Deyaar Development PJSC — Interim / Quarterly Report 2023

May 10, 2023

Deyaar Development PJSC

Review report and interim financial information for the three month period ended 31 March 2023

Deyaar Development PJSC

Content Report on review of interim financial information Condensed consolidated interim statement of financial position Condensed consolidated interim statement of profit or loss Condensed consolidated interim statement of profit or loss and other comprehensive income Condensed consolidated interim statement of changes in equity Condensed consolidated interim statement of cash flows Notes to the condensed consolidated interim financial information

Pages 1 2 3 4 5 6 7 - 19

Deloitte & Touche (M.E.) Building 3, Level 6 Emaar Square Downtown Dubai P.O. Box 4254 Dubai United Arab Emirates

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Tel: +971 (0) 4 376 8888 Fax:+971 (0) 4 376 8899 www.deloitte.com

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

The Board of Directors Deyaar Development PJSC Dubai United Arab Emirates

Introduction

Deyaar Development PJSC (the “Company”) and its Subsidiaries (together the “Group”) as at 31 March 2023 and the related condensed consolidated statements of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and cash flows for the three-month period then ended. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with International Accounting Standard 34: “ Interim Financial Reporting” (IAS 34). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements 2410: “ Review of Interim Financial Information Performed by the Independent Auditor of the Entity ”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34.

Deloitte & Touche (M.E.)

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Akbar Ahmad Registration No. 1141 9 May 2023 Dubai United Arab Emirates

Akbar Ahmad (1141), Cynthia Corby (995), Georges Najem (809), Jazala Hamad (1267), Mohammad Jallad (1164), Mohammad Khamees Al Tah (717), Musa Ramahi (872), Mutasem M. Dajani (726), Obada Alkowatly (1056), Rama Padmanabha Acharya (701) and Samir Madbak (386) are registered practicing auditors with the UAE Ministry of Economy.

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Deyaar Development PJSC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS

For the three month period ended 31 March 2023

Notes	Three month period ended
	31 March 2023 31 March 2022 AED’000 AED’000
	(Unaudited)
Revenue Direct costs General, administrative and selling expenses Other operating income Finance cost Provision/expense against claims Finance income Share of results from a joint venture and an associate	312,539 161,897 (210,762) (99,944) (55,690) (43,650) 6,378 1,200 (14,009) (7,003) (89) (79) 5,062 149 12,922 12,492
Profit for theperiod	56,351 25,062
Earnings pershare-basic and diluted 19	Fils 1.29 Fils 0.43

The accompanying notes form an integral part of this condensed consolidated interim financial information.

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Deyaar Development PJSC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three month period ended 31 March 2023

	Three month period	ended
	31 March	31 March
	2023	2022
	AED’000	AED’000
	(Unaudited)
Profit for the period	56,351	25,062
Other comprehensive loss
Items that will not be subsequently reclassified to profit or loss
Equity investment at fair value through other comprehensive loss -
net change in fair value	(359)	(644)
Total comprehensive income for theperiod	55,992	24,418

The accompanying notes form an integral part of this condensed consolidated interim financial information.

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Deyaar Development PJSC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

For the three month period ended 31 March 2023

Share capital Legal reserve Equity investments fair valuation reserve AED’000 AED’000 AED’000	Retained Earnings/ Accumulated (losses) Total equity AED’000 AED’000
Balance at 1 January 2022, as previously reported (audited) 5,778,000 303,438 (13,874) Total comprehensive (loss)/income for the period (unaudited) Profit for the period - - - Other comprehensive loss for theperiod - - (644)	(1,705,600) 4,361,964 25,062 25,062 - (644)
Total comprehensive(loss)/income for theperiod(unaudited) - - (644)	25,062 24,418
Balance at 31 March 2022(unaudited) 5,778,000 303,438 (14,518)	(1,680,538) 4,386,382
Balance at 1 January 2023, as previously reported (audited) 4,375,838 14,424 (14,441) Total comprehensive (loss)/income for the period (unaudited) Profit for the period - - - Other comprehensive loss for the period - - (359)	126,664 4,502,485 56,351 56,351 - (359)
Total comprehensive (loss)/income for the period (unaudited) - - (359) Adjustments to Board of Directors’ remuneration[Refer Note 10(b)] - - -	56,351 55,992 (550) (550)
Balance at 31 March 2023(unaudited) 4,375,838 14,424 (14,800)	182,465 4,557,927

The accompanying notes form an integral part of this condensed consolidated interim financial information.

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Deyaar Development PJSC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

For the three month period ended 31 March 2023

Notes Cash flows from operating activities Net cashgenerated from/(used in) operating activities 15 Cash flows from investing activities Additions to property and equipment Addition to investment properties Dividend received from an associate Net movement in term deposits with an original maturity greater than three months Income from term deposits Net cashgenerated from investing activities Cash flows from financing activities Repayments of borrowings 12 Drawdown of borrowings 12 Finance costs paid Net cash(used in)/generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of the period Charge of impairment on bank balances Cash and cash equivalents, end of theperiod	Three month period ended
	31 March 2023 31 March 2022 AED’000 AED’000
	(Unaudited)
	115,327 (11,807)
	(1,642) (1,279) (358) (65) - 2,000 135,000 35,000 2,394 150
	135,394 35,806
	(37,038) (145,489) 500 224,993 (14,148) (6,208)
	(50,686) 73,296
	200,035 97,295 694,990 398,029 (8) (32)
	895,017 495,292
For the purpose of condensed consolidated statement of cash flows; cash and cash equivalents comprise: Cash in hand 2,006 633 Current accounts 499,427 377,032 Fixed deposits 504,020 148,570
1,005,453 526,235 Less:provision for impairment (600) (440)
Cash and bank balances, net 1,004,853 525,795
Less: term deposits with an original maturity greater than three months (109,836) (30,503)
Cash and cash equivalents 895,017 495,292

The accompanying notes form an integral part of this condensed consolidated interim financial information.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

For the three month period ended 31 March 2023

1. Legal status and activities

Deyaar Development PJSC (the “Company”) was incorporated and registered as a Public Joint Stock Company in the Emirate of Dubai, United Arab Emirates (“UAE”) on 10 July 2007. The registered address of the Company is P. O. Box 30833, Dubai, UAE. The Company is listed on Dubai Financial Market, Dubai, UAE.

The ultimate majority shareholder of the Group is Dubai Islamic Bank (“the Ultimate Controlling Party”).

The principal activities of the Company and its subsidiaries (together, “the Group”) are property investment and development, leasing, facilities, property management services and hospitality related activities.

Federal Law No. (32) of 2021 on Commercial Companies (the “New Companies Law”) was issued on 20 September 2021 and has come into effect on 2 January 2022, to entirely replace Federal Law No. 2 of 2015 on Commercial Companies, as amended (the “2015 Law”). The Company has applied the requirements of New Companies Law during the year ended 31 December 2022.

2. Basis of preparation and accounting policies

2.1 Basis of preparation

The condensed consolidated interim financial information for the three month period ended 31 March 2023 has been prepared in accordance with IAS 34 ‘ Interim Financial Reporting ’. The condensed consolidated interim financial information should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2022, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and the requirements of UAE Federal Law No. (32) of 2021.

2.2 Application of new and revised International Financial Reporting Standards (IFRSs)

• (a) New and revised IFRSs and interpretations that are effective for the current year

The following new and revised IFRSs, which became effective for annual periods beginning on or after 1 January 2023, have been adopted in these consolidated financial statements.

In the current year, the Group has applied a number of amendments to IFRSs and Interpretations issued by the International Accounting Standards Board (IASB) that are effective for an annual period that begins on or after 1 January 2023.

Their adoption has not had any material impact on the disclosures or on the amounts reported in these consolidated financial statements but may affect the accounting for future transactions or arrangements.

• Amendments to IAS 8 Accounting policies, Changes in accounting estimates and errors;

• Amendments to IAS 1 Presentation of Financial Statements relating to classification of Liabilities as Current or Non-Current; and

• Amendment to IFRS 17 Insurance contracts.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

For the three month period ended 31 March 2023 (continued)

2. Basis of preparation and accounting policies (continued)

• 2.2 Application of new and revised International Financial Reporting Standards (IFRSs) (continued)

• (b) New and revised IFRSs in issue but not yet effective and not early adopted

The Group has not early adopted the following new and revised standards that have been issued but are not yet effective.

New and revised IFRSs

Effective for annual periods beginning on or after

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures relating to the treatment of the sale or contribution of assets from an investor to its associate or joint venture.

Effective date deferred indefinitely

The Group anticipates that these new standards, interpretations and amendments will be adopted in the Group’s consolidated financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments may have no material impact on the consolidated financial statements.

3. Estimates and assumptions

The preparation of the condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing the condensed consolidated interim financial information, the significant judgements made by the management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2022.

4. Financial risk management

The Group’s activities potentially expose it to a variety of financial risks as follows:

• Market risk (including currency risk, price risk, cash flow and fair value interest rate risk)

• Credit risk and liquidity risk.

The condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual consolidated financial statement, and should be read in conjunction with the Group’s annual consolidated financial statements as at 31 December 2022. The Group’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2022.

5. Segment information

Operating segment

The Board of Directors is the Group’s chief operating decision maker. The Board considers the business of the Group as a whole for the purpose of decision making. Management has determined the operating segments based on segments identified for the purpose of allocating resources and assessing performance. The Group is organised into three major operating segments: property development (includes sale of properties and leasing activities), properties and facilities management and hospitality related activities.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

For the three month period ended 31 March 2023 (continued)

5. Segment information (continued)

Operating segment (continued)

Management monitors the operating results of its operating segments for the purpose of making strategic decisions about performance assessment. Segment performance is evaluated based on operating profit or loss.

Property development activities AED’000	Properties and facilities management Hospitality Total AED’000 AED’000 AED’000
Three month period ended 31 March 2023 (unaudited) Segment revenues – external 245,549	33,305 33,685 312,539
Segmentprofit 36,209	5,980 14,162 56,351
As at 31 March 2023 (unaudited) Segment assets 5,047,736	388,317 803,9336,239,986
Segment liabilities 1,376,110	289,621 16,328 1,682,059
Property development activities AED’000	Properties and facilities management Hospitality Total AED’000 AED’000 AED’000
Three month period ended 31 March 2022 (unaudited) Segment revenues – external 101,377	28,833 31,687 161,897
Segment profit 9,011	2,849 13,202 25,062
As at 31 December 2022 (audited) Segment assets 5,085,713	283,517 807,1846,176,414
Segment liabilities 1,482,850	170,485 20,594 1,673,929

Revenue from property development activities are recognised over time and revenue from hospitality, properties and facilities management are recognised at a point in time as well as over time.

Geographic information

The carrying amount of total assets located outside the United Arab Emirates as at 31 March 2023 is AED 0.5 million (31 December 2022: AED 0.5 million).

6. Property and equipment

The property and equipment balance includes buildings, leasehold improvements, furniture and fixtures, office equipment, motor vehicles and capital work in progress.

Management have reviewed the prior year valuations for all three hotels and believe that there is no material variance in the recoverable value as at 31 March 2023.

The Group has a policy of depreciating assets on a straight-line method, at rates calculated to reduce the cost of assets to their estimated residual value. The Group depreciates buildings for 50 years and furniture and fixtures from 5 to 15 years. Furthermore, the depreciation expense of the Group in the current period amounted to AED 4.3 million (31 March 2022: AED 4.1 million).

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION For the three month period ended 31 March 2023 (continued)

7. Investment properties

	UAE	UAE	UAE	UAE	UAE		31 December
	Mix use	Parking	Stores	Retail	Service	31 March 2023	2022
	building	spaces	units	units	Apartments	Total	Total
	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000	AED’000
				(Unaudited)			(Audited)
Fair value hierarchy	3	3	3	3	3
Fair value at the
beginning of the
reporting period/year	161,041	74,201	14,045	222,042	291,447	762,776	758,231
Additions	42	-	-	217	99	358	1,356
Transfer from properties
held for development
and sale	-	-	-	-	-	-	3,189
Net gain from fair value
adjustments on
investment properties	-	-	-	-	-	-	-
Fair value at the end of
reporting period/year	161,083	74,201	14,045	222,259	291,546	763,134	762,776

Investment properties represent properties held at fair value and any fair value gain/loss under the fair value model is treated in accordance with IFRS.

During the year ended 31 December 2022, the Group had reclassified service apartment units amounting to AED 3.2 million from properties held for development and sale based on change in use of these units. These units were reclassified to investment properties at their fair value and management believes that the carrying amount of the units transferred is equivalent to the fair value on the date of transfer (Note 9).

Investment properties with a carrying value of AED 426 million (31 December 2022: AED 426 million) are mortgaged against bank borrowings (Note 12).

Management have reviewed the prior year valuations for all of its investment properties and believes that there is no material variance in the fair value of the Group’s investment properties as at 31 March 2023.

8. Trade, contract and other receivables

	31 March	31 December
	2023	2022
	AED’000	AED’000
	(Unaudited)	(Audited)
Trade and unbilled receivables	769,636	671,456
Other receivables	248,437	240,049
	1,018,073	911,505
Current	551,818	635,211
Non-current	466,255	276,294
Total	1,018,073	911,505
Trade receivables
Amounts receivable within 12 months	151,860	102,013
Contract assets
Unbilled receivables within 12 months	151,521	293,149
Unbilled receivables after 12 months	466,255	276,294
	769,636	671,456

The above trade and other receivables are net of provision for impairment amounting to AED 121.8 million (31 December 2022: AED 121.6 million) relating to trade and other receivables which are past due. All the other receivables are considered recoverable.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

For the three month period ended 31 March 2023 (continued)

9. Properties held for development and sale

The properties held for development and sale include land held for future development, properties under development and completed properties held in inventory.

Net realisable value has been determined on the basis of committed sale price if the remaining receivable amount is lower than the current market value of the units booked by customers. For units not yet booked by customers, net realisable value takes into consideration the expected market prices.

During the year ended 31 December 2022, the Company had reclassified service apartment units amounting to AED 3.2 million to investment properties based on the change in use of these units (Note 7).

Plots of land including under development projects with total carrying value of AED 872.1 million (2022: AED 843 million) and completed properties with total carrying value of AED 65.6 million (31 December 2022: AED 65.6 million) are mortgaged under Islamic finance obligations (Note 12).

In the current period, the Group has recognised an amount of AED 178.4 million (for the year ended 31 December 2022: AED 406 million and for the three month period ended 31 March 2022: AED 65.6 million) included in the profit or loss under “direct costs” against revenue recognised of AED 233.3 million (for the year ended 31 December 2022: AED 537.8 million and for the three month period ended 31 March 2022: AED 92.3 million).

For plots of land held for future development and use amounting to AED 528.9 million as at the reporting date (31 December 2022: AED 693.6 million) , management is currently evaluating feasibility of the projects and considering alternative viable profitable options as well as various offers from potential buyers.

10. Related party transactions and balances

Related parties include the significant shareholders, key management personnel, associates, joint ventures, directors and businesses which are controlled or jointly controlled, directly or indirectly, by the significant shareholders or directors or over which they exercise significant management influence.

(a) Related party transactions

During the period, the Group entered into the following significant transactions with related parties in the normal course of business and at prices and terms agreed by the Group’s management:

	Three month	period ended
	31 March 2023	31 March	2022
	AED’000	AED’000
	(Unaudited)	(Unaudited)
Ultimate majority shareholder
Other operating income/finance income	3,349		139
Finance cost	10,154		5,574
Borrowings drawdown	500	123,593
Borrowings repayment	37,038	145,490
Joint venture
Other operatingincome	569		165
Associate
Dividend income	-		2,000

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION For the three month period ended 31 March 2023 (continued)

10. Related party transactions and balances (continued)

(b) Remuneration of key management personnel

(b) Remuneration of key management personnel
	Three month period ended
	31 March 2023	31 March	2022
	AED’000	AED’000
	(Unaudited)	(Unaudited)
Salaries and other short-term employees’ benefits	4,061		3,337
Termination and post-employment benefits	103		164
Board of Directors’sitting fees	90		-
	**4,254 **		3,501

During the current period, an additional provision for the Board of Directors’ remuneration amounting to AED 0.55 million was recognised ( during the three month period ended 31 Mar 2022: AED Nil ) based on the final approval of the shareholders in the Annual General Meeting dated 22 Mar 2023.

(c) Due from related parties comprises:

	31 March	31 December
	2023	2022
	AED’000	AED’000
	(Unaudited)	(Audited)
Current
Due from a joint venture	1,329	1,084
Due from other relatedparties	245,426	245,426
	246,755	246,510
Less: provision for impairment	(33,615)	(33,613)
	213,140	212,897

Management believes that based on the court judgement and the Conditional Settlement Agreement signed with a related party during 2022 (refer Note 17 for further details), the net receivable balance from a related party amounting to AED 212 million is recoverable. Accordingly, no further adjustment has been made to the carrying value of the receivable amount as at the reporting date.

Cash and bank balances include amounts held with the ultimate majority shareholder of the Group, bank account balances of AED 172.9 million (31 December 2022: AED 166.6 million) and fixed deposits of AED 419 million (31 December 2022: AED 354 million) , at market prevailing profit rates.

Impairment provision

To determine the provision for impairment, management applied certain key assumptions and judgments in accordance with IFRS 9 - Financial Instruments in order to determine the expected credit loss which includes the use of various forward-looking information that could impact the timing and/or amount of recoveries.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION For the three month period ended 31 March 2023 (continued)

10. Related party transactions and balances (continued)

• (d) Due to related parties comprises:

(d) Due to related parties comprises:
	31 March	31 December
	2023	2022
	AED’000	AED’000
	(Unaudited)	(Audited)
Current
Due to ultimate majority shareholder	143	271
Due to other related party	100	110
	243	381

At 31 March 2023, the Group had bank borrowings from the ultimate majority shareholder of AED 783.8 million (31 December 2022: AED 798.8 million) , at market prevailing profit rates (Note 12).

11. Share capital

At 31 March 2023 share capital comprised of 4,375,837,645 (31 December 2022: 4,375,837,645 shares) of AED 1 each. All shares are authorised, issued and fully paid up.

At the Annual General Meeting of Shareholders (AGM) in April 2022, the shareholders approved the proposal of the Board of Directors for the reduction of the issued share capital of the Group by partially writing off the accumulated losses amounting to AED 1,706 million and using legal reserves amounting to AED 303 million against the issued share capital amounting to AED 5,778 million as at 1 January 2022. Accordingly, during 2022 management had obtained all the required approvals from the relevant authorities and reflected the share capital reduction as listed below:

	As at		As at
	01 January	Approved	31 December
	2022	reduction	2022
	AED’000	AED’000	AED’000
Issued share capital	5,778,000	(1,402,162)	4,375,838
Accumulated losses	(1,705,600)	1,705,600	-
Legal reserve	303,438	(303,438)	-

12. Borrowings

	31 March	31 December
	2023	2022
	AED’000	AED’000
	(Unaudited)	(Audited)
Islamic finance obligations
Current	90,794	99,247
Non-current	810,176	838,261
Total borrowings	900,970	937,508

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION For the three month period ended 31 March 2023 (continued)

12. Borrowings (continued)

	AED’000
1 January 2022 Drawdown Repayments	795,185 416,194 (273,871)
31 December 2022(Audited)	937,508
1 January 2023 Drawdown Repayments	937,508 500 (37,038)
31 March 2023 (Unaudited)	900,970

The Islamic finance obligations represent Ijarah and other Islamic facilities obtained from Dubai Islamic Bank PJSC (ultimate majority shareholder), and from other local banks. The facilities were availed to finance the properties under construction and working capital requirements.

During 2022, the Group had obtained a new Islamic facility with one local bank amounting to AED 250 million. The existing outstanding facilities with the ultimate majority shareholder was settled partially by utilising the new facility and remaining balance of AED 54 million is available for drawdown to the Group. The new facility carries market prevailing profit rates and is repayable in quarterly instalments over four years from the reporting date. The facility is subject to certain financial covenants.

During the current period, the Group has obtained a new Islamic facility with one local bank amounting to AED 200 million. The new facility carries market prevailing profit rates and is repayable in quarterly instalments over seven years from the reporting date. The facility has AED 199.5 million available for drawdown to the Group. The facility is subject to certain financial covenants.

Islamic finance obligations with the ultimate majority shareholder carry market prevailing profit rates and are repayable in quarterly instalments over a period of nine years from the reporting date (31 December 2022: nine years) .

Islamic finance obligations are secured by mortgages over properties classified under property held for development and sale (Note 9), property and equipment (Note 6) and investment properties (Note 7). Further, certain facilities with banks are subject to financial covenants.

13. Advances from customers

Advances from customers comprise of payments received from sale of properties. The revenues have not been recognised in the consolidated statements of profit or loss, in line with the revenue recognition policy of the Group consistent with the IFRS.

14. Trade and other payables

Trade and other payables include trade payables in normal course of business and provision relating to claims made by third parties and customers against the Group. This includes legal claim made by customers against the Group for refund of partial payments made to purchase certain property units. In accordance with Law No. 13 of 2008 and its subsequent amendment through Law No. 9 of 2009 applicable in the Emirate of Dubai, the Group had earlier forfeited amounts due to failure of customers to pay the outstanding balances as per the Sale and Purchase Agreement. The provisions are based on management’s best estimate after considering the potential cash flows in respect of the claim on a case by case basis.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

For the three month period ended 31 March 2023 (continued)

15. Cash flows from operating activities

15. Cash flows from operating activities
	Three month period ended **31 March **
	2023 2022 AED’000 AED’000
	(Unaudited) (Unaudited)
Profit for the period Adjustments for: Depreciation on property and equipment Provision for employees’ end of service benefits Reversal of provision against properties held for development and sale Impairment against trade receivables, contract and other financial assets Provision for claims Finance income Finance costs Share of results from a joint venture and an associate Operating cash flows before payment of employees’ end of service benefits and changes in working capital Payment of employees’ end of service benefits Changes in working capital: Property held for development and sale (net of project cost accruals) Trade and other receivables - non-current Trade and other receivables – current Due from related parties Inventories Retentions payable - non-current Retentions payable – current Advances from customers Trade and other payables Due to relatedparties	56,351 25,062 4,252 4,125 741 776 (74) (2,209) 96 760 89 79 (5,061) (149) 14,009 7,003 (12,638) (12,492)
	57,765 22,955 (339) (810) 117,758 (36,634) (189,960) (73,650) 86,055 40,353 (244) (10) 526 151 2,794 4,546 146 (3,396) 44,203 48,894 (3,239) (14,595) (138) 389
Net cash generated from/(used in) operating activities	115,327 (11,807)

Bank accounts include a balance of AED 369.9 million (31 December 2022: AED 291.5 million) and fixed deposits of AED 95 million (31 December 2022: AED 52 million) at market prevailing profit rates held in escrow accounts.

These Escrow accounts include project Escrow accounts where amounts are collected against sale of properties and are available for payments relating to construction of development properties. These Escrow accounts also include Community Management Escrow accounts of various properties where service charges are collected from owners and are available for payments for management and maintenance of the properties.

Bank accounts balance include a balance of AED 101.6 million (31 December 2022: AED 99.7 million) , held in a fiduciary capacity on behalf and for the beneficial interest of third parties, which are recorded in these condensed consolidated financial statements.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION For the three month period ended 31 March 2023 (continued)

16. Commitments

At 31 March 2023, the Group had total commitments of AED 645.8 million (31 December 2022: AED 349 million) with respect to project related contracts issued net of invoices received and accruals made at that date.

17. Contingencies

Contingent liabilities

At 31 March 2023, the Group has contingent liabilities in respect of performance bond and guarantees issued by banks, in the ordinary course of business, amounting to AED 341.4 million (31 December 2022: AED 246 million), which mainly includes performance guarantees of AED 330.9 million (31 December 2022: AED 235.5 million) issued to Real Estate Regulatory Authority (RERA) for the projects under development. Also, the Group has contingent liabilities, on behalf of a subsidiary (under liquidation), in respect to guarantees issued by a bank amounting to AED 3.4 million (2022: AED 3.4 million) . The Group anticipates that no material liabilities will arise from these performance and other guarantees.

Legal claims

The Group is also a party to certain legal cases in respect to various potential claims from customers and, where necessary, makes adequate provisions against any potential claims. Such provisions are reassessed regularly to include significant claims and instances of potential litigations. Based on review of opinion provided by the legal advisors/internal legal team, management is of the opinion that no material cash outflow in respect of these claims is expected to be paid by the Company in these legal cases over and above the existing provision in the books of accounts. The Company has elected not to present the complete disclosures as required by IAS 37 “Provision and Contingent Liabilities and Contingent Assets” as management is of the view that since the legal claims are sub-judice and are disputed, therefore this information may be prejudicial to their position on these matters.

Certain other contingent liabilities may arise during the normal course of business, which based on the information presently available, either cannot be quantified at this stage or in the opinion of the management is without any merit. However, in the opinion of management, these contingent liabilities are not likely to result in any cash outflows for the Group.

Further, certain properties were under dispute with UAE based developer (“a related party”) against which in 2019, the Group had received a favourable judgment by the Court of Cassation which upheld a ruling made by the Court of Appeal confirming Dubai Court of First Instance’s judgement to terminate all sale and purchase agreements of lands under dispute and had also ordered counterparty to return all amounts paid, to the tune of AED 412 million plus pay a compensation of AED 61 million as well as 9% legal interest accruing from the date of filing the case.

In 2020, the execution of the court judgement has been handed over to a special committee by virtue of resolution number 12 of 2020 passed by the Government of Dubai. However, on 15 February 2021, the special committee has decided that it has no jurisdiction over the case and has transfer the case to the court of execution. Accordingly, management had submitted an application to the court of execution to proceed with the execution process.

In 2022, the Group has signed a Conditional Settlement Agreement (“the Agreement”) with the related party for an amount of AED 500 million based on the shareholders’ approval in the Annual General Meeting held on 21 November 2022. The Group received AED 200 million during the year 2022 upon execution of the Agreement and the remaining amount of AED 300 million is to be received within 18 months from date of the signed Agreement (refer Note 10 for further details). Accordingly, the Group submitted an application to the court for the temporary suspension of the auction process on the remaining properties of the related party identified in the Agreement. During the current period, the Group accepted the request of the related party to proceed with the cancellation of the registration pertaining to the plots under dispute, and to re-register the plots under the name of the related party as per the Agreement.

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION For the three month period ended 31 March 2023 (continued)

18. Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

		Equity
		instrument at
		fair value
		through other
	Amortised	comprehensive
	cost	income	Total
31 March 2023(unaudited)	AED’000	AED’000	AED’000
Assets as per condensed consolidated interim
statement of financial position
Equity instrument at fair value other comprehensive
income	-	4,535	4,535
Trade, contract and other receivables excluding
prepayments and advances	876,989	-	876,989
Due from related parties	213,140	-	213,140
Bank balances	1,000,723	-	1,000,723
	2,090,852	4,535	2,095,387
	Amortised
	cost		Total
31 March 2023 (unaudited)	AED’000		AED’000
Liabilities as per condensed consolidated interim
statement of financial position
Trade and other payables	462,974	-	462,974
Retentions payable	60,758	-	60,758
Borrowings	900,970	-	900,970
	1,424,702	-	1,424,702
		Equity
		instrument at
		fair value
		through other
	Amortised	comprehensive
	cost	income	Total
31 December 2022(audited)	AED’000	AED’000	AED’000
Assets as per condensed consolidated interim
statement of financial position
Equity instrument at fair value other comprehensive
income	-	4,894	4,894
Trade, contract and other receivables excluding
prepayments and advances	769,521	-	769,521
Due from related parties	212,897	-	212,897
Bank balances	939,353	-	939,353
	1,921,771	4,894	1,926,665

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION For the three month period ended 31 March 2023 (continued)

18. Financial instruments by category (continued)

The accounting policies for financial instruments have been applied to the line items below:

		Equity
		instrument at
		fair value
		through other
	Amortised	comprehensive
	cost	income	Total
31 December 2022(audited)	AED’000	AED’000	AED’000
Liabilities as per condensed consolidated interim
statement of financial position
Trade and other payables	465,714	-	465,714
Retentions payable	57,817	-	57,817
Borrowings	937,508	-	937,508
	1,461,039	-	1,461,039

The following table presents the Group’s financial assets that are measured at fair value, by valuation method:

method:
	Level 1	Total
	AED’000	AED’000
As at 31 March 2023 (unaudited)
Equity instrument at fair value through other
comprehensive income	4,535	4,535
As at 31 December 2022 (audited)
Equity instrument at fair value through other
comprehensiveincome	4,894	4,894

The carrying value less impairment provision of trade receivables, contract assets, due from related parties, bank balances and long term fixed deposit is assumed to approximate their fair values keeping in view the period over which these are expected to be realised. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. Other receivables and payables approximate their fair values.

19. Earnings per share

Basic and diluted earnings per share is calculated by dividing the profit for the period by the weighted average number of ordinary shares in issue during the period. There were no instruments or any other items which could cause a dilutive effect on the earnings per share calculation:

	Three month	period ended
	31 March 2023	31 March 2022
	(Unaudited)	(Unaudited)
Profit for the period (AED’000)	56,351	25,062
Weighted average number of ordinary shares (’000)	4,375,838	5,778,000
Earnings perordinary share- Basic andDiluted (Fils)	1.29	0.43

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Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

For the three month period ended 31 March 2023 (continued)

20. Corporate Income Tax

On 9 December 2022, UAE Ministry of Finance (“MoF”) released Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses, Corporate Tax Law (“CT Law”) to implement a new CT regime in the UAE. The new CT regime is applicable for accounting periods beginning on or after 1 June 2023. The Group’s accounting year ends on 31 December, accordingly the effective implementation period for the Group will correspond to the year ending on 31 December 2024 and the first return will be filed on or before 30 September 2025.

According to CT Law, UAE businesses will be subject to a 9% CT rate on taxable income exceeding a certain threshold, as prescribed by way of a Cabinet Decision.

The Group is currently assessing the impact of these laws and regulations and will apply the requirements as further guidance is provided by the relevant tax authorities.

21. Reclassifications

Certain comparative figures have been reclassified to conform to the presentation adopted in these condensed consolidated interim financial statements. The reclassification does not have any material effect on the condensed consolidated interim statement of profit or loss, condensed consolidated interim statement of profit or loss and other comprehensive income, condensed consolidated interim statement of changes in equity and condensed consolidated interim statement of cash flows.

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