partnership with Italian supercar brand Pagani is
expected to be fully completed by Q2 2024. The fit-out works for
the project was awarded to the globally renowned contractor
Shapoorji Pallonji Mideast (L.L.C) in May this year .
W Residences - The W Residences project was launched in early
2022. The Company has begun the main works on the project and has
awarded the construction contract to China State Construction
Engineering Corporation Middle East (CSCEC ME), the world's largest
transnational multidisciplinary conglomerate in civil, industrial
engineering and real estate development. The project is now
expected to be fully completed in Q1 2026, earlier than previous
guidance of Q2 2026.
DG1 - The Company unveiled DG1 as its first 'own-brand'
development in March 2023. This 20-storey tower will comprise 221
units, including one, two, and three-bedroom apartments and Dar
Global has partnered with Gensler Architects on the design of the
tower . The launch of Dar Global's signature brand with DG1 is set
to create a new benchmark in Dubai's luxury living space, making it
a highly desirable asset. Construction on the project is expected
to start in Q4 2023 and complete in Q4 2026.
Qatar - One active project comprising of five residential
buildings
Qatar's housing market is normalising in 2023 post the
construction boom in the lead up to the 2022 FIFA World Cup hosted
in the country. In the first half of 2023, the supply of
residential inventory in Qatar saw a boost from developments
specifically reserved for visitors to the FIFA World Cup, such
properties have now been released to the market and as a result
both the prices to rent and purchase a residential property have
largely reverted to the pre World Cup levels. As of 30 June 2023,
Dar Global has one project in Qatar with a total GDV of US$361
million comprising 303 units, of which 68 units have been sold
resulting in 17% of the total GDV being sold.
Les Vagues - The Les Vagues project features 303 opulent
sea-front residences of one, two and three-bedroom apartments.
Construction is expected to commence in Q4 2023 and the project is
expected to be completed by in Q4 2026.
Oman - A master plan comprising of a Trump branded golf course,
a club house, residential units and hotels
The residential real estate market in Muscat, Oman has seen
steady growth over the recent years, with a focus on developing new
residential projects. More recently, land prices in the Sultanate
rose by an average of c. 15% in Q2 2023 when compared with Q2 2022
and the price of residential units was up approximately 6% in the
same period, as per the National Center for Statistics and
Information of Oman. As of 30 June 2023, Dar Global has one project
in Oman with a total GDV of US$2,404 million spread across ten
phases. Phase one with a GDV of US$411 million has been launched
and 115 of its 368 units have been sold resulting in 14% of the
launched GDV being sold.
AIDA - The AIDA project is expected to be phased over 10 years,
with a plan to launch one phase per year. AIDA is set to redefine
luxury living with its breath-taking views, immersive experiences,
and spectacular outdoor landscapes. The project is being developed
sustainably, preserving the area's topography and unique
environmental features, which adds to its appeal.
The first phase of the project was launched in the second half
of March 2023 and generated significant interest from customers
worldwide. Infrastructure works commenced in Q2 2023 with phase one
expected to complete in Q1 2027 and the entire project to complete
in December 2034. This project is being developed in partnership
with the OMRAN GROUP (Oman Tourism Development Company) and the
Trump Organisation.
United Kingdom
While Prime Central London, where Dar Global operates is, in
many ways, in a class of its own compared with the wider housing
sector, uncertainty surrounding the short-term economic outlook is
impacting prices here as well. That said, with more than half of
all owner-occupier homes in this area having no mortgage secured
against them, and cash purchases continuing to make up a large
proportion of sales between April and June according to JLL - it is
likely that the recent mortgage rate volatility will have less of
an impact on this part of the housing market.
As well as being less reliant on debt to fund purchases, the
prime central London market benefits from its appeal to both a
domestic and international audience. Data from Heathrow indicates
that the number of people arriving at the airport increased in Q2
2023 when compared with the same period last year. Specifically,
the number of travellers from the Middle East and from North
America have risen in double digit percentage terms. The sterling
continues to strengthen and recover from the lows of 2022, but it
still offers good value for overseas buyers using non-sterling
currencies for their purchases. Dollar-based investors are now
paying 35% less than they were in 2014, due largely to favourable
exchange rates, while Chinese investors are paying 24% less.
Therefore, the fundamentals of prime central London look stronger
than both the UK and Greater London averages over the coming
years.
Old Park Lane - Situated on the corner of Old Park Lane and
Piccadilly and overlooking Green Park, 149 Old Park Lane is a
sophisticated landmark building with an important role in London's
architectural heritage. Refurbishment works are in progress and are
expected to complete by Q1 2024.
Spain - Two active projects and one sizeable land parcel across
the south of Spain, primarily in the Costa De Sol region
The appetite for residential property along the Costa del Sol
remains strong with the pace of transactions increasing in 2023
compared to 2022. The Spanish economy this year has been less
buoyant than last year and with inflation above 3% and interest
rates above 4% - the number of mortgage transactions have decreased
year over year, indicating an overall slowdown in the residential
market. However, according to the Malaga Property Observatory,
OMAU, 45% of buyers in the Costa del Sol make their purchases
without a loan, suggesting that the regional market is less
affected by rising interest rates.
Property prices in Marbella and Malaga city have continued their
upward trajectory in 2023. According to Gesvalt, a real estate
consultancy in Spain, prices in these cities along the Costa del
Sol have gone up faster in H1 2023 when compared to the prior six
months in H2 2022. Overseas buyers remain very active in the Costa
del Sol real estate market with 70% of all homes sold in the region
in 2023 purchased by international buyers, according to Spain's
Notaries' Association. This reaffirms the increasing popularity for
residential real estate investment among international buyers.
Tierra Viva - In June 2023, Dar Global launched this
ultra-luxury project comprising of 53 exclusive villas.
Construction is expected to commence in Q4 2023 and the project is
expected to be completed in Q4 2026.
Manilva (Tabano) - In September 2022, Dar Global acquired six
plots of land in the municipality of Manilva in the province of
Malaga on the border with the province of Cadiz in southern Spain.
The plots are located approximately 45 minutes from Marbella by car
and are close to several polo clubs and one of the best beach areas
of Costa del Sol. The total land area of the Tabano project is
4,650,092 square meters.
The Tabano project is currently in the early permitting stage
and is expected to be completed in December 2029. AECOM consultants
have been appointed for the development of the concept master plan
and associated infrastructure plan.
Marea, interiors by Missoni - Dar Global unveiled its second
project in Spain on 30 August 2023, bringing the company's total
launched assets in the country to a GDV of c. EUR350 million. This
project is located in one of the most sought-after enclaves of the
Andalusian coast, not far from the Finca Cortesin resort which has
an 18-hole championship golf course rated among Spain's best golf
courses. Following the strong reception for Tierra Viva, the
Company expects to generate significant interest in Marea,
interiors by Missoni over the coming months. Construction is
expected to commence in Q2 2024 and the project is expected to be
completed in Q2 2027.
Bosnia
Sidra - Sidra is a development project in Bosnia, situated in
Ravne, Vares, 38 km outside Sarajevo, the capital of Bosnia. The
Project has been awarded to M/s Cestohnik as the main contractor
for carrying out infrastructure works, which are currently underway
and the works are expected to complete in Q4 2024.
Strong Balance Sheet & Net Cash Position
Dar Global boasts a resilient balance sheet, firmly supported by
a cash position of US$175.7 million (including free cash of US$64.4
million, and restricted cash of US$ 111.3 million including escrow
and escrow retentions). This strength strategically positions the
Company to capitalize on current market conditions. Amidst the
prevailing macro-economic uncertainties that have dampened the
broader residential real estate sector, Dar Global's capital light
model enables the Company to adopt an opportunistic approach. This
encompasses an exploration of potential transactions such as
targeted asset acquisitions, refurbishment projects, acquisition of
distressed assets, synergistic joint ventures, acquiring land
banks, and other investments across the geographical expanse where
the Company currently operates.
Outlook
Dar Global is positioned for steady growth as it confidently
navigates an ever-evolving economic landscape. With its strong
performance in the first half of 2023, the Company has demonstrated
not only resilience but robust performance in its industry. The
exceptional growth in revenue and profit is a testament to Dar
Global's singular focus on second / vacation homes targeting
affluent customers who are less impacted by the current macro
uncertainties.
Guidance for Full Year 2023
As contracted off-plan sales continue its current pace and
construction commences on our projects in Oman (AIDA Phase 1),
Qatar (Les Vagues) and Spain (Tierra Viva) as planned in Q4 2023,
we continue to grow our footprint and build on our credibility as
an accomplished global luxury developer with a solid track record
of designing world class residences in the most desirable
locations. This momentum sets the stage for us to capitalize on
emerging trends and continue exceeding expectations of creating
shareholder value.
Revenues recognised remain contingent on both construction
progress and the proportion of sales completed in the relevant
timeframe. Looking forward to the remainder of the financial year,
Dar Global anticipates building on its impressive momentum. The
Company is performing in line with management expectations and we
look forward to continued progress into year end.
Continued Expansion:
With a strong balance sheet and the business performing beyond
expectations, Dar Global is ready to expand its footprint further.
While the Company remains steadfast in its commitment to the
current geographies, it is also eyeing new horizons. Dar Global's
track record of success and financial strength positions it to
explore fresh opportunities across international markets,
diversifying its presence and deepening its impact.
As Dar Global continues to innovate and execute its ambitious
growth strategy, the Company looks forward to updating its
stakeholders on upcoming milestones in the months ahead.
Cautionary statement regarding forward-looking statements
This release may include statements that are, or may be deemed
to be, 'forward-looking statements'. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms 'believes', 'estimates', 'plans',
'projects', 'anticipates', 'expects', 'intends', 'may', 'will' or
'should' or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
release and include, but are not limited to, statements regarding
the Group's intentions, beliefs or current expectations concerning,
among other things, the Group's results of operations, financial
position, liquidity, prospects, growth, strategies and expectations
of the industry.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Forward-looking statements are not guarantees of future performance
and the development of the markets and the industry in which the
Group operates may differ materially from those described in, or
suggested by, any forward-looking statements contained in this
release. In addition, even if the development of the markets and
the industry in which the Group operates are consistent with the
forward-looking statements contained in this release, those
developments may not be indicative of developments in subsequent
periods. A number of factors could cause developments to differ
materially from those expressed or implied by the forward-looking
statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity
prices, changes in law or regulation, changes in its business
strategy, political and economic uncertainty. Save as required by
the Listing and Disclosure Guidance and Transparency Rules, the
Company is under no obligation to update the information contained
in this release. Past performance cannot be relied on as a guide to
future performance.
Going concern statement
The Board of Directors conducted an evaluation of the Group's
business plan and its anticipated funding needs for the
medium-term, comparing them to the level of committed loan
facilities and existing cash reserves. As of June 30 2023, the
Group holds unrestricted cash balance of US$64.4 million and total
liquidity of US$290.2 million (including undrawn debt facilities).
Additionally, the Group will receive funds from customers for units
sold, as per contracted payment plans and from sales of unsold
units.
Throughout this assessment, we have considered the inherent
uncertainties associated with future financial projections. Where
applicable, we have applied severe yet plausible sensitivities to
the key factors impacting the Group's financial performance.
Based on this evaluation, the Directors hold a reasonable
expectation that the Group possesses ample resources to sustain its
operations for the foreseeable future, extending no less than 12
months from the date of these Condensed Consolidated Interim
Financial Statements. Therefore, they have opted to continue using
the going concern basis of accounting when preparing the Group's
Condensed Consolidated Interim Financial Statements.
Principal risks and uncertainties
The principal business risks and uncertainties facing Dar Global
for the next six months are:
-- portfolio concentration in early-stage projects and related
completion uncertainties (costs, delays, quality),
-- dependence on contractors to mitigate construction-related risks,
-- joint development and joint venture risks,
-- global economic and political uncertainties, in particular
knock-on effects on oil markets impacting our customer's wealth and
default rates,
-- the Group's limited operating history,
-- the due diligence process the Group undertakes in connection
with new projects is still maturing,
-- key personnel risk, in particular at the executive level,
-- uncertainties in obtaining regulatory approvals,
-- evolving environmental laws,
-- cyber and data risks
Directors' responsibility statement
This statement, which should be read in conjunction with the
independent review of the auditors set out before the condensed
consolidated interim financial statements (the "interim financial
statements"), is made to enable shareholders to distinguish the
respective responsibilities of the Directors and the auditors in
relation to the interim financial statements which the Directors
confirm have been presented on a going concern basis.
The Directors consider that the Group has used appropriate
accounting policies, consistently applied and supported by
reasonable and appropriate judgements and estimates. A copy of the
interim financial statements of the Group is placed on the website
of Dar Global Plc: www.darglobal.co.uk. The Directors are
responsible for the maintenance and integrity of the information on
the website. Information published on the internet is accessible in
many countries with different legal requirements. Legislation in
the United Kingdom governing the preparation and dissemination of
the financial statements may differ from legislation in other
jurisdictions.
The Directors confirm that this condensed set of interim
financial statements has been prepared in accordance with
International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the United Kingdom and that the interim
management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related party transactions in the first six months
of the financial year and any material changes in the related party
transactions described in the IPO Prospectus..
On 9 August 2023, the Company announced that Shivaraman Iyer
stepped down from the Board as an Executive Director of the
Company, with effect from 8 August 2023. Mr. Iyer will continue in
his role as Chief Financial Officer and will also remain part of
the Company's executive management team. This change enhances the
ratio of independent and non-executive members of the Board.
A list of current Directors is maintained on Dar Global Plc's
website, with further announcements to be made in due course.
On behalf of the Board
David Hunter
Chairman
28 September 2023
INDEPENT REVIEW REPORT TO DAR GLOBAL PLC
Conclusion
We have been engaged by the Company to review the condensed set
of consolidated financial statements in the interim financial
report for the six months ended 30 June 2023 of the Company and its
subsidiaries (together, the "Group"), which comprises the statement
of financial position, the statement of comprehensive income, the
statement of changes in equity, the statement of cash flows and the
related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated
financial statements in the interim financial report for the six
months ended 30 June 2023 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued by the Financial Reporting Council
for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. We read the other information contained in the
interim financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of consolidated financial
statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Scope of review
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However future events or conditions
may cause the Group to cease to continue as a going concern, and
the above conclusions are not a guarantee that the Group will
continue in operation.
Directors' responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with the DTR
of the UK FCA.
As disclosed in note 2.1, the annual consolidated financial
statements of the Group are prepared in accordance with
International Financial Reporting Standards. The directors are
responsible for preparing the condensed set of consolidated
financial statements included in the interim financial report in
accordance with IAS 34 Interim Financial Reporting.
In preparing the interim financial report, the directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they
either intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of consolidated financial statements in the
interim financial report based on our review. Our conclusion,
including our conclusions relating to going concern, are based on
procedures that are less extensive than audit procedures, as
described in the scope of review paragraph of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement letter to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man
27 September 2023
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of financial position
(In United States dollar)
June 30, December
31,
2023 2022
Note (Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents 5 168,325,398 112,612,385
Trade and unbilled receivables 6 113,856,383 40,552,740
Advances, deposits and other receivables 7 95,266,118 81,131,849
Development properties 8 306,918,591 302,274,899
Escrow retentions 9 7,432,170 5,853,253
Investment in joint venture 10 5,129,139 4,681,667
Loan to joint venture 11 2,098,027 1,991,953
Due from related party 19 6,978,473 5,310,572
Property and equipment 12 2,418,159 842,131
Right-of-use assets 13 6,907,860 2,643,470
--------------- ---------------
TOTAL ASSETS 715,330,318 557,894,919
========= =========
LIABILITIES AND EQUITY
LIABILITIES
Trade and other payables 14 24,320,312 30,691,284
Advances from customers 15 139,007,025 94,456,096
Retention payable 16 4,410,940 4,038,203
Development property liability 17 75,457,098 72,467,693
Loans and borrowings 18 63,725,576 69,668,662
Due to related party 19 1,506,825 2,101,668
Employees' end of service benefits 310,461 325,910
Lease liabilities 13 6,959,753 2,743,815
-
---------------- ---------------
TOTAL LIABILITIES 315,697,990 276,493,331
---------------- ---------------
EQUITY
Share capital 20 1,800,216 22,395,109
Share premium 21 88,781,078 259,263,179
Retained earnings 307,531,749 -
Foreign currency translation reserve 1,110,844 (256,700)
Statutory reserve 408,441 -
--------------- ---------------
TOTAL EQUITY 399,632,328 281,401,588
--------------- ---------------
TOTAL LIABILITIES AND EQUITY 715,330,318 557,894,919
========= =========
The accompanying notes from 1 to 34 form an integral part of
these condensed consolidated interim financial statements.
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of profit or loss and other
comprehensive income
(In United States dollar) Six-month period ended
June 30, June 30, 2022
2023
Note (Unaudited) (Unaudited)
Revenue 22 108,419,405 27,510,602
Cost of revenue 22 (62,698,442) (15,130,428)
--------------- ---------------
Gross profit 45,720,963 12,380,174
Other income 23 1,743,005
Selling and marketing expenses 24 (13,185,382) (1,931,815)
General and administrative expenses 25 (12,928,893) (4,552,537)
Finance costs 26 (1,853,291) (2,219,259)
Finance income 26 1,332,942 15,059
Share of loss from joint venture 10 (31,553) -
Profit before tax 20,797,791 3,691,622
Income tax expenses 2.5 - -
--------------- -------------
Profit for the period 20,797,791 3,691,622
========= ========
Other comprehensive income
Items that are or may be classified
subsequently to profit or loss
Increase in foreign currency translation 1,110,844 -
reserve
--------------- -------------
Total comprehensive income for the
period 21,908,635 3,691,622
======== =========
Profits attributable to:
Owners of the company 20,797,791 3,691,622
Non-controlling Interests - -
--------------- -------------
20,797,791 3,691,622
Total comprehensive attributable ========= ========
to:
Owners of the company 21,908,635 3,691,622
Non-controlling Interests - -
---------------- -------------
21,908,635 3,691,622
Earnings per share attributable to ========= =======
owner of the Company:
- basic and diluted earnings per
share (USD) 27 0.08 12.31
---------------- --------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA)
Net finance costs 520,349 2,204,200
Depreciation on property and equipment
and right-of-use assets 1,172,123 77,268
------------- ---------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 22,490,263 5,973,090
======== =========
The accompanying notes from 1 to 34 form an integral part of
these condensed consolidated interim financial statements.
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of changes in equity
(In United States dollar)
Foreign
currency
Share Statutory translation Retained Capital Total
capital reserve reserve earnings Share premium Contribution equity
Balance as at
January 1, 2022
(Unaudited) 816,882 - - - - 19,333,349 20,150,231
Profit for the
period - - - 3,691,622 - - 3,691,622
Other
comprehensive
income - - - (714,417) - - (714,417)
Total
comprehensive
income for
the period - - - 2,977,205 - - 2,977,205
Transactions
with owners of
the
company
Capital
contribution
for the period* - - - - - 14,101,420 14,101,420
Transferred from
capital
contribution - - - 2,219,259 - (2,219,259) -
Statutory
reserve - 408,441 - (408,441) - - -
Total
transactions
with owners
of the Company - 408,441 - 1,810,818 - 11,882,161 14,101,420
---------- ---------- -------------- ------------ ------------ -------------- --------------
Balance as at
June 30, 2022
(Unaudited) 816,882 408,441 - 4,788,023 - 31,215,510 37,228,856
====== ====== ======== ======= ======= ======== ========
Balance as at
January 1, 2023
(Unaudited) 22,395,109 - - - 259,263,179 - 281,658,288
Profit for the
period - - - 20,797,791 - - 20,797,791
Other
comprehensive
income - - 1,110,844 - - - 1,110,844
Total
comprehensive
income for
the period - - 1,110,844 20,797,791 - - 21,908,635
Transaction with
owners of the
Company
Issue of shares
related to
acquisition
of subsidiary
(notes 20 & 21) 3,666,666 - - - 20,398,935 - 24,065,601
Issue of
ordinary shares
(notes
20 & 21) 216,216 - - - 71,783,588 - 71,999,804
Reduction of
share capital
(notes
20 & 21) (24,477,775) - - 287,142,399 (262,664,624) - -
Statutory
reserve - 408,441 - (408,441) - - -
Total
transactions
with owners
of the Company (20,594,893) 408,441 - 286,733,958 (170,482,101) - 96,065,405
------------ ------------ ------------ ---------------- -------------- ----------- ---------------
Balance as at
June 30, 2023
(Unaudited) 1,800,216 408,441 1,110,844 307,531,749 88,781,078 - 399,632,328
======= ======= ======= ========= ======== ====== =========
* This represents the difference between the carrying value of
the "Due to related Parties" i.e., the amount of cash received net
of losses absorbed, and their fair value on the initial
recognition.
The accompanying notes from 1 to 34 form an integral part of
these condensed consolidated interim financial statements.
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of cashflows
for the period ended 30 June 2023
June 30, June 30,
2023 2022
Note (Unaudited) (Unaudited)
Cash flows from operating activities
Profit for the period 20,797,791 3,691,622
Adjustments for:
Depreciation on property and equipment 25 328,301 77,268
Depreciation on right-of-use assets 25 843,822 -
Provision for employees' end of
service benefits 6,024 24,796
Finance costs 26 1,853,291 2,219,259
Finance income 26 (1,332,942) (15,059)
Share of loss from joint venture 10 31,553 -
-------------- -------------
Operating profit before working
capital changes 22,527,840 5,997,886
Working capital changes:
Trade and unbilled receivables (73,303,643) (12,001,581)
Advances, deposits and other receivables (14,134,269) (43,566,829)
Development properties (1,654,287) (11,947,117)
Escrow retentions (1,578,917) (3,302,010)
Trade and other payables (6,370,972) 7,902,265
Advances from Customers 44,550,929 55,304,297
Retention Payable 372,737 1,147,523
Employees' end of service benefits (21,476)
paid -
--------------- ------------
Net cash used in operating activities (29,612,058) (465,566)
--------------- ------------
Cash flows from investing activities
Acquisition of property and equipment 12 (1,904,329) (86,228)
Funds transferred to related party 19 (1,667,901) -
Investment in joint venture (447,472) -
Interest income 26 1,332,942 15,059
-------------- -----------
Net cash used in investing activities (2,686,760) (71,169)
Cash flows from financing activities -------------- -----------
Loan received from related parties - 56,058,203
Proceeds from bank borrowings 18 2,224,527 -
Repayment of bank borrowings 18 (8,167,613) -
Interest expense on borrowings 26 (1,697,297) -
Proceeds from initial public offerings 71,999,804 -
Funds received from parent company 23,470,759 -
Lease payments 13 (1,048,266) -
--------------- --------------
Net cash generated from financing
activities 86,781,914 56,058,203
--------------- --------------
Net increase in cash and cash
balances 54,483,096 55,521,468
Effect of translation of foreign 1,229,917
currency -
Cash and cash equivalents, beginning
of the period 112,612,385 18,573,311
--------------- --------------
Cash and cash equivalents at
the end of the period 168,325,398 74,094,779
Cash and cash equivalents: --------------- --------------
Cash in hand 21,516 312
Cash at banks 168,303,882 74,094,467
--------------- --------------
168,325,398 74,094,779
========= ========
The accompanying notes from 1 to 34 form an integral part of
these condensed consolidated interim financial statements.
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 Percentage of Percentage of voting License / Principal activities
and domicile effective holding rights Registration No.
M/s. Dar Al Arkan
Properties L.L.C., Commercial license Development and sale
Dubai - UAE * 100% 100% no. 791860 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Al Arkan Global
UK Holdings LTD - Company registration Development and sale
United Kingdom 100% 100% no. 13881707 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Al Arkan Holding
UK PLC - United Company registration Development and sale
Kingdom 100% 100% no. 14385758 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Global UK No. 1
LTD - United Kingdom Company registration Development and sale
** 100% 100% no. 14751868 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Global UK No. 2
LTD - United Kingdom Company registration Development and sale
** 100% 100% no. 14751750 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Global UK No. 3
LTD - United Kingdom Company registration Development and sale
** 100% 100% no. 14751915 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Al Arkan Spain SL Company registration Development and sale
- Spain 100% 100% no. B09896390 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Benahavis I, S.L Company registration Development and sale
- Spain 100% 100% no. B72530843 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Company registration Development and sale
Daranavis S.L - Spain 100% 100% no. B72530850 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Tabano, S.L - Company registration Development and sale
Spain 100% 100% no. B72530835 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
1.4 The Company has the following subsidiaries over which it
will exercise effective control: (continued)
Name of subsidiary and Percentage of Percentage of voting License / Principal activities
domicile effective holding rights Registration No.
M/s. Prime Real Estate
D.o.o Sarajevo - Company registration Development and sale
Bosnia * 100% 100% no. 65-01-0672-17 of real estate.
---------------------- ---------------------- ---------------------- ---------------------
M/s. Luxury Real
Estate D.o.o. Company registration Development and sale
Sarajevo - Bosnia * 100% 100% no. 65-01-0698-17 of real estate.
---------------------- ---------------------- ---------------------- ---------------------
M/s. Dar Al Arkan
Property Development
D.o.o Sarajevo - Company registration Development and sale
Bosnia * 100% 100% no. 65-01-0676-17 of real estate.
---------------------- ---------------------- ---------------------- ---------------------
M/s. Beijing Dar Al 100% 100% Company registration Economic and trade
Arkan Consulting Co. no. 91110105MA7 consulting,
Ltd. * EQ79Y9Q 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 Commercial license Purchase and sale of
Development LLC) * 100% 100% no. 997901 real estate
---------------------- ---------------------- ---------------------- ---------------------
1.4 The Company has the following subsidiaries over which it
will exercise effective control: (continued)
Name of subsidiary Percentage of Percentage of voting License / Principal activities
and domicile effective holding rights Registration No.
Dar Al Arkan
International
Properties LLC - UAE Commercial license Purchase and sale of
* 100% 100% no. 997919 real estate
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan
International
Property Development Commercial license Purchase and sale of
LLC - UAE * 100% 100% no. 997915 real estate
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan Property 100% 100% Commercial license Real estate
Development SPC - no. 1402786 development,
Oman Construction of
buildings (general
constructions of
residential and
non-residential
buildings
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan Holdings Commercial license Development and sale
Ltd (ADGM) - UAE * 100% 100% no. 000008662 of real estate.
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan
Properties L.L.C -
Branch Of Abu Dhabi Commercial license Development and sale
1 - UAE ** 100% 100% no. CN-4765091 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 bene t 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 January 1, 2024
IAS 1
Classification of Liabilities as Current or Noncurrent
- Amendments to IAS 1 January 1, 2024
Lease liability in a Sale and Leaseback - Amendments to January 1, 2024
IFRS 16
Sale or Contribution of Assets between an investor and Effective date
its Associate or Joint Venture - IFRS deferred indefinitely
10 and IAS 28
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
34,900,000 -
* Short-term deposits (refer to (c) below)
---------------- ----------------
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
Computers
Leasehold Furniture and office Capital
improvements and fixtures equipment 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:
As at June
Right-of-use assets 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
======== ========
As at June
Lease liabilities 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)
As at June
Loans and borrowings maturity profile: 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 As at June
30, 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 As at June
30, 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 As at June
30, 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 December
As at June 30, 2023 31, 2022
(Unaudited) (Unaudited)
Ordinary shares Number Amount Number Amount
Ca lled 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, June 30,
December December
2023 31, 2022 2023 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
Less More
Carrying than than
amount Total 1 year 1-2 years 2-5 years 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, January 1, 2022
2023 to June to June 30,
30, 2023 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
-------------------------- -------------------------------
Underlying gross profit and gross margin
The Directors consider this to be an important indicator of the
underlying trading performance of the Group.
Underlying profit before taxation
This is the profit before taxation. The Directors consider this
to be an important indicator of the profitability of the Group
before taxation.
Net cash
Net cash is cash and cash-equivalents plus non-current and
current interest-bearing loans and borrowings. Net cash Illustrates
the Group's overall liquidity position and general financial
resilience.
The company has a cash position of US$175.7 million, comprising
free cash of c. US$64.4 million and restricted cash of c. US$111.3
million (including escrow and escrow retention) across all project
accounts. The total borrowings as at 30(th) June 2023 was US$ 63.7
million.
Net cash post deduction of borrowings is US$ 112 million (total
cash position - borrowings).
[1] Drawdown subject to terms and conditions
[2] HY 2023 operating profit includes revenue and cost
recognised for DaVinci Tower by Pagani with an operating profit
margin of 37% along with those for Urban Oasis Tower. HY 2022 only
included Urban Oasis Tower recognition which was at an operating
profit margin of 45%.
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END
IR UBSBROOUKUAR
(END) Dow Jones Newswires
September 28, 2023 02:00 ET (06:00 GMT)
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