Modon Holding PSC — Annual Report 2023

Feb 5, 2023

Q Holding PSC and its subsidiaries

(Formerly "Al Qudra Holding PJSC")

BOARD OF DIRECTORS' REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

31 DECEMBER 2022

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 December 2022

Contents	Pages
Board of director's report
Independent auditor's report	$1-6$
Consolidated statement of profit or loss	$\overline{7}$
Consolidated statement of comprehensive income	8
Consolidated statement of financial position	$9 - 10$
Consolidated statement of changes in equity	11
Consolidated statement of cash flows	12
Notes to the consolidated financial statements	$13 - 74$

Q Holding PSC and its subsidiaries
(Formerly "Al Qudra Holding PJSC")

BOARD OF DIRECTORS' REPORT

31 DECEMBER 2022

Board of Directors' report

For the year ended 31 December 2022

The Directors present their report together with the audited consolidated financial statements of Q Holding PSC (the "Company") and its subsidiaries (together referred to as the "Group") for the year ended 31 December 2022.

Principal activities

The Group is principally engaged in investing in pioneering business ideas and forming strategic partnerships emanating from focused research and the expertise of its founders. The Group envisages subscribing as founder in potentially successful companies, development, management, sales and leasing of real estate projects, launch and manage educational, hospitality and health care projects and acquire controlling interests in strategic companies.

Financial results

The financial results of the Group have been presented on page 7 of these consolidated financial statements.

Directors

H.E. Sheikh Abdulla Mohamed Butti Al-Hamed	Chairman
H.E. Khalifa Yousif Abdulla Husain Khouri	Director
H.E. Rashed Abdul Karim Ghloum Mohammed Al Balooshi	Director
H.E. Jasim Hussain Ahmed Al Ali	Director
H.E. Ahmed Jasim Yousif Naser AlZaabi	Director

Release

The Directors release from liability management and the external auditor in connection with their duties for the year ended 31 December 2022.

For the Board of Directors

H.E. Sheikh Abdulla Mohamed Butti Al-Hamed Chairman

6 February 2023

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Q Holding PSC and its subsidiaries
(Formerly "Al Qudra Holding PJSC")

CONSOLIDATED FINANCIAL STATEMENTS

31 DECEMBER 2022

Ernst & Young Middle East (Abu Dhabi Branch) P.O. Box 136 27th Floor, Nation Tower 2 Abu Dhabi Corniche Abu Dhabi, United Arab Emirates

Tel: +971 2 417 4400 Fax: +971 2 627 3383 abudhabi@ae.ey.com ev.com

CL No. 1001276

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

Q HOLDING PSC (FORMERLY "AL OUDRA HOLDING PJSC")

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Q Holding PSC (the "Company") (formerly "Al Qudra Holding PJSC") and its subsidiaries (collectively referred to as the "Group"), which comprise the consolidated statement of financial position as at 31 December 2022, and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2022, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards ("IFRSs").

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (the "IESBA Code") together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the United Arab Emirates, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures. including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Q HOLDING PSC (FORMERLY "AL QUDRA HOLDING PJSC") continued

Report on the Audit of the Consolidated Financial Statements continued

Key audit matters continued

Fair value of investment properties

The Group's investment properties including investment properties under development amounted to AED 7,239 million (note 15) representing 37% of total assets as of 31 December 2022.

The Group accounts for investment properties initially at cost and subsequently measured at fair value. Gains and losses arising from changes in the fair value of investment properties are included in consolidated statement of profit or loss. The Group has used valuations carried out by independent third party valuers with appropriate experience of the particular market in which properties are held as well as in-house valuations prepared by management to determine the fair value of investment properties for the year ended 31 December 2022.

As the fair value is determined based on level 3 valuation methodologies, it requires management to apply significant judgement in determining the fair value of investment properties. We have identified the recognition and valuation of investment properties as a key audit matter in view of the significant judgments involved.

How the matter was addressed during our audit:

• Involved our real estate specialists to assist us in evaluating the assumptions and methodologies of the external and in-house valuations prepared by management;
• Gained an understanding of management expert's valuation methodologies and their assumptions and assessed the reasonableness of the valuations on a sample basis based on evidence of comparable market transactions and other publicly available information relating to the property industry;
• Inspected agreements / title deeds to assess whether that all properties are either owned or unconditionally assigned to the Group; and
• Evaluated the appropriateness and adequacy of the related disclosures in the notes to the consolidated financial statements.

Revenue recognition

Revenue recognition is considered to be a key area of focus given there are multiple revenue streams associated with the Group which come from various decentralized operational locations. The Group has a variety of customer contracts and revenue arrangements that require careful consideration and judgement to determine the appropriate revenue recognition. Further, revenue is also a key performance indicator for the Group's performance. During the year ended 31 December 2022, total revenue of the Group amounted to AED 682 million (notes 4 and 6).

We reviewed the revenue recognition policies applied by the Group to assess their compliance with IFRS requirements. For each material operational location with significant revenue streams, we performed or involved component auditors to perform substantive audit procedures which included substantive analytical procedures at the Group and subsidiary level and performed testing on transactions around the year end, to assess whether revenues were recognised in the correct accounting period and in line with IFRS requirements.

Q HOLDING PSC (FORMERLY "AL QUDRA HOLDING PJSC") continued

Report on the Audit of the Consolidated Financial Statements continued

Key audit matters continued

Business combination within the scope of IFRS 3

During the year, the Company acquired 100% equity interest in Reem Investments PJSC ("Reem") through a share swap arrangement which was accounted for using the acquisition method under IFRS 3 – Business Combinations, as disclosed in Note 3.1 to the consolidated financial statements.

The assessment of whether this acquisition falls within the scope of IFRS $3$ – Business Combinations requires significant management analysis and judgment (refer to note 2.4). A detailed assessment was performed by the management to determine whether the acquisition was a business combination under common control (i.e. whether Reem was ultimately controlled by the same shareholder/s before and after the acquisition).

The accounting treatment for business combinations that fall within the scope of IFRS 3 and those that represent combination of entities under common control could result in different recognition and measurement of assets acquired and liabilities assumed. The acquisition of Reem, computed in accordance with IFRS 3 requirements resulted in a bargain gain of AED 1,866 million. The assets of Reem amounting to AED 7,050 million represented 36% of the total assets of the Group. We considered the acquisition of Reem as a key audit matter for the purposes of our audit.

As part of our audit, we have performed the following procedures to address the key audit matter:

• Obtained and read the share purchase agreement ("SPA") and all documents associated with the transaction, including regulatory approvals received by the Company, to perform an assessment of the transaction and its implications on the consolidated financial statements of the Group;
• Performed procedures to audit the Group's assessment that the transaction does not meet the criteria of a business combination under common control, which included:
• We obtained the Group's assessment that the transaction does not meet the criteria for a a. business combination under common control
• Reviewed the list of shareholders of Reem prior to the acquisition b.
• We assessed whether the Group had control or defacto control through contractual $\mathbf{c}$ . arrangements over Reem before acquisition by obtaining and reviewing the board composition of Reem, attendance at the Annual General Assembly over the last 3 years and obtaining confirmations from the Company's controlling shareholders that the Group did not have control/defacto control over Reem prior to acquisition
• Validated the basis for determining the purchase consideration associated with the transaction by verifying the share swap ratio to the SPA and the market price to the published share price of the Company on the date of the transaction;
• Obtained the purchase price allocation computation from the management and involved our internal specialists to review the computation. The review included an assessment of reasonableness of inputs used in the valuation, assumptions made such as the discount rate, terminal growth rate etc., the identification of intangible assets and the useful life of tangible and intangible assets.
• Verified that the business combination was properly accounted by the Group, including the determination of the date of acquisition and the fair value of the consideration transferred, in accordance with IFRS 3, and all related disclosures, as required by IFRS, are disclosed in the consolidated financial statements.

Q HOLDING PSC (FORMERLY "AL QUDRA HOLDING PJSC") continued

Report on the Audit of the Consolidated Financial Statements continued

Other information

Other information consists of the information included in the Board of Director's Report and Annual report, other than the consolidated financial statements and our auditor's report thereon. We obtained the Board of Director's Report prior to the date of our audit report, and we expect to obtain the Annual Report after the date of our auditor's opinion. The Board of Directors and management are responsible for the other information.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed or the other information obtained prior to the date of the auditor's opinion, we conclude that there is a material misstatement of this other information. we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and the Board of Directors for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs and in compliance with the applicable provisions of the Articles of Association and the UAE Federal Law No. (32) of 2021, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is 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 management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Q HOLDING PSC (FORMERLY "AL QUDRA HOLDING PJSC") continued

Report on the Audit of the Consolidated Financial Statements continued

Auditor's responsibilities for the audit of the consolidated financial statements continued

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats safeguards applied.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Q HOLDING PSC (FORMERLY "AL QUDRA HOLDING PJSC") continued

Report on Other Legal and Regulatory Requirements

Further, as required by the UAE Federal Law No. (32) of 2021, we report that for the year ended 31 December 2022:

• $i)$ the Group has maintained proper books of account;
• $ii)$ we have obtained all the information and explanations we considered necessary for the purposes of our audit;
• iii) the consolidated financial statements have been prepared and comply, in all material respects, with the applicable provisions of the Company's Articles of Association and the UAE Federal Law No. $(32)$ of 2021;
• $iv)$ the financial information included in the report of the Board of Directors is consistent with the books of account and records of the Group;
• note 22 to the consolidated financial statements reflects the disclosures relating to related party $\mathbf{v})$ transactions and the terms under which they were conducted;
• vi) investment in shares and stocks are included in notes 16 and 17 to the consolidated financial statements and include purchases and investments made by the Group for the year ended 31 December 2022;

vii) based on the information that has been made available to us, nothing has come to our attention which causes us to believe that the Company has contravened during the financial year ended 31 December 2022, any of the applicable provisions of the UAE Federal Law No. (32) of 2021 or of its Articles of Association which would materially affect its activities or its consolidated financial position as at 31 December 2022; and

during the year, the Group made no social contributions. viir

Signed by Raed Ahmad Partner Ernst & Young Registration No. 811

6 February 2023 Abu Dhabi

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Year ended 31 December 2022

	Notes	2022 AED'000	2021 AED'000
Continuing operations
Revenue from contracts with customers	4	316,567	128,872
Rental income	6	365,839	240,495
Dividend income	5	37,854	29,739
		720,260	399,106
Contract costs		(184, 464)	(75, 874)
Staff costs	9	(65, 046)	(55, 168)
Utilities		(36, 353)	(38, 786)
Marketing expenses		(18, 180)	(100)
Rent expenses		(5,610)	(380)
Depreciation on property and equipment		(17, 362)	(22, 757)
Amortisation of intangible assets	14	(2,326)
Depreciation on right-of-use assets	28	(3, 407)	(3,371)
Provision for expected credit losses on financial assets	8	(82, 914)	(7, 782)
Net changes in fair value of investments carried at
fair value through profit or loss	5	(348, 889)	24,750
Net change in fair value of investment properties	6	(73, 262)
Provision for impairment loss on investment properties under development	15	(260, 768)
Provision for impairment loss on property and equipment	13	(306, 463)
Provision for impairment loss on development work in progress	19	(188, 030)	(143)
Bargain purchase gain on acquisition of subsidiary	3.1	1,865,900
Gain on remeasurement of previously existing interest in an associate 3.2			75,169
Gain on disposal of investment in an associate			900
Gain on liquidation of subsidiaries		3,741
Loss on disposal of subsidiaries, net	3.4	(16, 254)
Loss on disposal of joint venture	16	(6,152)
Share of (loss) profit from associates	16	(701)	489
Share of (loss) profit from joint ventures Finance costs, net	16 10	(567)	506
Other expenses, net	7	(99,707) (49, 179)	(72, 835) (21, 633)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS		824,267	202,091
Discontinued operations
(Loss) profit for the year from discontinued operations	11, 3.4	(1,615)	22
PROFIT FOR THE YEAR		822,652	202,113
Profit attributable to:
Owners of the Company		899,672	164,775
Non-controlling interests		(77, 020)	37,338
		822,652	202,113
Basic and diluted earnings attributable to
owners of the Company (AED)	12	0.14	0.10
Earnings per share for continuing operations
Basic and diluted earnings attributable to
owners of the Company (AED)	12	0.14	0.10

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2022

	Notes	2022 AED'000	2021 AED'000
Profit for the year		822,652	202,113
Other comprehensive (loss) income: Items that will not be reclassified to profit or loss Net changes in the fair value of investments carried at fair value through other comprehensive income	17	(28, 537)	(18,315)
Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations	25	690	(6,657)
Share of other comprehensive income of an associate	16	1,624
Other comprehensive loss for the year		(26, 223)	(24, 972)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		796,429	177,141
Total comprehensive income attributable to:
Owners of the Company		873,449	139,803
Non-controlling interests		(77,020)	37,338
		796,429	177,141

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2022

		2022	2021
	Notes	AED'000	AED'000
ASSETS
Non-current assets
Property and equipment	13	454,968	694,669
Investment properties	15	7,239,241	6,560,874
Intangible assets and goodwill	14	198,471	78,639
Right-of-use assets	28	90,336	93,743
Investment in associates	16	31,508	32,027
Investment in joint ventures	16	502	7,322
Investments carried at fair value through
other comprehensive income	17	430,217	467,557
Investments carried at amortised cost	17	49,316
Trade and other receivables	20	411,786	127,803
		8,906,345	8,062,634
Current assets
Inventory properties	18	2,053,230	7,509
Development work in progress	19	1,276,791	1,202,812
Trade and other receivables	20	463,327	405,832
Investments carried at fair value through profit or loss	17	2,951,614	62,383
Amounts due from related parties	22	142,553	112,689
Cash and bank balances	21	1,828,133	1,668,655
		8,715,648	3,459,880
Assets held for sale	11	1,919,751	1,058,031
		10,635,399	4,517,911
TOTAL ASSETS		19,541,744	12,580,545
EQUITY AND LIABILITIES Equity
Share capital
Share premium	23 23	6,855,599	5,508,191
Legal reserve	24	4,459,919 353,732	327,122
Merger reserve		(189, 234)	(189, 234)
Other reserves	25	238,056	235,742
Cumulative changes in fair value		2,832	38,875
Retained earnings		1,571,694	691,192
Equity attributable to Owners of the Company		13,292,598	6,611,888
Non-controlling interests	30	955,255	1,033,098
Total equity		14,247,853	7 644 986

CONSOLIDATED STATEMENT OF FINANCIAL POSITION continued As at 31 December 2022

	Notes	2022 AED'000	2021 AED'000
LIABILITIES
Non-current liabilities
Trade and other payables	26	15,013	28,707
Loans and borrowings	29	1,582,570	2,119,634
Lease liabilities	28	98,598	94,227
Provision for employees' end of service benefits	27	13,299	13,377
		1,709,480	2,255,945
Current liabilities
Trade and other payables	26	2,788,692	1,967,934
Loans and borrowings	29	212,294	203,552
Lease liabilities	28	15,492	13,880
Amounts due to related parties	22	559,918	486,143
		3,576,396	2,671,509
Liabilities directly associated with assets held for sale	11	8,015	8,105
		3,584,411	2,679,614
Total liabilities		5,293,891	4,935,559
TOTAL EQUITY AND LIABILITIES		19,541,744	12,580,545

Chairman

-3

$\mathcal{R}^{\text{L}}$ , $\mathcal{R}^{\text{L}}$

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 December 2022

					Attributable to Owners of the Parent
	Share 000.GFV capital	000.GFV Share premium	AED '000 reserve Legal	AED'000 reserve Merger	A£D'000 Other reserves	fair value OOO, CFF Cumulative changes in	$\frac{earnings}{AED$ '000 Retained	000. CFF Total	controlling Non- interests 000.GTP	equity 000.CFV Total
Other comprehensive loss for the year 4t 1 January 2021 rofit for the year	808,984		291,593	336,465	(6,657) 242,399	(18, 315) 57,190	561,946 164,775	(24.972) 2,298,577 164,775	37,338 996,281	(24.972) 3,294,858 202,113
hare capital injected during the year (note 23) otal comprehensive income for the year susiness combination of entities under ransfer to legal reserve (note 24) ssuance of bonus shares (note 23)	56,629 2,398,500		35,529		(6,657)	(18,315)	164,775 (35,529)	139,803 56,629 2,398,500	37,338	2,398,500 56,629 177,141
common control (note 23)	2,244,078			525,699				1,718,379	(52)	1,717,858
1131 December 2021	5,508,191		327,122	189,234	235,742	38,875	691,192	$-6,611,888$	1,033,098	7,644,986
Other comprehensive loss for the year At 1 January 2022 Profit for the year	5,508,191		327,122	189,234)	235,742 2,314	(28, 537) 38,875	691,192 899,672	(26, 223) 6,611,888 899,672	(77,020) 1,033,098	(26,223) 7,644,986 822,652
ncrease in share capital on acquisition of otal comprehensive income for the year					2,314	(28, 537)	899,672	873,449	(77,020)	796,429
ransfer of fair value reserve of equity securities carried Acquisition of subsidiary (note 23) isposal of subsidiaries subsidiary (note 23)	1,347,408	4,459,919	(66)					(66) 1,347,408 4,459,919	(823)	(889) 4,459,919 1,347,408
at fair value through other comprehensive income ransfer to legal reserve (note 24)		Ή	26,676			(7,506)	7,506 (26,676)
4t 31 December 2022	6,855,599	4,459,919	353,732	189,234	238,056	2,832	1,571,694	13,292,598	955,255	14,247,853

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2022

	Notes	2022 AED'000	2021 AED'000
OPERATING ACTIVITIES
Profit from continued operations (Loss) profit from discontinued operations		824,267 (1,615)	202,091 22
Adjustments for:		822,652	202,113
Depreciation on property and equipment	13	17,398	22,898
Amortisation of intangible assets	14	2,326
Depreciation on right of use assets Net changes in investments carried at fair value through profit or loss	28 17	3,407 348,889	3,371
Gain on disposal of assets held for sale		(4,341)	(24,750)
Provision for employees' end of service benefits	27	2,366	103
Dividend income Provision for expected credit loss on financial assets	5 8	(37, 854)	(29, 739)
Provision for impairment loss on property and equipment	13	82,914 306,463	7,782
Provision for impairment loss on development work in progress	19	188,030	143
Provision for impairment loss on investment properties Net change in fair value of investment properties	15 15	260,768
Share of loss (profit) from associates	16	73,262 701	(489)
Share of loss (profit) from joint ventures	16	567	(506)
Gain on remeasurement of previously existing interest in an associate Gain on disposal of investment in an associate	3,2		(75, 169)
Gain on liquidation of subsidiaries		(3,741)	(900)
Loss on disposal of subsidiaries	3.4	16,254
Loss on disposal of joint venture Bargain purchase gain on acquisition of subsidiary	16 3.1	6,152 (1,865,900)
Finance costs, net		99,716	72,875
		320,029	177,732
Changes in working capital: Inventory properties		46,279
Development work in progress		(256, 820)	(1,030) 107,457
Trade and other receivables Amounts due from related parties		(29, 894)	280,124
Amounts due to related parties		(28, 922) 63,802	93,952 97,763
Trade and other payables		601,726	(1, 115, 852)
Cash flows generated from (used in) operating activities Employees' end of service benefits paid	27	716,200 (4,716)	(359, 854) (2,629)
Net cash flows generated from (used in) operating activities		711,484	(362, 483)
INVESTING ACTIVITIES
Purchase of property and equipment	13	(241, 569)	(18, 724)
Proceeds from disposal of property and equipment Purchase of intangible assets	14	310 (158)
Proceeds from disposal of assets held for sale		13,473
Additions to investments properties		(84, 895)	(95, 971)
Purchase of investments carried at fair value through profit or loss Proceeds from the disposal of investments carried at fair value through profit or loss	17 17	(72, 946)	(37, 633)
Proceeds from the disposal of investment carried at fair value through other comprehensive income	17	131,768 8,803
Proceeds from the maturity of investments carried at amortised cost	17	236
Dividends received Cash acquired on acquisition of subsidiaries		39,386	30,250
Investment in an associate	16	408,700 (90)	335,635
Interest income received		15,651
Term deposit placed Margin deposits released		(496, 865) (9,955)	(377) 62
Net cash flows (used in) generated from investing activities		(288,151)	213,242
FINANCING ACTIVITIES Proceeds from the issue of convertible bonds
Proceeds from bank borrowings		1,084,040	2,400,000 250,000
Repayments of borrowings		(1,769,289)	(670, 573)
Payment of lease liabilities	28		(14, 323)
Finance costs paid Dividends paid		(106, 601) (78)	(167, 897) (879)
Net cash flows (used in) generated from financing activities		(791, 928)	1,796,328
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(368, 595)	1,647,087
Net foreign exchange differences Cash and cash equivalents at 1 January	21	24,353 1,652,264	(6,799) 11,976
CASH AND CASH EQUIVALENTS AT 31 DECEMBER	21	1,308,022	1,652,264
Significant non-cash transactions excluded from the statement of cashflow including the following:
Transfer of plot of land from inventory properties		45,000

$\mathbf{1}$ GENERAL INFORMATION

Q Holding PSC (formerly "Al Qudra Holding PJSC") (the "Company") is a private joint stock company incorporated in the Emirate of Abu Dhabi, United Arab Emirates (UAE). The Company is registered on the secondary market in Abu Dhabi Stock Exchange.

The Company is registered under commercial license No. CN-1002912. The registered office of the Company is at P.O. Box 48111, Abu Dhabi, U.A.E. The Company and its subsidiaries together are referred to as ("the Group").

On 8 March 2022, the shareholders approved to change the name of the Company from "Al Oudra Holding PJSC" to "Q Holding PSC".

International Holding Company PJSC is the Parent and Royal Group Holding LLC is the Ultimate Parent of the Company.

The Group is principally engaged in investing in pioneering business ideas and forming strategic partnerships emanating from focused research and the expertise of its founders. The Group envisages subscribing as a founder in potentially successful companies, development, management, sales and leasing of real estate projects, launch and manage educational, hospitality and health care projects and acquire controlling interests in strategic companies.

The consolidated financial statements were authorised for issue in accordance with the resolution of the Board of Directors on 6 February 2023.

$2.1$ BASIS OF PREPARATION

Accounting convention

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as issued by International Accounting Standards Board (IASB), and the applicable requirements of the UAE Federal Law No. (32) of 2021.

Functional and presentation currency

The consolidated financial statements are presented in UAE Dirhams ("AED"), which is the presentation currency of the Group and the functional currency of the Company. All the values are rounded to the nearest thousand (AED '000) except when otherwise indicated.

Statement of compliance

The consolidated financial statements have been prepared under the historical cost convention except for investments carried at fair value through profit or loss, investments carried at fair value through other comprehensive income and investment properties which have been measured at fair value.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2022. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

$2.1$ BASIS OF PREPARATION continued

Basis of consolidation continued

When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.

The Group considers all relevant facts and circumstances in assessing whether or not the Group's voting rights in an investee are sufficient to give it power, including:

• The contractual arrangement(s) with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Group's voting rights and potential voting rights.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Group and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Group and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, the cost on initial recognition of an investment in an associate or a joint venture

				Percentage of holding
			31 December	31 December
Name of subsidiary	Principal activity	Country of incorporation	2022	2021
			%	$\%$
Al Qudra Real Estate LLC	Real estate management	United Arab Emirates	100	100
Al Qudra Holding - Syria	General investment	Syrian Arab Republic	100	100
Al Qudra Real Estate	Real estate management	Syrian Arab Republic	100	100
Al Qudra Trading LLC	Commercial project investment	United Arab Emirates	100	100
$Q &$ Elevate LLC (i)	Hospitality Service	United Arab Emirates	70	$\sim$
Ain Al Fayda Real Estate LLC	Real estate management.	United Arab Emirates	100	100
Q Scape Komtec LLC (iv)	Building Maintenance and landscaping	United Arab Emirates		51
Buhyarat Ain Al Fayda Real Estate LLC	Real estate management	United Arab Emirates	100	100
Manarah Bay Real Estate	Real estate management	United Arab Emirates	100	100
Q International Limited	General Investment	United Arab Emirates	100	100
Al Qudra Services LLC (iii)	Environmental plants maintenance	United Arab Emirates	$\overline{\phantom{a}}$	100
Al Qudra and Ravago Investment LLC (iii)	General investment	United Arab Emirates		100
Al Qudra General Trading Establishment	Commercial project investment	United Arab Emirates	100	100

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

$2.1$ BASIS OF PREPARATION continued

Basis of consolidation continued

				Percentage of holding
Name of subsidiary	Principal activity	Country of incorporation	31 December 2022 %	31 December 2021 $\frac{0}{6}$
Q For Commercial Markets Management	Setup, Ownership and Development of
	Commercial Market, Parks and
Q Link Transport	entertainment facilities Transportation	United Arab Emirates United Arab Emirates	60 85	60 85
Q Car Park LLC (v)	Developing, operating, renting and
	equipping of car parking	United Arab Emirates	50	50
Q Active for Technologies LLC	Telecommunication system
ABNIA for Industrial Holding LLC (v)	installation and maintenance Activities of cement, glass, iron, wood	United Arab Emirates	51	51
	and electromechanical industries	United Arab Emirates	50	50
Al Qudra Belarus Ltd.	General Investment	Republic of Belarus	100	100
Al Qudra Holding - Yemen Al Qudra Industrial LLC	General Investment	Republic of Yemen	100	100
	Consultancy in alternative power and industrial projects	United Arab Emirates	100	100
O Parks Establishment	Touristic resort management &
	entertainment investment	United Arab Emirates	100	100
Al Qudra Health Care LLC	Health care & hospitality	United Arab Emirates	100	100
QP International LLC	Project Management	United Arab Emirates	60	60
Al Rayan Investment PSC	Develop, manage and invest
Construction Workers	in real estate enterprises	United Arab Emirates	99.97	99.97
Residential City LLC	Real Estate Investment	United Arab Emirates	65	65
Moon Flower Real Estate
Development LLC	Real Estate Investment	United Arab Emirates	100	100
Green Precast Systems Technology LLC	General Contracting	United Arab Emirates	60	60
Earth Care Agricultural Products LLC	Agriculture Business	United Arab Emirates	100	100
Apex Residential LLC	Real Estate Investment	United Arab Emirates	100	100
Al Rayan Global Real Estate LLC Q construction LLC	Real Estate Investment General contracting	United Arab Emirates United Arab Emirates	100 100	100 100
Radiant & Moonflower
Real Estate Development LLC	Real Estate Investment	United Arab Emirates	65	65
Al Qudra Holding - Morocco	General investment	Morocco	100	100
Smart Hotel Management	Hotel management	Morocco	100	100
Smart Hotel Properties	Hotel management	Morocco	100	100
Kasr Al Bahr	Hospitality	Morocco	100	100
Atlantic Coast Hospitality	General investment	Morocco	100	100
Al Qudra Facilities Management LLC (iv)	Cleaning and general maintenance for
	buildings and establishments management services	United Arab Emirates		100
Danat Facility Management LLC	Facilities management service	United Arab Emirates	100	100
Al Qudra for Agricultural and
Development LLC Envo Scape LLC (iv)	Agricultural development Irrigation network contracting, constructing,	United Arab Emirates	100	100
	maintaining parks and landscape design and planning activities	United Arab Emirates		100
Q General Investments Ltd.	General investment	British Virgin Islands	100	100

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

$2.1$ BASIS OF PREPARATION continued

Basis of consolidation continued

			Percentage of holding
Name of subsidiary	Principal activity	Country of incorporation	31 December 2022 %	31 December 2021 %
Al Qudra New Line Oil & Gas LLC (iii)	Oil and gas and maintenance	United Arab Emirates		50
Q Energy LLC	Oil & Gas equipment installation and
Al Qudra Education LLC (iii)	maintenance services Education Services	United Arab Emirates United Arab Emirates	60	60 100
Al Qudra Holding - Algeria	General Investments	Algeria	100	100
Al Qudra Holding International LLC	Industrial Enterprises and
Emirates Simulation Academy LLC	financial management Construction, Operation management	United Arab Emirates	100	100
Winds Laundry -	and development of training centre	United Arab Emirates	60	60
Sole Proprietorship LLC Al Qudra Holding Offshore	Laundry services Holding Company	United Arab Emirates Morocco	100 100	100 100
Q Investment RSC Ltd.	Real Estate Investment	United Arab Emirates	100	100
Q Malls – Sole Proprietorship LLC	Real Estate Lease and Management	United Arab Emirates	100	100
Barary Ain Al Fayda Development LLC	Real estate management	United Arab Emirates	100	100
Al Tamouh Investments Company LLC	Real estate management	United Arab Emirates	100	100
Al Ain Adventures LLC (formerly "Wadi
Adventures LLC")	Adventure Park	United Arab Emirates	100	100
Green Mubazzarah Chalets LLC	Resort and furnished residences leasing	United Arab Emirates	100	100
Tamouh National Contracting LLC	Building projects contracting	United Arab Emirates	51	51
Arch Models Abu Dhabi LLC	Designing and constructing
	architectural models	United Arab Emirates	60	60
TSL Properties LLC	Real estate management	United Arab Emirates	100	100
Island Villas LLC	Real estate management	United Arab Emirates	100	100
Marina Square Community
Real Estate LLC Team Builders LLC	Real estate management Real estate management	United Arab Emirates United Arab Emirates	100	100
Q Properties LLC (i)			51	51
Q Companies Management LLC (i)	Real estate management	United Arab Emirates	100	×
Q Hospitality LLC (i)	Real estate management	United Arab Emirates	100	٠.
Reem Hills - Sole Proprietorship LLC (i)	Real estate management	United Arab Emirates	100	$\overline{\phantom{a}}$
Reem Investments –	Real estate management	United Arab Emirates	100	÷
Sole Proprietorship PJSC (ii) Reem Developers-	Real estate management	United Arab Emirates	100
Sole Proprietorship LLC (ii) Reem for Energy Investment	Real estate management	United Arab Emirates	100
Services - Sole Proprietorship LLC (ii)	Oil and gas projects	United Arab Emirates	100
Discontinued operations
Paragon Malls LLC	Ownership and leasing of retail property	United Arab Emirates	100	100
Dana Hospitality LLC	Hotel Management service	United Arab Emirates	100	100

These are subsidiaries of the Group, incorporated during the year. $(i)$

Subsidiaries acquired during the year (note 3.1). $(ii)$

During the year ended 31 December 2022, the Group has liquidated these subsidiaries. $(iii)$

During the year ended 31 December 2022, the Group has disposed of its investment in these subsidiaries. $(iv)$

$(v)$ Although the Group owns 50% of the outstanding shares of Q Car Park LLC and ABNIA for Industrial Holding LLC, the investment has been classified as a subsidiary by virtue of control over the investee.

$2.2$ CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

The accounting policies adopted are consistent with those of the previous financial year, except for the following new standards, interpretations and amendments effective as of 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

• Reference to the Conceptual Framework Amendments to IFRS 3
• Property, Plant and Equipment: Proceeds before Intended Use Amendments to IAS 16
• $\bullet$ Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
• IFRS 1 First-time Adoption of International Financial Reporting Standards Subsidiary as a first-time adopter
• IFRS 9 Financial Instruments Fees in the '10 per cent' test for derecognition of financial liabilities
• IAS 41 Agriculture Taxation in fair value measurements

These amendments had no significant impact on the consolidated financial statements of the Group. The Group intends to use the practical expedients in future periods if they become applicable.

New and amended standards and interpretations

The following new standards / amendments to standards which were issued up to 31 December 2022 and are not yet effective for the year ended 31 December 2022 have not been applied while preparing these consolidated financial statements. The Group does not expect that the adoption of these standards / amendments will have a material impact on its consolidated financial statements:

• IFRS 17 Insurance Contracts
• $\ddot{\bullet}$ Classification of liabilities as Current or Non-current - Amendments to IAS 1
• Definition of Accounting Estimates Amendments to IAS 8
• Disclosure of Accounting Policies Amendments to IAS 1 and IFRS Practice Statement 2
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction Amendments to IAS 12.

UAE Corporate Tax Law

On 9 December 2022, the UAE Ministry of Finance released Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law or the Law) to enact a Federal corporate tax (CT) regime in the UAE. The CT regime will become effective for accounting periods beginning on or after 1 June 2023.

Generally, UAE businesses will be subject to a 9% CT rate. A rate of 0% will apply to taxable income not exceeding a particular threshold to be prescribed by way of a Cabinet Decision (expected to be AED 375,000 based on information released by the Ministry of Finance). In addition, there are several other decisions that are yet to be finalised by way of a Cabinet Decision that are significant in order for entities to determine their tax status and the taxable income. Therefore, pending such important decisions by the Cabinet as at 31 December 2022, the Group has considered that the Law is not substantively enacted from IAS 12 – Income Taxes perspective as at 31 December 2022. The Group shall continue to monitor the timing of the issuance of these critical cabinet decisions to determine their tax status and the application of IAS $12$ – Income Taxes.

The Group is currently in the process of assessing the possible impact on its consolidated financial statements, both from a current and deferred tax perspective, once these critical cabinet decisions are issued.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the noncontrolling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in other expenses.

The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:

• deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits, respectively:
• liabilities or equity instruments related to share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date; and
• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognised in the consolidated statement of profit or loss in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognised in the consolidated statement of profit or loss.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the consolidated statement of profit or loss.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Business combinations and goodwill continued

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Acquisition of entities under common control

Transactions giving rise to a transfer of interest in entities that are under common control are accounted for in accordance with the pooling of interest method of accounting at the date the transfer without restatement of prior periods. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the books of transferor entity. The components of the equity of the acquired entities are added to the same components within Group entity. Any transaction costs paid for the acquisition are recognised directly in equity.

Investment in associates and joint ventures

An associate is an entity over which the Group has significant influence that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but has no control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group's investments in its associates and joint ventures are accounted for using the equity method.

The results and assets and liabilities of the associates and joint ventures are incorporated in the consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately.

The consolidated statement of profit or loss reflects the Group's share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group's OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.

The aggregate of the Group's share of profit or loss of an associate and a joint venture is shown on the face of consolidated the statement of profit or loss outside operating profit and represents profit or loss after tax and noncontrolling interests in the subsidiaries of the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as he Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognises the loss within 'Share of profit from associates' and 'share of profit from joint ventures' in the consolidated statement of profit or loss.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Investment in associates and joint ventures continued

When the Group's share of losses in an associate or joint venture equals or exceeds its interests in the associates or joint ventures (which includes any long-term interests that, in substance, form part of the Group's net investment in the associates or joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associates or joint ventures.

Upon loss of significant influence over the associates or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

Revenue recognition

Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

Revenue from contracts with customers for sale of goods or services

The Group recognises revenue from contracts with customers based on a five-step model as set out in IFRS 15:

• Step 1: Identify 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;
• Step 2: Identify 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;
• 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 transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties;
• Step 4: Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Group allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group expects to be entitled in exchange for satisfying each performance obligation; and
• Step 5: Recognise revenue when (or as) the Group satisfies a performance obligation.

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

• a) The Group's performance does not create an asset with an alternate use to the Group and the Group has as an enforceable right to payment for performance completed to date;
• The Group's performance creates or enhances an asset that the customer controls as the asset is created or $b)$ enhanced; and
• $\mathbf{c})$ The customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs.

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 contractbased asset on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognised this gives rise to a contract liability.

Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes and duty. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Revenue recognition continued

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably.

Sale of plots

Revenue from the sale of plots is recognised at the point in time when control of the asset is transferred to the customer. generally on delivery of the land plots.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate ("EIR") applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset's net carrying amount.

Dividend income

Dividend income from investment is recognised when the shareholder's right to receive payment has been established.

Construction contract revenue

The Group provides construction services to its customers. Such contracts are entered into before rendering of services begins. Under the terms of the contracts, the Group is contractually restricted from reducing the structure under construction to another customer and has enforceable right to payment for work done. Revenue from construction is therefore recognised over time on a cost to cost method based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. The management consider that this input method is an appropriate measure of the progress towards complete satisfaction of the performance obligations under 'IFRS 15 Revenue from Contracts with Customers'.

Where the outcome of a construction contract cannot be estimated reliably, revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. Contract costs are recognised as expenses in the period in which they are incurred.

When it is possible that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Costs of contracts include all direct costs of labour, materials, depreciation of Property and equipment and costs of subcontracted works, plus an appropriate portion of construction overheads and general and administrative expenses of the year allocated to construction contracts in progress during the year at a fixed rate of the value of work done on each contract. Any under recovery at the end of the fiscal year, is charged to profit or loss as unallocated overheads.

The gross amount of contract assets from customers classified under trade and other receivables, is the net amount of costs incurred plus recognised profits; less recognised losses and progress billings, for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceeds progress billings.

The gross amount of contract liabilities to customers classified under trade and other payables, is the net amount of costs incurred plus recognised profits less recognised losses and less progress billings, for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses).

The effect of a change in the estimates of contract revenue or contract costs or the outcome of a contract, including that arising from liquidated damages and final contract settlements, is used in the determination of the amount of revenue and costs recognised in profit or loss in the period in which the change is made and in subsequent periods.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Contract costs

Contract costs comprise direct contract costs and other costs relating to the contracting activity in general and which can be allocated to contracts. In addition, contract costs include other costs that are specifically chargeable to the customer under the terms of the contracts.

Costs that cannot be related to contract activity or cannot be allocated to a contract are excluded from the costs of the construction contracts and are included in other expenses. A loss is recognised in the consolidated statement of profit or loss when the expected contract costs exceed the total anticipated contract revenue.

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group as lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

$i$ ). Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term as follows:

Land

30 to 50 years

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

The right-of-use assets are also subject to impairment. Refer to summary of significant accounting policies for impairment of non-financial assets section.

ii). Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date. the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term. a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Leases continued

The Group as lessee continued

iii). Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value (i.e., below USD 5,000, when new). Lease payments on short- term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the consolidated statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment in value. Land is not depreciated.

Cost includes expenditures that are directly attributable to the acquisition of the assets including installation costs. The cost of replacing part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance expenses are charged to the consolidated statement of profit or loss during the reporting period in which they are incurred.

The estimated useful lives for the current and the comparative periods are as follows:

Buildings	40 years
Machinery and equipment	3 to 4 years
Vehicles	3 to 4 years
Office and computer equipment	3 to 5 years
Furniture and fixtures	4 to 5 years
Leasehold improvements	lower of lease term or 4 years
Other assets	5 years

Land is not depreciated. In the case of leasehold improvements, it is expected that the underlying lease will continue to be renewed over the useful life and therefore, depreciation is charged over the useful life of the leasehold improvements.

The Group assesses, at each reporting date, whether there is an indication that the carrying value of property and equipment may be impaired. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

The gain or loss arising on the disposal or retirement of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the property and equipment and is recognised in the consolidated statement of profit or loss in the year when the property and equipment is sold or retired.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Capital work-in-progress

Capital work-in-progress are recorded at cost. Allocated costs directly attributable to the construction of the asset are capitalised. The capital work-in-progress are transferred to the appropriate asset category and depreciated or amortised in accordance with the Group's policies when construction of the asset is completed, and the asset is commissioned.

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. Investment income earned on the temporary investment of borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the consolidated statement of profit or loss in the period in which they are incurred.

Intangible assets

Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful lives are reviewed at the end of each annual reporting period, with effect of any changes in estimate being accounted for on a prospective basis.

Concession rights

These include cost incurred to obtain certain concession rights and are amortised on a straight-line basis in the consolidated statement of profit or loss over their estimated useful life of 35 years from the date of construction of the district cooling plant.

Investment properties

Initial recognition and measurement

Investment properties are measured initially at cost, including transaction costs.

Subsequent measurement

Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the consolidated statement of profit or loss in the period in which they arise. Fair values are determined based on an annual valuation performed by an external independent valuer.

Derecognition

Investment properties are derecognised either when they have been disposed of (i.e., at the date the recipient obtains control) or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in consolidated statement of profit or loss in the period of derecognition. In determining the amount of consideration from the derecognition of investment property, the Group considers the effects of variable consideration, existence of a significant financing component, non-cash consideration, and consideration payable to the buyer (if any).

Transfer

Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property and equipment up to the date of change in use.

Development work in progress

Development work-in-progress consists of property being developed principally for sale and is stated at the lower of cost and net realisable value. Cost comprises all direct costs attributable to the design and construction of the property and, where applicable, the cost of land upon which the property is being developed. Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses.

Land under development work-in-progress granted to the Group without consideration is carried at nominal value.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Investment properties under development

Investment properties under development that are being constructed or developed for future use as investment properties are measured initially at cost including all direct costs attributable to the design and construction of the properties including related staff direct costs. Subsequent to initial recognition, investment properties under development are measured at fair value. Gains and losses arising from changes in the fair value of investment properties under development are included in the consolidated statement of profit or loss in the period in which they arise. Upon completion of construction or development, such properties are transferred to completed investment properties.

Contract work in progress

Contract work in progress represents the unbilled portion of the contract revenue recognized during the year valued at cost plus attributable profit. Cost includes materials, labour and other overheads related to the projects.

Inventory properties

Inventory properties are stated at the lower of cost or net realisable value. Cost is determined using the first in first out cost method. Net realisable value is based on the estimated selling price less any further costs of disposals.

Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs of disposal and its value in use.

Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These budgets and forecast calculations cover a period to the end of useful life of the assets.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets' or cash-generating units' recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the consolidated statement of profit or loss.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i) Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition as financial assets carried at fair value through profit or loss, fair value through other comprehensive income or amortised cost. All financial assets are recognised initially at fair value plus in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. The Group's financial assets comprise trade and other receivables, amounts due from related parties, bank balances and cash, investments carried at fair value through other comprehensive income ("FVTOCI") and investments carried at fair value through profit or loss ("FVTPL").

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace are recognised on the trade date, which is the date that the Group commits to purchase or sell the asset.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• a) Financial assets at amortised cost;
• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments); $b)$
• $c)$ Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and
• $d)$ Financial assets at fair value through profit or loss.

Financial assets at amortised cost

The Group measures financial assets at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in the consolidated statement of profit or loss when the asset is derecognised, modified or impaired.

The Group's financial assets are classified at amortised cost, which includes investments carried at amortised cost. trade and other receivables, amounts due from related parties and cash and bank balances.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Financial instruments continued

i). Financial assets continued

Financial assets at fair value through OCI (debt instruments)

The Group measures debt instruments at fair value through OCI if both of the following conditions are met:

• The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the consolidated statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.

The Group does not have any debt instruments at fair value through OCI.

Financial assets designated at fair value through OCI (equity instruments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by- instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as income from investments in the consolidated statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

The Group have various equity investments under this category.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value.

Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments.

Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the consolidated statement of financial position at fair value with net changes in fair value recognised in the consolidated statement of profit or loss.

The Group has classified various investments under this category.

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Financial instruments continued

Financial assets continued i).

Derecognition

The Group derecognises 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 entity.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for 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 recognise the financial asset.

ii). Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group's financial liabilities include trade and other payables, amounts due to related parties, lease liabilities and loans and borrowings.

Subsequent measurement

The measurement of financial liabilities depends on their classification. The category of financial liabilities most relevant to the Group is loans and borrowings.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss, except for derivatives.

Loans and borrowings

After initial recognition, loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the consolidated statement of profit or loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 recognised in the consolidated statement of profit or loss.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if:

• There is a currently enforceable legal right to offset the recognised amounts; and
• There is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all assets at amortised cost including debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade and other receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Group considers a financial asset in default when contractual payments are 90 days past due, considering the nature of the Group's operations. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash in hand and bank balances net of bank overdrafts, margin deposits and term deposits with maturity of more than three months.

Provisions

Provisions are recognised when the Group has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

Employees' end of service benefits

The Group provides end of service benefits to its expatriate employees. The entitlement to these benefits is usually based upon the employees' final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment.

With respect to its UAE national employees, the Group makes contributions to the relevant government pension scheme calculated as a percentage of the employees' salaries. The Group's obligations are limited to these contributions, which are expensed when due.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Taxes

Value added tax ("VAT")

Expenses and assets are recognised net of the amount of VAT, except:

• When the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable; or when receivables and payables are stated with the amount of VAT included.
• The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statement of financial position.

Foreign currency transactions

Transactions in foreign currencies are recorded at the rate ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to the consolidated statement of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

Foreign operations

The assets and liabilities of foreign operations, including fair value adjustments arising on acquisition, are translated into AED at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into AED at the exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the currency translation reserve, except to the extent that the translation difference is allocated to non-controlling interests.

When a foreign operation is disposed in its entirety or partially such that control, significant influence of joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interests.

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 economic best 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.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

$2.3$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Fair value measurement continued

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level $1$ Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level $2$ Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
• Level $3$ Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Current versus non-current classification

The Group presents assets and liabilities in consolidated statement of financial position based on current/non-current classification. An asset as current when it is:

• Expected to be realised or intended to sold or consumed in normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realised within twelve months after the reporting period; or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal operating cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the reporting period; or ö
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Group classifies all other liabilities as non-current.

$2.4$ SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosures of contingent liabilities, at the consolidated statement of financial position date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. It also requires management to exercise its judgment in the process of applying the Group's accounting policies.

Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

Determining the lease term of contracts with renewal and termination options - Group as lessee

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

$2.4$ SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued

Judgements continued

Classification of properties

In the process of classifying properties, management has made various judgments. Judgment is needed to determine whether a property qualifies as an investment property or property and equipment. The Group develops criteria so that it can exercise that judgment consistently in accordance with the definitions of investment properties or property and equipment. In making its judgment, management considered the detailed criteria and related guidance for the classification of properties as set out in International Accounting Standards IAS 16 - Property, Plant and Equipment and IAS 40 - Investment Property, in particular, the intended usage of property as determined by management.

Business combinations

For every acquisition, the Group performs an assessment to determine whether the transaction represents an acquisition of assets or business. In cases where the acquisition is determined to be a business then the Group performs certain additional procedures, as mentioned below, to conclude whether the business combination is within the scope of IFRS 3 – Business Combinations (IFRS 3) or the business combination is under common control which is outside the scope of IFRS 3:

• consider the total shareholding of the Group in the acquiree (investee), owned either directly, indirectly or through beneficial ownership, prior to the acquisition;
• determine whether the Group exerts control or de-facto control over the investee in accordance with IFRS 3.

Further, the Group also performs an assessment of the reliability of acquisition date fair value of the acquiree's equity interests to determine if this value may be more reliably measurable than the acquisition date fair value of the acquirer's equity interests. Judgment is involved to make this assessment which includes performing procedures such as evaluating the volume of shares traded of the acquiree and acquirer prior to the transaction to conclude on the fair value to be applied in the determination of the purchase consideration.

Classification of investments

Management designates at the time of acquisition of securities whether these should be classified as at fair value through other comprehensive income ("FVTOCI"), fair value through profit or loss ("FVTPL") or amortised cost. In making a judgement whether investments in securities are as at FVTOCI, FVTPL or amortised cost, management has considered the detailed criteria for determination of such classification as set out in IFRS 9 Financial Instruments. Management is satisfied that its investments in securities are appropriately classified.

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 assesses the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component and any non-cash consideration in the contract.

In determining the impact of variable consideration, the Group uses the "most-likely amount" method in IFRS 15 whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts.

Estimates and assumptions

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 period are discussed below.

Useful lives of property and equipment and intangible assets

The Group's management determines the estimated useful lives of its property and equipment and intangible assets for calculating depreciation / amortisation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual values and useful lives annually and the future depreciation/amortisation charge is adjusted where management believes that the useful lives differ from previous estimates. Where management determines that the useful life or residual value of an asset requires amendment, the net book amount in excess of the residual value is depreciated/amortised over the revised remaining useful life.

Q Holding PSC (formerly "Al Qudra Holding PJSC") and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31 December 2022

$2.4$ SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued

Estimates and assumptions continued

Impairment of property and equipment and intangible assets

The Group determines whether property and equipment and intangible assets are impaired when events or conditions indicate that the carrying amount may not be recoverable. In assessing whether there is any indication that the property and equipment and intangible assets at the end of the reporting period may be impaired, the Group considered the following:

• Changes in the technological, market, economic or legal environment in which the Group operates that had or would have an adverse effect on the Group;
• Physical damage of assets under construction;
• Plans to discontinue or restructure the operation to which the assets under construction belong; and
• Evidence from internal reporting and external factors that indicates a potential decline in budgeted net cash flows flowing from the asset.

Estimation of the recoverable amount of the property and equipment and intangibles assets where indicators of impairment were present, is made on the reporting date. Estimation of the recoverable amount requires a determination of the property and equipment's and intangible assets value in use and their fair value less costs to sell. Calculation of value in use requires the Group to make an estimate of the expected future cash flows from individual cash-generating units and determination of a suitable discount rate to calculate the present value of those cash flows. Fair value less costs to sell is determined by obtaining reports from third parties.

The net carrying amount of property and equipment subject to impairment assessment at 31 December 2022 was AED 454,968 thousand (2021: AED 694,669 thousand) with provision for impairment of AED 366,084 thousand (2021:AED 59,621 thousand). The net carrying amount of intangible assets subject to impairment assessment at 31 December 2022 was AED 120,330 thousand (2021: AED 498 thousand) with provision for impairment amounting to AED Nil (2021: AED Nil).

Valuation of investment properties

Investment properties are stated at fair value as at the consolidated statement of financial position date. Gains or losses arising from changes in the fair values are included in the consolidated statement of profit or loss in the year in which they arise. The fair values of investment properties are determined by management through engaging through professional valuers, who hold recognised and relevant professional qualifications and having recent experience in the location and category of the investment properties being valued. The valuation techniques adopted comprise the Income Method and Comparable Method.

Investment properties under development are measured at fair value. In the exceptional cases, when a fair value cannot be reliably determined, such properties are recorded at cost. The fair value of investment properties under development is determined using either the Comparable Sales Method and discounted cash flow valuation techniques.

The determination of the fair value of investment properties requires the use of estimates such as future cash flows from assets and discount rates applicable to those assets. In addition, development risks (such as construction and letting risks) are also taken into consideration when determining the fair value of investment properties under development. These estimates are based on local market conditions existing at the consolidated statement of financial position date. In arriving at their estimates of fair values as at 31 December 2022 and 2021, management and external expert have used their market knowledge and professional judgment and have not only relied solely on historic transactional comparables.

Key assumptions used to determine the fair value of the investment properties are disclosed in note 15.

$2.4$ SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued

Estimates and assumptions continued

Impairment of inventory properties

Inventory properties are held at the lower of cost and net realisable value. When inventory properties become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory properties type and the degree of ageing or obsolescence, based on anticipated selling prices.

At the reporting date, gross inventory properties were AED 2,053,230 thousand (2021: AED 7,509 thousand) with no provision for impairment.

Provision for expected credit losses for trade and other receivables and amounts due from related parties The Group uses a provision matrix to calculate ECLs for trade and other receivables and amounts due from related parties. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by operating segment, product type, customer type and rating, and coverage by letters of credit and other forms of credit insurance).

The provision matrix is initially based on the Group's historical observed default rates. The Group then calibrates the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future.

The Group has also performed the specific assessment for some customers based on the risk profile to calculate the ECL using the simplified approach.

At the reporting date, gross trade and other receivables were AED 995,957 thousand (2021: AED 606,526 thousand) and the allowance for expected credit losses was AED 207,001 thousand (2021: AED 131,085 thousand). Any difference between the amounts actually collected in future periods and the net carrying amounts is recognised in the consolidated statement of profit or loss.

At the reporting date, amount due from related parties were AED 435,672 thousand (2021: AED 398,790 thousand) and the allowance for expected credit losses was AED 293,119 thousand (2021: AED 286,101 thousand). Any difference between the amounts actually collected in future periods and the net carrying amounts is recognised in the consolidated statement of profit or loss.

Leases - estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in its leases, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available.

$\mathbf{3}$ BUSINESS COMBINATIONS

$3.1$ Acquisitions Under IFRS 3 Business Combinations during the year

The Group acquired the following entity, which was accounted for using the acquisition method under IFRS 3 Business Combinations:

Reem Investments PJSC and its subsidiaries (Reem Investments)

Effective 2 June 2022, the Group, acquired a 100% interest in Reem Investments for a total consideration of AED 5,807,327 thousand. Reem Investments PJSC is a private joint stock company incorporated in Abu Dhabi United Arab Emirates on 29 May 2005 and is engaged in real estate development and the sale and investment in real estate and securities in the UAE and abroad. Since its acquisition, Reem Investments has contributed revenue and loss to the Group amounting to AED 30,988 thousand and AED 409,461 thousand respectively. If the acquisition had taken place at the beginning of the year, Reem Investments would have contributed revenue and loss to the Group amounting to AED 113,528 thousand and AED 148,809 thousand, respectively.

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of the acquired entity as at the date of acquisition were as follows:

	AED'000
Assets
Property and equipment	10,315
Investment properties	1,702,231
Development work in progress	5,189
Inventory properties	2,047,000
Amount due from related parties	7,960
Investments carried at amortised cost	49,314
Investments carried at fair value through profit or loss	3,296,942
Intangible assets	122,000
Trade and other receivables	388,043
Cash and bank balances	408,700
	8,037,694
Liabilities
Provision for employees' end of service benefits	2,272
Loans and borrowings	147,695
Amounts due to related parties	9,973
Trade and other payables	204,527
	364,467
Total identifiable net assets at fair value	7,673,227
Gain on bargain purchase	1,865,900
Purchase consideration against the issuance of shares	5,807,327

Purchase consideration comprises share capital of AED 1,347,408 thousand (1,347,408 shares of AED 1 each) and share premium of AED 4,459,919 thousand which was determined using a share swap ratio of 17.33 shares of the Company against each share of Reem Investments as agreed in the share purchase agreement entered into between the Company and Reem Investments.

$\overline{\mathbf{3}}$ BUSINESS COMBINATIONS continued

$3.2$ Acquisitions Under IFRS 3 Business Combinations during the prior year

Acquisition of Barary Ain Al Fayda Development LLC. ("Barary")

Effective 31 December 2021, the Company increased its ownership interest in Barary Ain Al Fayda Development LLC ("Barary") from 30% to 100% for a consideration of AED Nil. Barary is a private limited liability company based in the United Arab Emirates that is involved in the sale and development of real estate.

The fair values of the identifiable assets and liabilities of Barary as at the date of acquisition were as follows:

	AED'000
Assets
Property and equipment	5
Trade and other receivables	$\overline{\mathbf{3}}$
Development work-in-progress	125,159
Amounts due from related parties	105
Cash and bank balances	46,099
	171,371
Liabilities
Provision for employees' end of service benefits	49
Amounts due to a related party	110,841
Trade and other payables	63,453
	174,343
Total identified net liabilities	(2, 972)
Proportionate share of identifiable net liabilities acquired	(2,972)
Goodwill arising on acquisition	78,141
Purchase consideration	75,169
The breakup of the purchase consideration is as follows:
Fair value of previously held equity interest	75.169

$3.3$ Business combination under common control during the prior year

During 2021, the Group acquired Al Tamouh Investments Company LLC and its subsidiaries. This acquisition is excluded from the scope of International Financial Reporting Standard 3 (IFRS 3) "Business Combinations" as it is a business combination of entities under common control, given that the Company and the acquired entity is ultimately controlled by the same party before and after the acquisition. The acquisition has been accounted for in the consolidated financial statements using the pooling of interest method, which reflects the economic substance of the transaction except for investment properties which are fair valued to align with the accounting policies of the Group. The Group has elected to consolidate the income, expenses, assets and liabilities of acquired entities from the date of acquisition.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

BUSINESS COMBINATIONS continued $\mathbf{3}$

$3.3$ Business combination under common control during the prior year continued

Acquisition of Al Tamouh Investments Company LLC ("Tamouh")

Effective 31 December 2021, the Company acquired 100% of the shares in Al Tamouh Investments Company LLC and its subsidiaries ("Al Tamouh") in exchange of 2,244,077,972 shares of the Company at a par value AED 1 per share. Al Tamouh is based in Abu Dhabi, United Arab Emirates and is involved in the development of real estate, which includes land and infrastructure development, property development for sale or lease, property and facilities management as well as an adventure park. Transaction costs of AED 1,786 thousand were expensed and are included in administrative expenses. The Group has elected to measure the non-controlling interests in the acquiree at book value.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed from Al Tamouh Investments Company LLC are set out below.

	AED'000
Assets
Property and equipment	10,748
Intangible assets	498
Investment properties	1,575,036
Investments carried at fair value through other comprehensive income	54,151
Trade and other receivables	287,131
Development work-in-progress	697,755
Inventory properties	5,440
Assets held for sale	907,659
Cash and bank balances	289,537
	3,827,955
Liabilities
Provision for employees' end of service benefits	6,704
Loans and borrowings	391,865
Trade and other payables	963,814
Advances from customers	747,216
Liabilities directly associated with assets held for sale	498
	2,110,097
Net assets	1,717,858
Add: Non-controlling interest	521
Identifiable net assets acquired	1,718,379
Consideration paid	(2, 244, 078)
Merger reserve	525.699

$\overline{\mathbf{3}}$ BUSINESS COMBINATIONS continued

$3.4$ Disposal of subsidiaries during the year

Disposal of Q Scape Komtec LLC

Effective 18 May 2022, the Group disposed of its entire ownership interest in Q Scape Komtec LLC for a consideration of AED Nil. Consequently, it has been excluded from the consolidated financial statements as a subsidiary from the date of disposal.

The carrying value of the identifiable asset and liabilities disposed off on the date of sale are as follows

	AED'000
Assets
Property and equipment	55
Trade and other receivables	17,986
Amounts due from related parties	1,182
Cash and bank balances	211
	19,434
Liabilities
Provision for employees' end of service benefits	399
Trade and other payables	238
Amounts due to related parties	17,117
	17,754
Total identified net assets at fair value	1,680
Consideration received on disposal
Proportionate share of loss on disposal (i.e 51%)	(857)
Impairment on balance due from Q Scape Komtec LLC	(15, 922)
Total loss on disposal	(16, 779)

$\overline{3}$ BUSINESS COMBINATIONS continued

$3.4$ Disposal of subsidiaries during the year continued

The results of the Q Scape Komtec LLC included in the consolidated statement of profit or loss are set out below.

	2022	2021
	AED'000	AED'000
Revenue	26	4,717
Contract costs	(699)	(6, 848)
Staff costs	(488)	(2,198)
Provision for employees' end of service benefits		(46)
Depreciation on property and equipment	(5)	(61)
Utilities	(2)	(7)
Rentals	$\left(1\right)$	(514)
Other expenses	(58)	(212)
Finance costs	(3)	(14)
LOSS FROM DISCONTINUED OPERATIONS	(1,230)	(5,183)
Attributable to:
Owners of the Company	(627)	(2,644)
Non-controlling interest	(603)	(2, 539)
LOSS FROM DISCONTINUED OPERATIONS	(1,230)	(5,183) $\overline{\phantom{000000000000000000000000000000000000$

Disposal of Al Qudra Facilities Management LLC

Effective 18 July 2022, the Group disposed of its entire ownership interest in Al Qudra Facilities Management LLC for a consideration of AED Nil. Consequently, it has been excluded from the consolidated financial statements as a subsidiary from the date of disposal.

The carrying value of the identifiable asset and liabilities disposed off on the date of sale are as follows

	AED'000
Assets
Property and equipment	170
Trade and other receivables	853
Amounts due from related parties	2,303
Bank balances and cash	202
	3,528
Liabilities
Provision for employees' end of service benefits	337
Trade and other payables	2,311
Amounts due to related parties	3,235
	5,883
Total identified net liabilities	(2, 355)
Consideration received on disposal
Gain on disposal	2,355
Impairment on balance due from Al Qudra Facilities Management LLC	(1, 830)
Total gain on disposal	525

$3¹$ BUSINESS COMBINATIONS continued

$3.4$ Disposal of subsidiaries during the year continued

The results of the Al Qudra Facilities Management LLC included in the consolidated statement of profit or loss are set out below.

	2022 AED'000	2021 AED'000
Revenue	3,891	7,248
Contract costs	(3, 142)	(5,183)
Staff costs	(912)	(1, 401)
Provision for employees' end of service benefits	(67)	(26)
Depreciation on property and equipment	(31)	(80)
Utilities	(7)	(22)
Marketing expenses	(4)	(4)
Other expenses	(107)	(166)
Finance costs	(6)	(26)
(LOSS) PROFIT FROM DISCONTINUED OPERATIONS	(385)	340
Attributable to:
Owners of the Company	(385)	340
(LOSS) PROFIT FROM DISCONTINUED OPERATIONS	(385)	340
REVENUE FROM CONTRACTS WITH CUSTOMERS 4
	2022 AED'000	2021 AED'000
Revenue from contracts with customers Revenue from sale of plots	112,467 204,100	118,570 10,302
	316,567	128,872

Timing of revenue recognition
Services transferred at a point in time	204.100	10.302
Services transferred over time	112,467	118,570
	316.567	128,872

Geographical markets

All revenues are generated from the United Arab Emirates and Morocco.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

$\overline{\mathbf{5}}$ INCOME FROM INVESTMENTS

	2022 AED'000	2021 AED'000
Dividend income Net changes in fair value of investments carried	37,854	29,739
at fair value through profit or loss (note 17)	(348, 889)	24,750
	(311, 035)	54,489
INCOME FROM INVESTMENT PROPERTIES 6
	2022	2021
	AED'000	AED'000
Rental income	365,839	240,495
Net change in fair value of investment properties (note 15)	(73, 262)
	292.57	240.495

$\overline{\mathbf{7}}$ OTHER EXPENSES, NET

	2022 AED'000	2021 AED'000
Other expenses Other income	61,788 (12,609)	34,744 (13, 111)
	49,179	21,633

$\bf{8}$ PROVISION FOR EXPECTED CREDIT LOSSES ON FINANCIAL ASSETS

	2022 AED'000	2021 AED'000
Provision for expected credit losses on trade and other receivables (note 20) Provision (reversal) for expected credit losses on	75,916	9,257
amounts due from related parties (note 22) Reversal of expected credit losses on investments	7,018	(1,475)
carried at amortised cost (note 17)	(20)
	82.914	7,782
9 STAFF COSTS
	2022 AED'000	2021 AED'000
Salaries and other benefits Provision for employees' end of service benefits Directors' fees	62,747 2,299	53,797 31 1,340
	65.046	55,168

10 FINANCE COSTS, NET

	2022	2021
	AED'000	AED'000
Interest on loans and borrowings (note 29)	77,878	67,316
Profit Rate Swap settlement*	31,715
Interest expense on lease liabilities (note 28)	5,983	6.074
Interest income on term deposits	(15,869)	(555)
	99.707	72.835

*During the previous year, the Group had entered into a profit rate swap to economically hedge its interest rate risk associated with a borrowing it had obtained from an Islamic bank. During the current year, the Group settled the related borrowing and accordingly terminated the profit rate swap and incurred certain early termination fees, a portion of which were capitalized to investment properties under development as they were considered to be qualifying borrowing costs while the remainder has been recorded as finance costs during the current year.

11 DISCONTINUED OPERATION AND ASSETS HELD FOR SALE

	2022 AED'000	2021 AED'000
Assets directly associated with subsidiaries held for sale (Note 11.1 & 11.2) Assets held for sale -buildings (Note 11.3)	521,248 1,398,503	521,701 536,330
	1,919,751	1,058,031
Liabilities directly associated with subsidiary held for sale (Note 11.1 & 11.2)	8,015	______

11.1 Holiday Inn Abu Dhabi

During 2021, the Group announced the decision of its Board of Directors to sell Holiday Inn Abu Dhabi (Dana Hospitality LLC), a wholly owned subsidiary. The sale of Holiday Inn Abu Dhabi is expected to be completed within a year from the reporting date. At 31 December 2022, Holiday Inn Abu Dhabi was classified as a disposal group held for sale and as a discontinued operation. The results of Holiday Inn Abu Dhabi for the year are presented below:

	2022	2021
	AED'000	AED'000
Revenue from contracts with customers		22,798
Contract costs		(2,605)
Marketing		(463)
Other expenses		(4,784)
Staff costs		(7, 431)
Provision for employees end of service benefits		(250)
Utilities		(2,369)
Finance costs		(31)
Profit for the year from discontinued operations		4.865

11 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE continued

11.1 Holiday Inn Abu Dhabi continued

The major classes of assets and liabilities of Holiday Inn Abu Dhabi classified as held for sale as at 31 December are, as follows:

	2022 AED'000	2021 AED'000
Assets
Trade and other receivables	5,930	5,930
Inventories	223	223
Amounts due from related parties	91	91
Cash and bank balances	2,048	2,048
Assets held for sale	8.292	8,292
Liabilities
Provision for employees' end of service benefits	867	867
Trade and other payables	6,740	6,740
Liabilities directly associated with the assets held for sale	7,607	7,607
Net assets directly associated with disposal group	685	685

11.2 Paragon Malls LLC

The sale of Paragon Malls LLC is expected to be completed within 2023. At 31 December 2022, Paragon Malls LLC's major assets and liabilities classified as held for sale, are as follows:

	2022 AED'000	2021 AED'000
Assets
Property and equipment	503,096	503,096
Trade and other receivables	9,860	9,752
Cash and bank balances		561
Assets held for sale	512,956	513,409
Liabilities
Trade and other payables	408	498
Liabilities directly associated with the assets held for sale	408	498
Net assets directly associated with disposal group	512,548	512.911

11 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE continued

11.3 Assets Held For Sale - Buildings

• In connection with the sale of Holiday Inn Abu Dhabi, the buyer and the Group entered into a sale and a) purchase agreement for the hotel building with a net book value of AED 142,080 thousand. Accordingly, the building was classified as held for sale.
• $b)$ In connection with the sale of Paragon Malls LLC, the buyer and the Group entered into a sale and purchase agreement for the mall building with a net book value of AED 385,118 thousand. Accordingly, the building was classified as held for sale.
• In connection with the sale of Traditional Souk, Abu Dhabi, the buyer and the Group entered into an $c)$ agreement for the building with a net book value of AED 871,305 thousand. Accordingly, the building was classified as held for sale.

12 BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share is calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of shares outstanding during the year.

The following reflects the profit and share data used in the basic and diluted earnings per share computations:

	2022 AED'000	2021 AED'000
Profit attributable to ordinary equity holders of the Company: Continuing operations Discontinued operations	900,684 (1,012)	162,214 2,561
	899,672	_ 164,775
Weighted average number of ordinary shares issued (shares in '000)	6,294,487	1,676,804
Earnings per share	0.14	0.10
Earnings per share for continuing operations	0.14	0.10

There are no dilutive instruments issued by the Company, accordingly diluted earnings per share are the same as basic earnings per share.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

PROPERTY AND EQUIPMENT $\overline{13}$

	Land and buildings AED '000	Machinery and equipment 000. G3V	AED '000 Vehicles	equipment 000, CFF Office and computer	fixtures 000. CFF and Furniture	AED '000 Leasehold improvements	assets Other 000. G3V	work in progress AED '000 Capital	Total 000. G3P
Acquired in business combinations (note 3.2 & note 3.3) Transferred to assets held for sale Exchange differences At 1 January 2021 Additions Transfers Cost:	(210, 419) 72,060 3,024 283,544	(52, 858) 91,755	3,114 280 1,470	$\overline{15}$ 88,222 573	(13, 384) 57,589 2,921 29,615	5,534	$\overline{19}$ 23,747	(3,024) 14,930 613,104 125	(276, 661) 125 18,724 103,160 .166,609
Acquired in business combinations (note 3,1) Transfers to investment properties (note 15) Transferred to assets held for sale At 31 December 2021 Exchange differences Additions Disposals	23,820 (10,523) (2.147) 148,209 3,336	(210) Ĭ $\hat{\textbf{r}}$ 38,898	(1, 387) $\Omega$ 265 4,864	(216) (24) 88,810 1,487 1,259	(334) $\Xi$ 6,922 610 76,741	5,534 4,773	(1,282) 23,766 888 1,102	(137, 215) 625,135 228,671	(10, 523) $(137,215)$ $(3,429)$ $(25,368)$ ,011,957 241,569 32,073
At 31 December 2022	162,695	38,688	4,236	91,266	83,928	(532) 9,775	23,967	(22.082) 694,509	109,064
Acquired in business combinations (note 3.2 & note 3.3) Transferred to assets held for sale Depreciation charge for the year Accumulated depreciation: At 1 January 2021	(68, 339) 76,886 64,440 6,595	(52, 858) 55,640 2,037	190 1,302 2,811	86,508 1,417 $\approx$	(13, 384) 29,495 11,795 26,655	5,534	20,069 864		(134, 581) 22,898 92,407 276,943
Acquired in business combinations (note 3,1) Transfers to investment properties (note 15) Depreciation charge for the year At 31 December 2021 Exchange differences Disposals	(3,886) (346) 1,833 13,568 79,582	(210) 4,819 1,999	(1, 178) (14) 4,303 236 451	(213) $\boxed{2}$ 87,935 1,174 1,254	$(332)$ $(272)$ 610 54,561 11,351	(532) 5,534 4,773	(1, 186) (569) 20,933 805 1,102		257,667 17,398 21,758 (3,886) (3, 119) (1,806)
At 31 December 2022	90,751	6,608	3,798	90,077	65,918	9,775	21,085		288,012
At 1 January and 31 December 2021 mpairment allowance: Charge for the year					1,738			59,621 304,725	306,463 59,621
At 31 December 2022					1,738		Ί	364.346	366,084
At 31 December 2021 Net book value:	68.627	34,079	$\frac{561}{2}$	$rac{875}{2}$	22.180		2.833	565.514	694.669
At 31 December 2022	71,944	32,080	438	1.189	16,272	Ί	2,882	330,163	454,968

45

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

PROPERTY AND EQUIPMENT continued 13

• $i)$ During the year ended 31 December 2022, the Group capitalised borrowing costs on loans in capital workin-progress in the amount of AED 3,767 thousand (2021: AED 6,648 thousand).
• ii) Capital work in progress consist of following:
• During the year, the Group entered into an agreement with a buyer for the sale of the Traditional a) Souk building. Accordingly, an amount of AED 137,215 thousand was transferred to assets held for sale in accordance with the requirements of IFRS 5 "Non-current assets held for sale and discontinued operations". The Group performed an impairment assessment on the building prior to the transfer and accordingly recorded an impairment provision amounting to AED 36,253 thousand.
• $b)$ During the year, the Group performed an impairment assessment on the Kasr Al Bahr hotel in Morocco which is currently being constructed and recorded under capital work in progress. Accordingly, the Group recorded a provision amounting to AED 268,472 thousand based on its assessment as at 31 December 2022.

14 INTANGIBLE ASSETS AND GOODWILL

	Concession rights AED'000	Goodwill AED'000	Total AED'000
Cost: Recognised/ acquired in business combinations	498	78,141	78,639
At 31 December 2021 Additions Acquired in business combinations (note 3.1)	498 158 122,000	78,141	78,639 158 122,000
At 31 December 2022	122,656	78,141	200,797
Accumulated amortisation: At 1 January and 31 December 2021		۰
Amortisation charge for the year	2,326		2,326
At 31 December 2022	2,326		2,326
Net book value: At 31 December 2021	498	78,141	78,639
At 31 December 2022	120,330	78,141	198,471

Goodwill

Goodwill represents the goodwill recognized on the Group's acquisition of Barary Ain Al Fayda Development LLC during 2021. Goodwill is allocated to the respective cash generating units and during the year ended 31 December 2022, management performed its annual impairment review of goodwill using the discounted cashflow method. The estimated recoverable amounts exceeded the carrying values; hence, no impairment has been recorded.

The recoverable amounts have been computed based on the value in use approach derived from cash flow projections over a period of eight years.

Value in use was determined by discounting cash flows and was based on the following key assumptions:

• Discount rate: 10.8%
• Sales price: AED 123.46 148.15 per square metre

No reasonably possible change in any of the above key assumptions would cause the carrying values to materially exceed its recoverable amounts as of 31 December 2022.

15 INVESTMENT PROPERTIES

	Properties
	under	Labour
	development	camps	Land	Buildings	Total
	AED'000	AED'000	AED'000	AED'000	AED'000
At 1 January 2022	1,143,882	2,921,199	1,105,740	1,390,053	6,560,874
Additions	103,431		464		103,895
Acquired in business
combinations (note 3.1)	789,961		52,121	860,149	1,702,231
Transfers	(386, 330)			386,330
Transfer from property
and equipment (note 13)				6,637	6,637
Transfer to inventory properties (note 18)			(19,702)	(46, 574)	(66, 276)
Impairment	(260, 768)				(260, 768)
Change in fair value (note 6)	686	(310,600)	(158, 110)	394,762	(73, 262)
Transfer to assets held for sale	(734,090)				(734,090)
At 31 December 2022	656,772	2,610,599	980,513	2,991,357	7,239,241
At 1 January 2021	1,018,055	2,921,199	871,583	49,460	4,860,297
Additions	124,286		1,255		125,541
Acquired in business combinations	1,541		232,902	1,340,593	1,575,036
At 31 December 2021	1,143,882	2,921,199	1,105,740	1,390,053	6,560,874

Certain investment properties amounting to AED 3,782,795 thousand (2021: AED 4,319,809 thousand) are mortgaged against borrowings as disclosed in Note 29.

The fair value measurement has been categorised as a Level 3 fair value based on the inputs to the valuation technique used.

$(i)$ Properties under development

	Labour/ staff camp AED'000	Complex AED'000	Total AED'000
At 1 January 2022 Acquired in business combinations	167,803	976,079	1,143,882
Transfer to completed investment properties		789,961 (386, 330)	789,961 (386, 330)
Transfer to assets held for sale	۰ ۰	(734,090)	(734,090)
Impairment	۰	(260, 768)	(260, 768)
Gain on change in fair value	٠	686	686
Additions		103,431	103,431
At 31 December 2022	167,803	488,969	656,772
At 1 January 2021	148,802	869,253	1,018,055
Acquired in business combinations		1,541	1,541
Additions	19,001	105,285	124,286
At 31 December 2021	167,803	976,079	1,143,882

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

15 INVESTMENT PROPERTIES continued

Complex

During the year 2017, Abu Dhabi Municipality provided a plot of land to the Group, for a lease period of fifty years. The Group is in the process of constructing a new traditional soug (the Soug) and a hotel situated between Al Magta'a bridge and Khaleej Al Arabi Street located at the gateway to Abu Dhabi. The Soug mainly comprises of commercial units and hubs which are expected to vield rental from its use. Subsequently, properties under development amounting to AED 734,090 thousand (2021: AED Nil) were transferred to assets held for sale in line with the requirements of IFRS 5 "Non-current Assets Held For Sale and Discontinued Operations" as the Group has resolved to sell the related properties under development and not continue with its original intended use. Prior to the transfer, the Group performed an impairment assessment of the complex and based on the assessment recorded an impairment provision of AED 260,768 thousand.

Transfer to completed investment properties represents one residential building in Najmat, Reem Island completed during 2022.

Investment properties under development amounting to AED 487,336 thousand (2021: AED 782,000 thousand) are pledged against loans and borrowings obtained by the Company to finance the construction of the mortgaged plots.

During the year, the finance cost as part of property under development amounted to AED 20,318 thousand (2021: AED 30,295 thousand)

Labour/staff camp

During the year 2012, Zones Corp provided a plot of land to Moon Flower Real Estate Development LLC ("Moon Flower"), a subsidiary of the Group for a lease period of thirty years.

The Group completed majority of the construction of this camp facility in 2020 and accordingly an amount of AED 2,150,065 thousand was transferred from property under development to Labour Camps. The remaining amount of AED 167,803 thousand at 31 December 2022 represents the costs incurred on the construction of a hospital on this camp facility. The estimated additional cost to complete that hospital as at 31 December 2022 amounted to AED 9,000 thousand (2021: AED 9,000 thousand).

$(ii)$ Labour camps

Construction Workers Residential City

The fair value of Construction Workers Residential City project which has been based on the discounted cashflow approach at a discount rate of 7.60%, amounted to AED 728,400 thousand (2021: AED 809,000 thousand), and has been determined based on a valuation performed by an external independent valuer, accordingly management has recorded a fair value loss of AED 80,600 thousand (2021: AED Nil). Lease revenue from this property recognised in the consolidated statement of profit or loss amounted to AED 65,146 thousand (2021: AED 75,811 thousand). The direct costs incurred and presented in the consolidated statement of profit or loss amounted to AED 15,582 thousand (2021: AED 14,244 thousand).

Moon Flower

The fair value of Moon Flower project which has been based on the discounted cashflow approach at a discount rate of 7.51%, amounted to AED 2,050,000 thousand (2021: AED 2,280,000 thousand), and has been determined based on a valuation performed by an external independent valuer, accordingly management has recorded a fair value loss of AED 230,000 thousand (2021: AED Nil). The property has 5,998 labour accommodation rooms. Lease revenue from this property recognised in the consolidated statement of profit or loss amounted to AED 156,000 thousand (2021: AED 156,000 thousand). The direct costs incurred and presented in the consolidated statement of profit or loss amounted to AED 38,046 thousand (2021: AED 28,866 thousand).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

15 INVESTMENT PROPERTIES continued

$(iii)$ Land

The following table illustrates the details of the plots of land which are owned by the Group:

Plot	Location	2022 AED'000	2021 AED'000
Manarah Bay (a)	Abu Dhabi, UAE	206,150	306,000
Khalifa city A $(b)$	Abu Dhabi, UAE	165,000	158,000
Khalifa city B $(b)$	Abu Dhabi, UAE	120,340	146,500
Damascus Syria (c)	Syrian Arab Republic	92,736	92,736
Reem Island plot $(d)$	Abu Dhabi, UAE	32,000	45,500
Hydra Golf Walk (d)	Abu Dhabi, UAE	11,500	14,800
Al Ain Retail & Health Care Plots (e)	Al Ain, UAE	16,650	48,047
Shuwaib Farm - Al Hayer $(f)$	Al Ain, UAE	64,600	61,255
Shams Land $(g)$	Abu Dhabi, UAE	97,840	98.321
Al Jaddaf Plots $(h)$	Dubai, UAE	18,420
RR07/C1 Najmat - School Plot (i)	Abu Dhabi, UAE	35,521	134,581
RT6C11,12,28&30 (j)	Abu Dhabi, UAE	119,756
		980.513	1,105,740

$(a)$ Manarah Bay

The fair value of Manarah Bay has been determined by considering the direct comparison approach.

$(b)$ Khalifa city A and Khalifa city B

The Group owns two plots of land in Khalifa City A and Khalifa City B for which the Group intends to construct investment properties for rental income. The fair values of these plots were determined using the direct comparison approach.

$(c)$ Damascus Syria

The Group holds a plot of land in Syrian Arab Republic. The Group's intention is to develop this plot in the future. The plot has been valued by an independent valuer based in Lebanon who has valued the plot at AED 253.849 thousand (2021: AED 241,210 thousand). Management have however, reduced the carrying value fair value to AED 92,736 thousand (2021: AED 92,736 thousand) (representing a 63.5% reduction from the external valuation) taking into consideration the downturn in the economy in Syria and the devaluation of its currency. Furthermore, management took into consideration the unstable political situation that exists there.

$(d)$ Reem Island and Hydra Golf Walk

The Group owns two plots of land in Reem Island and Hydra Golf Walk, respectively, for which the Group intends to construct investment properties for rental income. The fair values of these plots were determined using the direct comparison approach.

$(e)$ Al Ain Retail & Health Care Plots

The Group owns certain plots of land in Al Ain and intended to construct properties on these for rental income. The fair values of these plots were determined using the direct comparison approach.

$(f)$ Shuwaib Farm - Al Hayer

The Group owns a plot of agriculture land in Al Hayer, Al Ain, and intends to construct these properties for rental income. The fair value of this plot was determined using the direct comparison approach.

Shams Land and others $(g)$

The Group owns various plots of land in Reem Island, Abu Dhabi for which the Group intends to construct residential towers for sale. The fair values of these plots were determined using direct comparison approach.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

15 INVESTMENT PROPERTIES continued

$(h)$ Al Jaddaf Plots

The Group owns various plots of land in Dubai for which the Group intends to construct residential towers for sale. The fair values of these plots were determined using direct comparison approach.

RR07/C1 Najmat - School Plot $(i)$

The Group owns various plots of land in , Abu Dhabi for which the Group intends to construct residential towers for sale. The fair values of these plots were determined using investment approach.

RT6C11,12,28&30 $\left(\ddot{j}\right)$

The Group owns various plots of land in Reem Island, Abu Dhabi for which the Group intends to construct residential towers for sale. The fair values of these plots were determined using direct comparison approach.

$(iv)$ Buildings

Plot	Location	2022 AED'000	2021 AED'000
Horizon Tower	Abu Dhabi, UAE	911,336	698,377
Najmat-RR03-C10	Abu Dhabi, UAE	448,040
Najmat RR05-C2	Abu Dhabi, UAE	386,160
Najmat-RR05-C1	Abu Dhabi, UAE	344,220
Kite Tower	Abu Dhabi, UAE	231,202	230,949
Marina Square	Abu Dhabi, UAE	213,981	204,638
Rawdhat C93-96	Abu Dhabi, UAE	124,630
Nalaya Villas	Abu Dhabi, UAE	116,960
Reem Village	Abu Dhabi, UAE	106,000	105,096
Al Qudra building	Abu Dhabi, UAE	35,674	48,460
City of Lights	Abu Dhabi, UAE	38,656	24,161
Hills Villas	Abu Dhabi, UAE	17,900
Marina Bay, COL	Abu Dhabi, UAE	15,598	9,666
Al Ghadeer Project - Villa	Abu Dhabi, UAE	1,000	1,000
Nord Anglia	Abu Dhabi, UAE		67,706
		2,991,357	1,390,053

Following is the summary of valuation techniques and inputs used in the valuation of buildings:

Property	Valuation technique	Significant unobservable inputs
Leased	Investment	Estimated rental value per annum, for the different leased properties, is as follows: $\overline{\phantom{a}}$
properties	method	Residential properties: AED 19,200 - AED 335,000 per unit (2021: AED 19,200 - AED 330,000 per unit); ш
		Commercial properties: AED 40/sq. ft. - AED 90/sq. ft. (2021: AED 80/sq. ft. - $AED 108/sq. ft.$ );
		Retail: AED 90/sq. ft. - AED 140/sq. ft. (2021: 97/sq. ft. - AED 108/sq. ft.); ۰ Car park: AED 1260- AED 6,300 per unit (2021: AED 5,400 per unit); and ۰ Mix use property: AED 92/sq. ft (2021: AED 102/sq. ft) ۰
		Operating expenses: $10\% -32\%$ of market rent (2021: $12\% -34\%$ of market rent): and Terminal capitalisation rate: 7.25% - 8.75% (2021: 8% - 11%).
	Comparable method	Residential properties: AED $925/\text{sq}$ . ft. - AED $1,200/\text{sq}$ . ft. $(2021:$ AED $925/\text{sq}$ . ft. - $\omega$ $AED$ 1,100/sq. ft;
		Retail: AED 1250/sq. ft. (2021: AED 1250/sq. ft); and Ψ
		Discount rate on sales: 5-8% before a transaction occurs (2021: 5-8% before a transaction ÷ occurs).

16 INVESTMENT IN ASSOCIATES AND JOINT VENTURES

a) Investment in associates

	2022 AED'000	2021 AED'000
Sawaeed Employment L.L.C. (i) Century Village Real Estate Investment LLC (ii) Bunya Enterprises LLC (iii)	31,418 90	32,027
	31.508	32,027

The movement of investment in associates is as follows:

	As at 1 January AED'000	(loss) profit AED'000	Other Share of comprehensive income AED'000	Dividends AED'000	Additions (transfers) AED'000	As at 31 December AED'000
31 December 2022 Saweed Employment LLC Century Village Real Estate	32,027	(701)	1,624	(1, 532)	¥,	31,418
Investment LLC					$\frac{90}{2}$	90
	32,027	(701)	1,624	(1, 532)	$\overline{90}$	31,508
31 December 2021 Saweed Employment LLC RR Facility Management LLC	32,049 100	489	Ξ	(511)	(100)	32,027 $-1$
	32,149	489		(511)	(100)	32,027

Sawaeed Employment L.L.C. is treated as an associate even though the Group holds 10% of the equity of the $(i)$ investee since the Group exercises significant influence over the operations and decision-making function of the investee due to its membership on the board of directors.

The summarised financial information of Sawaeed Employment L.L.C. is as follows:

	2022 AED'000	2021 AED'000
Total assets	385,379	385,482
Total liabilities	68,332	$-62,791$
Total revenue	57,411	86,703
(Loss) profit for the year	(7,008)	4,886

During 2022, the Group invested AED 90 thousand in Century Village Real Estate Investment LLC. $(ii)$ The Group holds 30% of equity and the main activity of the entity is to provide lease and management services. The associate does not have any commercial operations since inception.

16 INVESTMENT IN ASSOCIATES AND JOINT VENTURES continued

a) Investment in associates continued

$(iii)$ Bunya Enterprises LLC ("Bunya") is a limited liability company incorporated in the Emirate of Abu Dhabi and is engaged in consultancy and management of civil works and development of properties. Bunya is treated as an associate, even though the Group holds 64% of equity investee, given that all decisions have to be approved via unanimous consent of all the shareholders.

The summarised financial information of Bunya Enterprises LLC is as follows:

	2022 AED'000	2021 AED'000
Total assets	381,570	368,241
Total liabilities	378,455	356,444
Total revenue	6,458
Loss for the year	(8,681)	(13, 354)

Bunya is established by the three master developers of Al Reem Island to act as the municipal and regulatory authority and to be responsible for the provision of all the infrastructure of regional roads, bridges and other community services on Al Reem Island.

During 2009, the Government of Abu Dhabi represented by Abu Dhabi Urban Planning Council (ADUPC) has taken responsibility of funding the operations of Bunya. The shareholders in Bunya will no more contribute any cash towards the operations of Bunya.

The Group has not recorded any receivable in its books since these are recoverable only on the completion of the Reem Island infrastructure project and subject to direction of the relevant government authority. The amount contributed by the Group toward working capital of Bunya has already been included as part of the infrastructure cost incurred by the Company on its property's development.

In addition, the Group has already recognised in prior years its share of Bunya general and administrative expenses and accordingly its investment in Bunya has already been eroded. Accordingly, the Group is not recognizing any additional share of Bunya losses in 2022.

INVESTMENT IN ASSOCIATES AND JOINT VENTURES continued 16

$\mathbf{b}$ Investment in joint ventures

	2022 AED'000	2021 AED'000
Al Qudra Sports Management L.L.C.	$\sim$	6.209
Al Qudra ICSM	$\overline{\phantom{a}}$	510
Al Qudra Addoha pour L'Investissement Immobilier	502	603
		'.322

The movement of investment in joint ventures is as follows:

	As at 1 January AED'000	Disposals AED'000	Share of (loss) profit AED'000	Share in translation reserves AED'000	As at 31 December AED'000
2022
Al Qudra Sports Management L.L.C. Al Qudra ICSM	6,209 510	(5,642) (510)	(567)
Al Qudra Addoha pour
L'Investissement Immobilier	603			(101)	502
	7,322	(6,152)	(567)	(101)	502
2021
Al Qudra Sports Management L.L.C.	5,703		506		6,209
Al Qudra ICSM	510		Ŧ,	۰.	510
Al Qudra Addoha pour
L'Investissement Immobilier	586			$\frac{17}{2}$	603
	6,799		506		7,322

17 INVESTMENTS

	2022	2021
	AED'000	AED'000
Investments carried at fair value through other comprehensive income	430,217	467,557
Investments carried at fair value through profit or loss	2,951,614	62,383
Investments carried at amortised cost	49,316
	3,431,147	529.940
Investments at fair value through other comprehensive income comprise:
	2022	2021
	AED'000	AED'000
Quoted equity securities inside UAE	37,633	55,687
Unquoted equity securities inside UAE	392,584	411,870

430,217

467,557

17 INVESTMENTS continued

Bonds

Investments carried at fair value through profit or loss comprise;

	2022 AED'000	2021 AED'000
Inside UAE Quoted equity securities	2,541,230	62,383
Unquoted equity securities	4,633
Managed funds	6,819
	2,552,682	62,383
Outside UAE
Quoted equity securities	167,306
Unquoted equity securities	6,682
Managed funds	224,944
	398,932
	2,951,614	62,383
Investments carried at amortised cost comprise:
	2022	2021
	AED'000	AED'000

The movement in investments carried at fair value through other comprehensive income is as follows:

	2022	2021
	AED'000	AED'000
At 1 January	467,557	431,721
Acquired in business combinations (note 3.2)		54.151
Disposals	(8, 803)
Change in fair value	(28, 537)	(18, 315)
At 31 December	430,217	467,557

$\underline{49,316}$

$\sim$ $\sim$

The movement in investments carried at fair value through profit or loss is as follows:

	2022 AED'000	2021 AED'000
At 1 January	62,383
Additions	72,946	37,633
Acquired in business combinations (note 3.1)	3,296,942
Disposals	(131,768)
Change in fair value (note 5)	(348, 889)	24,750
At 31 December	2,951,614	62,383

17 INVESTMENTS continued

The dividend income recognised in consolidated statement of profit or loss amounted to AED 37,854 thousand (2021: AED 29,739 thousand).

Fair value of certain unquoted investments have been estimated on the basis of latest concluded sales of similar investments confirmed by market intermediaries or through internal valuations.

The movement in investments carried at amortised cost is as follows:

	2022	2021
	AED'000	AED'000
At 1 January
Acquired in business combinations, net of
provision for expected credit losses (note 3.1)	49,314
Matured during the year	(236)
Interest income accrued	218	a,
Reversal of provision for expected credit losses (note 8)	20
At 31 December

		Stage 2 lifetime	Stage 3 lifetime
	Stage 1	ECL	ECL
	12 month	not credit	credit
	ECL	impaired	impaired	Total
	$AED$ '000	AED '000	$AED$ '000	$AED$ '000
31 December 2022
Investments at amortised cost	49,655	Ξ	7,357	57,012
Provision for expected credit losses	(339)	$\sim$	(7,357)	(7,696)
	49.316	$-$		49.316

18 INVENTORY PROPERTIES

	2022	2021
	AED'000	AED'000
At 1 January	7.509	1,039
Acquired in business combination (note 3.1)	2,047,000	5,440
Additions during the year	1,080	1,030
Transfers from investment properties (note 15)	66,276	$\left( -\right)$
Sold during the year	(68, 635)
At 31 December	2,053,230	7.509

Inventory properties comprise completed properties held for sale in the ordinary course of business. inventory properties are stated at the lower of cost and net realizable value.

19 DEVELOPMENT WORK IN PROGRESS

2022	2021
AED'000	AED'000
1,170,635	1,042,909
379,733	379,701
221,298	125,159
54,642	42,402
1,826,308	1,590,171
(549, 517)	(387, 359)
1.276.791	1,202,812

Development work in progress represents development, design and construction costs incurred on assets under construction. Land granted without consideration to the Group is accounted for at nominal value. As at the reporting date, the development work in progress is in a usable condition and no further impairment exists.

• $(i)$ Development work in progress represents development and construction costs incurred on properties being constructed for sale.
• The Group has a plot of land located in Al Reem Island, Abu Dhabi. The plot will be used to construct $(ii)$ residential units for resale to individuals.
• The Group has a plot of land located in Al Ain, Abu Dhabi. The plot will be used to construct residential $(iii)$ units for resale to individuals.

Movement during the year is as follows:

	2022 AED'000	2021 AED'000
At 1 January	1,590,171	529,560
Acquired in business combinations (note 3.1)	5,189	1,168,068
Additions during the year	233,845	3,543
Derecognized during the year	(2,897)	(111,000)
	1,826,308	1,590,171
Less: provision for impairment	(549, 517)	(387, 359)
At 31 December	1,276,791	1,202,812
Movement in provision for impairment is as follows:
	2022	2021
	AED'000	AED'000
At 1 January	387,359	42,062
Charge for the year	188,030	143
Reversal during the year - included in contract cost	(25, 872)
Acquired in business combination		345,154
At 31 December	549,51	387,359

20 TRADE AND OTHER RECEIVABLES

	2022	2021
	AED'000	AED'000
Trade receivables	779,088	483,295
Unbilled revenue	94,137	32,179
Less: allowance for expected credit losses on trade receivables	(200, 966)	(125,050)
	672,259	390,424
Advances to contractors	13,394
Retention receivables	16,213	45,554
Prepayments and other advances	56,550	12,640
Other receivables	122,732	91,052
Less: allowance for expected credit losses
on advances and other receivables	(6,035)	(6,035)
	875,113	533,635
Non-current	411,786	127,803
Current	463,327	405,832
	875,113	533,635

The Group measures the loss allowance for trade receivables, unbilled revenue and other receivables at an amount equal to lifetime ECL. The expected credit losses on financial assets and contract assets are estimated using a provision matrix based on the Group's historical credit loss experience and an analysis of the debtor's current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtor operates and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

The movement in the expected credit loss on the trade and other receivables and unbilled revenue during the year was as follows:

	2022 AED'000	2021 AED'000
At 1 January	131,085	314,526
Charge for the year (note 8)	75,916	9,257
Acquired in business combinations		90,364
Reversal for the year	$\overline{\phantom{a}}$	(3,420)
Write off during the year		(278, 378)
Transfer to discontinued operations		(1,264)
At 31 December	207,001	131,085

20 TRADE AND OTHER RECEIVABLES continued

As at 31 December, the ageing analysis of unimpaired trade and other receivable and unbilled revenue is as follows:

	Total AED'000	Not past due AED'000	$30$ days AED'000	$31 - 60$ days AED'000	$61 - 120$ days AED'000	$121 - 360$ days AED'000	>360 days AED'000
31 December 2022
Expected credit loss rate	20.8%	$0.2\%$	0.1%	3.7%	4.5%	$5.2\%$	30.5%
Estimated total gross
carrying amount at default	995,957	214,204	71,214	23,131	13,033	2,823	671,552
Life time ECL	(207,001)	(535)	(34)	(861)	(589)	(148)	(204, 834)
31 December 2021
Expected credit loss rate	21.6%	$\blacksquare$	$9.4\%$	11.0%	10.3%	17.2%	56.3%
Estimated total gross
carrying amount at default	606.526	264.308	20,042	33,705	44,461	42,443	201,567
Life time ECL	(131.085)	$\overline{\phantom{a}}$	(1,888)	(3,720)	(4,599)	(7,300)	(113, 578)

Concentration risk: The Group is exposed to a concentration risk with six customers individually representing 78% (2021: 60%) of the total balance of trade receivables outstanding as of the reporting date. The Group does not expect any further losses from these customers.

Retention receivables represent amounts withheld by the customers in accordance with the respective contract terms and conditions. These amounts are to be released upon fulfilment of contractual obligations.

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. The maximum exposure to credit risk at the reporting date is represented by the carrying amounts of each class of receivables mentioned above.

21 CASH AND BANK BALANCES

	2022 AED'000	2021
		AED'000
Current and call accounts	574,974	1,003,316
Term deposits	1,239,865	662,000
Margin accounts	13,294	3,339
Cash and bank balances	1,828,133	1,668,655
Less: term deposits with an original maturity of more than three months	(508, 865)	(12,000)
Less: margin deposits with an original maturity of more than three months	(13,294)	(3,339)
Less: bank overdrafts (note 29)		(3,100)
	1,305,974	1,650,216
Add: cash and bank balances attributable to discontinued operations (note 11.1)	2,048	2,048
Cash and cash equivalents	1.308.022	1,652,264

Term deposits are placed with commercial banks. These are mainly denominated in the AED and earn interest at market rates. These deposits have original maturity between 1 to 12 months.

22 RELATED PARTY BALANCES AND TRANSACTIONS

The Group enters into transactions with companies and entities that fall within the definition of a related party as contained in the International Accounting Standard (IAS) 24 Related Party Disclosures. These represent transactions with related parties, i.e. shareholders, associates, affiliates, directors and key management personnel of the Group, and entities controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group's management.

Balances with related parties included in the consolidated statement of financial position are as follows:

	2022 AED'000	2021 AED'000
Amounts due from related parties:
Projects International Dubai $\overline{\gamma}$ :	6,868	6,868
Connection Real Estate	5,905	5,905
SKM-Q LLC	3,635	3,635
Entities under common control	417,335	375,932
Al Qudra Sports Management LLC		4,332
Others	1,929	2,118
	435,672	398,790
Provision for expected credit losses	(293,119)	(286, 101)
	142.55	112,689

Movements in the allowance for expected credit losses on amounts due from related parties are as follows:

	2022 AED'000	2021 AED'000
At 1 January	286,101	17,883
Charge for the year (note 8)	7,018
Acquired in business combinations		269,693
Reversal of provision during the year (note 8)		(1, 475)
At 31 December	293.119	286,101
Amounts due to related parties:
Center for Excellence for Applied Research and training	28,256	28,256
Lootah BCGas	8,467	8,467
Salvatkore Sakr	8,277	8,277
GSE Power Systems, Inc.	8,065	8,065
Emirates Link Group	4,661	4,661
Entities under common control	502,123	428,327
Others	69	90
	559,918	486,143

22 RELATED PARTY BALANCES AND TRANSACTIONS continued

Transactions with related parties included in the consolidated statement of profit or loss are as follows:

	2022 AED'000	2021 AED'000
Sales	37,737	$-23,102$
Purchases	75,920	$-117,145$

Loans and borrowing for the year ended 31 December 2022 include borrowings from a related party commercial bank for AED 1,575,779 thousand (2021: AED 527,751 thousand) and accrued interest of AED 412 thousand (2021: AED 1,824 thousand).

Compensation of key management personnel

The remuneration of key management personnel during the year was as follows:

	2022 AED'000	2021 AED'000
Management compensation Employees' end of service benefits	8,603 698	9,902 696
Management compensation	9.301	10.598

23 SHARE CAPITAL

	2022 AED'000	2021 AED'000
Authorised, issued and fully paid
6,855,598,886 shares of AED 1 each
(31 December 2021: 5,508,191,386 shares of AED 1 each)	6,855,599	5,508,191

During the year, Group acquired a 100% interest in Reem Investments PJSC for a purchase consideration of AED 5,807,327 thousand which comprise of 1,347,408 thousand shares of AED 1 each which increased the share capital of the Group by AED 1,347,408 thousand and share premium of AED 4,459,919 thousand (note 3.1).

During 2021, the authorised share capital was increased by AED 4,699,207 thousand by the issue of 4,699,207 thousand ordinary shares of AED 1 each. The transactions during the year were as follows:

• $(i)$ The Company issued 56,629 thousand shares of AED 1 each as bonus shares in lieu of dividend payable declared in 2019 amounting to AED 56,629 thousand on 7 April 2021.
• $(ii)$ The Company issued 23 mandatory convertible bonds at a rate of 104,348 shares per bond. All the bonds were converted into 2,398,500 thousand fully paid equity shares of AED 1 each on 16 September 2021.
• $(iii)$ The Company issued 2,244,078 thousand shares of AED 1 each to acquire Al Tamouh Investments Company LLC on 12 December 2021 (note 3.2).

24 LEGAL RESERVE

In accordance with the Group companies' Articles of Association and the UAE Federal Law No. (32) of 2021, 10% of the annual profit of respective profitable companies each year is to be transferred to a legal reserve that is nondistributable. Transfers to this reserve are required to be made until it equals at least 50% of the paid up share capital of respective companies. During the year, the Group companies' have transferred profit of AED 26,676 thousand (2021: AED 35,529 thousand) to its legal reserve.

25 OTHER RESERVES

The movements in the 'other reserves' in the consolidated statement of financial position are as follows.

	Subsidiary's reserves on	Foreign currency	Other comprehensive
	acquisition AED'000	translation AED'000	income AED'000	Total AED'000
At 1 January 2021 Exchange differences on translation of foreign operations	245,885	(3,486) (6,657)		242,399 (6,657)
At 31 December 2021	245,885	(10, 143)		235,742
At 1 January 2022 Share of result of an associate (note 16) Exchange differences on translation of foreign operations	245,885	(10, 143) 690	1,624 ---------------------------------------	235,742 1,624 690
At 31 December 2022	245.885	(9.453)	1.624	238.056

TRADE AND OTHER PAYABLES 26

	2022	2021
	AED'000	AED'000
Trade payables	248,320	188,500
Advance from customers	1,254,735	899,560
Retention payables	113,187	35,255
Provision for infrastructure construction cost	246,990	235,226
Deferred revenue	462,983	422,157
Accrued expenses	217,309	47,330
Dividend payable	24,603	12,431
Accrued interest	412	1,824
Other payables	235,166	154,358
	2,803,705	1,996.641
Non-current	15,013	28,707
Current	2,788,692	1,967,934
	2,803,705	1,996,641

27 EMPLOYEES' END OF SERVICE BENEFITS

The movements in the provision recognised in the consolidated statement of financial position are as follows:

	2022 AED'000	2021 AED'000
At 1 January Acquired in business combination (note 3)	13,377 2,272	10,017 6,753
Provided during the year Relating to discontinued operations (note 11)	2,366	103
Employees' end of service benefits paid	٠ (4,716)	(867) (2,629)
At 31 December	13.299	13,377

28 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

Set out below are the carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the year:

Right-of-use assets:

	2022 AED'000	2021 AED'000
At 1 January Depreciation expense	93,743 (3, 407)	97,114 (3,371)
At 31 December	90,336	93,743
Lease liabilities:
	2022 AED'000	2021 AED'000
At 1 January Interest expense (note 10) Payments	108,107 5,983	116,356 6,074 (14, 323)
At 31 December	114.090	108,107

$\tilde{\mathcal{A}}$

Lease liability is analysed in the consolidated statement of financial position as follows:

	2022 AED'000	2021 AED'000
Current Non-current	15,492 98,598	13,880 94,227
Total	$-114,090$	108,107

28 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES continued

Set out below, are the amounts recognised in the consolidated statement of profit or loss related to leases:

	2022 AED'000	2021 AED'000
Depreciation on right-of-use assets Interest expense on lease liabilities (note 10)	3.407 5.983	3,371 6,074
Total	9.390	9.445

29 LOANS AND BORROWINGS

	2022 AED'000	2021 AED'000
Term loans	1,575,779	527,751
Islamic financing facilities	219,085	1,792,335
	1,794,864	2,320,086
Bank overdrafts*		3,100
	.794.864	2,323,186

*The bank overdrafts are repayable on demand and are secured against certain investments.

The above facilities are taken from commercial banks in the UAE and are repayable in quarterly and semi-annual instalments of various amounts.

Set out below are the movements loans and borrowings during the year:

	2022 AED'000	2021 AED'000
As at 1 January	2,323,186	2,424,097
Acquired in business combination (note 3.1 & note 3.3)	147,695	391,865
Amounts drawn down during the year	1,084,040	250,000
Interest expenses (note 10)	77,878	67,316
Repayments made during the year	(1,837,935)	(810,092)
As at 31 December	1.794.864	2,323,186

The loans and borrowings are classified in the consolidated statement of financial position as follows:

	2022 AED'000	2021 AED'000
Current Non-current	212,294 1,582,570	203,552 2,119,634
Total	1,794,864	2,323,186

29 LOANS AND BORROWINGS continued

Terms and conditions of bank borrowings are as follows:

	Year of maturity	2022 AED'000	2021 AED'000
Term loan 1	2031		1,308,822
Term loan 2	2031		250,000
Term loan 3	2028	239,708	248,322
Term loan 4	2029	219,085	233,513
Term loan 5	2024	100,753	158,352
Term loan 6	2030	110,609	121,077
Term loan 7	2028	944,986
Term loan 8	2027	108,460	÷.
Term loan 9	2030	71,263
Bank overdraft (note 21)			3,100
		.794.864	186

Details of term loans/Islamic financing are as follows:

$(i)$ Term loan 1

During 2021, the Group entered into an Islamic financing facility with a Sharia compliant structure amounting to AED 1,392 million in order to finance the construction of Traditional Souq and the Moon Flower Real Estate labor camp. The facility carried a variable profit rate of 3-month EIBOR $+$ 3% margin and is repayable in quarterly instalments of AED 20.875 million each, starting from 31 March 2021 up to 31 December 2031. During 2022, management repaid the entire of loan by availing a new facility with First Abu Dhabi Bank with a fixed interest rate of 3.32% p.a.

$(ii)$ Term loan 2

During 2021, Group obtained an Islamic financing facility to finance the construction of the Traditional Souq. The facility carried a variable profit rate of 3-month EIBOR $+3\%$ margin and is repayable in quarterly instalments of AED 6.25 million each, starting from 31 March 2022 up to 31 December 2031. During 2022, management repaid the entire of loan by availing a new facility with First Abu Dhabi Bank with a fixed interest rate of 3.32% p.a.

$(iii)$ Term loan 3

During 2020, the Group entered into a loan agreement amounting to AED 265 million for the purpose of funding its operations. The loan carries a fixed rate of 3.75% up to 31 December 2023 and 3 months EIBOR $+ 2.5\%$ subsequent to that date. The loan is repayable in quarterly instalments of AED 6.25 million each up to 31 December 2023 with an option to extend and it is secured by a first-degree mortgage over a plot of land with a fair value of AED 120,340 thousand (2021: AED 146,500 thousand), irrevocable corporate guarantee and irrevocable assignment of project profits pertaining to the 1,500 Government Villa West Baniyas Project (as and when the project is awarded).

$(iv)$ Term loan 4

During 2015, the Group entered into an Ijara agreement with a local bank, capped at AED 600 million which carries interest at a margin of 3% plus 3 months EIBOR. As at 31 December 2022, the outstanding balance of the loan amounting to AED 219,085 thousand (2021: AED 233,513 thousand) and the unamortised deferred financing costs balance was AED 5,915 thousand (2021: AED 6,888 million), is repayable in 36 instalments beginning 2020 with a bullet repayment in 2029. The facility is secured by an assignment of project proceeds and first-degree mortgage over certain properties of the Group located on Reem Island.

29 LOANS AND BORROWINGS continued

$(v)$ Term loan 5

During 2018, the Group obtained a term loan, capped at AED 458 million which carries interest at a margin of 2.8% plus 3 months Emirates Interbank Offered Rate (EIBOR). The interest on the term loan was reduced to 2.4% plus 3 months EIBOR and is repayable in instalments of AED 14.4 million each on a quarterly basis from 31 March 2021 up to 30 September 2024. As at 31 December 2022, the outstanding balance of the loan amounted to AED 100,753 thousand (2021: AED 158,352 thousand)

$(vi)$ Term loan 6

During 2013, the Group entered into a loan agreement amounting to AED 182,827 thousand for the purpose of funding its activities. During 2020, the Group restructured this loan with revised repayment and interest terms whereby interest was charged at a margin of 2.5% plus 3 months EIBOR with a minimum of 3% per annum and is repayable in quarterly instalments of AED 3.25 million each, starting from 31 March 2021 up to 30 June 2030.

$(vii)$ Term loan 7

During 2022, the Group entered into an Islamic loan facility amounting to AED 1,050 million by restructuring term loans 1 and 2 in order to finance the construction of Traditional Souq and the Moon Flower Real Estate labor camp. The facility carries a fixed profit rate of 3.32% per annum and is repayable in 14 semi-annual instalments of AED 65 million each, starting from 30 June 2022 up to 31 December 2028 and the balance to be paid with a bullet repayment at the end of the period. The loan is secured by commercial mortgage over assets of Moon Flower Complex with a fair value of AED 2,050,000 thousand, first degree registered mortgage over Al Qudra office building amounting to AED 66 million, pledge over 740,000 IGG shares, assignment of dividend proceeds from International Golden Group ("IGG") shares and rental proceeds from Moon Flower Real Estate Development LLC.

$(viii)$ Term loan 8

During 2017, Reem Investments, the Group's acquired subsidiary, had availed a term loan facility of AED 173 million from a local bank to finance construction of a residential building on plot No. $C106 - 107$ , Rawdhat. The loan bears interest of 6 Month EIBOR plus 2.50% per annum. During July 2021, the loan was rescheduled to be repaid in 8 equal semi-annual instalments of 12,500 thousand commencing on 31 July 2023 with the outstanding amount to be paid on 31 January 2027. The loan is mainly secured by first- degree registered mortgage over the property to be constructed (Land & Building on plot No. C106 – 107, Rawdhat). The drawn down loan and accrued interest as at 31 December 2022 amounted to AED 108,460 thousand.

$(ix)$ Term loan 9

During 2019, Reem Investments, the Group's acquired subsidiary, had availed a term loan facility of AED 102 million from a local bank to finance construction of project C2-RR05, Najmat. The loan bears interest of 6 Month EIBOR plus 2.50% per annum. During October 2021, the loan was rescheduled to be repaid in 15 variable semi-annual instalments commencing on 2 December 2022 with the outstanding amount to be paid on 1 January 2030. The loan is mainly secured by a first-degree registered mortgage over the property to be constructed (Land & Building on plot No. C19-RR05, Najmat). The drawn down loan as at 31 December 2022 amounted to AED 71,263 thousand.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022

NON-CONTROLLING INTERESTS $30$

Set out below is summarised financial information for each subsidiary that has non-controlling interest that is material to the Group. The amounts disclosed for each subsidiary are before intercompany eliminations.

Summarized statement of consolidated financial position:

		Construction	Radiant & Moonflower
		workers		Real Estate		Green Precast Systems
		Residential City LLC	Development LLC			Technologies LLC		Other subsidiaries		Total
	900.G3V 2022	000.GFV 2021	000.G3V 2022	AED'000 2021	AED'000 2022	AED'000 2021	000.GHV 2022	000.GFV 202)	2022 AED'000	AED '000 2021
Non-current assets Current assets	799,696 71,315	910,985	89,825 2,110,025	2,349,248 45,991	230	230	23,106 129	189 20,080	184,476 ,,909,850	3,260,422 142,388
	871,011	987,072	2,199,850	2,395,239	230	230	23,235	20,269	3,094,326	3,402,810
Non-current liabilities Current liabilities	287,089 49,356	302,927 49,436	854,516 57,482	161,509 813,911	415 12,155	415 12,155	717 180,864	52,453 1,127	107,970 1334,624	,118,380 275,553
	336,445	352,363	911,998	975,420	12,570	12,570	181,581	53,580	1,442,594	1,393,933
Net assets	534,566	634,709	1,287,852	1419,819	12,340	12,340	158,346	(33,311)	1,651,732	2,008,877
(receivable) from non-controlling interest Accumulated payable	285,805	316,520	780,142	826,33	(20,008)	70,008	(40, 684)	(39,745)	955,255	1,033,098
Summarised consolidated statement of profit or loss:
Revenue	75,063	81,338	$-229,790$	221,40	$\begin{array}{c} \begin{array}{c} \begin{array}{c} \begin{array}{c} \end{array} \end{array} \ \begin{array}{c} \end{array} \end{array} \end{array} \end{array}$			4,716	304,853	307,455
(Loss) profit for the year	(87,758)	15,417	(131,967)	98,492	1	$\begin{array}{c} \begin{array}{c} \begin{array}{c} \begin{array}{c} \end{array} \end{array} \ \begin{array}{c} \end{array} \end{array} \end{array} \end{array}$	$-766$	(5,179)	(218,959	108,730
(Loss) profit allocated to non-controlling interest	(30,715)	$-5.396$	(46,189)	34,472	Ï	$\overline{\phantom{a}}$	$\frac{16}{1}$	(2,530)	(77, 020)	37,338

31 SEGMENT REPORTING

For operating purposes, the Group is organised into business segments as follows:

Real estate includes the district cooling and air conditioning, investment in infrastructure projects, landscaping design and execution and sale of properties.

Hospitality includes commercial and contracting services contract related to the hotel business.

Labour accommodation includes providing services with respect to labour camp rental, management services, sale of food and cafeteria items.

Investments include the financial investments in equity securities, managed funds, bonds and other investments and securities within UAE and abroad.

Others (unallocated) includes head office expenses and income not allocated to any segment.

			Labour
	Real estate	Hospitality	accommodation	Investments	Others	Total
	AED'000	AED'000	AED'000	AED'000	AED'000	AED '000
For the year ended 31 December 2022
Income	365,463	7.810	308,499	37,854	634	720,260
Expenses	(262,046)	(9,507)	(161, 811)		(8, 382)	(441,746)
Provision for impairment loss of
non-financial assets	(485, 051)	(268, 472)	٠	۰	(1,738)	(755, 261)
Net gain from change in fair value
of investment properties	256,498	$\overline{\phantom{a}}$	(329,760)			(73, 262)
Net changes in fair value of investments held
at fair value through profit or loss		-	當	(348, 889)		(348, 889)
Depreciation and amortisation	(7,750)	(1,180)	(10, 756)		(2)	(19,688)
Depreciation on right-of-use assets			(3,407)		٠	(3, 407)
Finance costs, net	(73,708)	×,	(41, 868)	15,869	$\bullet$	(99, 707)
Share of loss from associates and joint ventures				(1,268)	$\bullet$	(1, 268)
Bargain purchase gain on acquisition of subsidiary	1,865,900	٠	×		۰	1,865,900
Net loss on disposal/liquidation of investment
in subsidiaries and joint venture					(18,665)	(18, 665)
Net segment results	1,659,306	(271, 349)	(239, 103)	(296, 434)	(28, 153)	824,267
For the year ended 31 December 2021
Income	50.314	761	318,293	29,738		399,106
Expenses	(57, 347)	(2,793)	(139, 583)		ż.	(199, 723)
Provision for impairment loss of
non-financial assets	(143)					(143)
Net changes in fair value of investments held
at fair value through profit or loss		$\overline{\bullet}$		24,750		24,750
Depreciation and amortisation	(12, 162)	(766)	(9,829)			(22, 757)
Depreciation on right-of-use of assets		S.	(3,371)			(3,371)
Finance costs, net	(19, 157)	(36)	(53, 642)			(72, 835)
Share of profit from associates and joint ventures	995					995
Gain on remeasurement of
previously existing interest in an associate					75,169	75,169
Gain on disposal of investment in an associate	$\overline{\phantom{a}}$		900			900
Net segment results	(37,500)	(2,834)	112,768	54,488	75,169	202,091
As at 31 December 2022
Segment assets	11,962,021	231,894	3,562,296	3,463,156	322,377	19,541,744
Segment liabilities	2,970,232	249,922	1,755,549	$-27,609$	290,579	5,293,891
As at 31 December 2021
Segment assets	6.914.866	327,600	3.689.616	1,478,195	170.268	12.580,545
Segment liabilities	2,969,021	384,996	1.377.934	27,608	176,000	4.935,559

$32$ CONTINGENCIES AND COMMITMENTS

	2022 AED'000	2021 AED'000
Contingencies: As at reporting date, the following contingent liabilities were outstanding:
Bank guarantees	77.756	257.528
Capital commitments: As at reporting date, the capital commitments relate to the following:
Construction of Infrastructure	538,410	358,349
Investment commitments	14.163

Litigations

One of the Group's subsidiaries is a defendant in a lawsuit in Egypt where the plaintiff asserts that it is entitled to receive the remaining purchase price in respect of the alleged breach of a contract for the sale of a number of units in a touristic development project. The Court of First Instance has rendered a judgement against that subsidiary to deliver its contractual obligations; the subsidiary is currently appealing the judgement in the Egyptian Court of Appeals. The subsidiary sought legal advice on the claim and the related judgement and has been advised by its legal counsel that the claim lacks merit and has a relatively high probability of success of being overturned via the appeals process or any of the litigation proceedings. Whilst the quantum of damages sought are significant, the Group's subsidiary and its legal counsel are confident that the judgement will be overturned in the Court of Appeals and, in the unlikely event that the judgement is not overturned, and becomes at a later stage final and enforceable, the subsidiary will receive the units in the touristic development.

33 FAIR VALUE MEASUREMENT

The fair values of financial assets and financial liabilities are determined as follows:

• The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market bid prices at the close of the business on the reporting date.
• The fair values of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments.

Fair value of the Group's assets that are measured at fair value on recurring basis

Some of the Group's financial assets are measured at fair value at the end of the reporting period. The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable and gives information about how the fair value of these financial assets are determined.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

33 FAIR VALUE MEASUREMENT continued

Fair value of the Group's assets that are measured at fair value on recurring basis continued

The table below analyses assets measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurement is categorised:

	Date of valuation	Level 1 AED'000	Level 2 AED'000	Level 3 AED'000	Total AED'000
2022 Investments at fair value through
profit and loss
Quoted shares Unquoted shares	31 December 2022 31 December 2022	2,708,536			2,708,536
Managed funds	31 December 2022		231,763	11,315	11,315
					231,763
		2,708,536	231,763	11,315	2,951,614
Investments at fair value through other comprehensive income
Quoted shares	31 December 2022	37,633			37,633
Unquoted shares	31 December 2022		336,492	56,092	392,584
		37,633	336,492	56,092	430,217
2021
Investments at fair value through profit and loss
Quoted shares	31 December 2021	62,383			62,383
Investments at fair value through other comprehensive income
Quoted shares	31 December 2021	55,687			55,687
Unquoted shares	31 December 2021		341,098	70,772	411,870
		55,687	341,098	70,772	467,557

Assets and liabilities for which fair values are disclosed:

	2022		2021
	Carrying	Fair	Carrying	Fair
	amount	value	value	value
	AED'000	AED'000	AED'000	AED '000
Loans and borrowings	944,986	831,188	٠	$\overline{\phantom{a}}$
Investments carried at amortised cost	49,316	49,969	$\bullet$	$\frac{1}{2}$

34 FINANCIAL RISK MANAGEMENT

Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.

There were no changes in the Group's approach to capital management during the year.

34 FINANCIAL RISK MANAGEMENT continued

Capital risk management continued

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and short-term deposits. Total capital is calculated as 'equity' as shown in the consolidated statement of financial position plus net debt.

	2022	2021
	AED'000	AED'000
Loans and borrowings (note 29)	1,794,864	2,323,186
Trade and other payables (note 26)	2,803,705	1,996,641
Lease liabilities (note 28)	114,090	108,107
Amounts due to related parties (note 22)	559,918	486,143
Cash and bank balances (note 21)	(1,828,133)	(1,668,655)
Net debt	3,444,444	3,245,422
Equity	13,292,598	6,611,888
Total equity and net debt	16,737,042	9,857,310
Gearing ratio	20.58%	32.92%

Financial risk management objectives

Financial instruments comprise financial assets and financial liabilities. The Group's principal financial liabilities comprise trade payables, amount due to related parties, lease liabilities, loans and borrowings and other payables. The Group has various financial assets such as trade receivables, amounts due from related parties, bank balances, investments carried at fair value through profit or loss, investments carried at amortised cost, investments carried at fair value through other comprehensive income and cash and other receivables which arise directly from its operations.

The main risks arising from the Group's financial instruments are interest rate risk, credit risk, currency risk and liquidity risk. The Group's policies for management of these risks are summarised below.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to financial loss.

Credit risk refers to the risk that a debtor will default on contractual obligations resulting in financial loss to the Group. The Group maintains a credit policy that states dealing with only credit worthy parties. In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group, including cash and cash equivalents, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

34 FINANCIAL RISK MANAGEMENT continued

Foreign currency risk

Foreign currency risk comprises of transaction and consolidated statement of financial position risk. Transaction risk relates to the Group's cash flow being adversely affected by a change in the exchange rates of foreign currencies against AED. Consolidated statement of financial position risk relates to the risk of the Group's monetary assets and liabilities in foreign currencies acquiring a lower or higher value, when translated into AED, as a result of currency movements.

The Group is exposed to foreign currency exposure risk to the Syrian Pound (SYP) and the Moroccan Dirham (MAD). The following are the Group's assets and liabilities by currency.

31 December 2022

	AED	SYP	MAD	Others	Total
	AED'000	AED'000	AED'000	AED'000	AED'000
Assets
Property and equipment	242,342	124	212,502		454,968
Investment properties	7,146,504	92,737			7,239,241
Right of use assets	90,336				90,336
Investment in associates	31,508				31,508
Investment in joint ventures			502		502
Intangible assets and goodwill	198,471				198,471
Investments carried at fair value through
other comprehensive income	430,217	۰			430,217
Investments carried at fair value through
profit or loss	2,951,614				2,951,614
Investments carried at amortised cost	49,316				49,316
Trade and other receivables	867,758		7,355		875,113
Amounts due from related parties	142,008	545			142,553
Inventory properties	2,053,167		63		2,053,230
Development work in progress	1,276,791			Ä,	1,276,791
Cash and bank balances	1,827,044	110	979	÷	1,828,133
Asset held for sale	1,919,751				1,919,751
	19,226,827	93,516	221,401		19,541,744
Liabilities
Trade and other payables	2,680,116	1,862	2,952	118,775	2,803,705
Lease liabilities	114,090				114,090
Provision for employees'
end of service benefits	12,883	251		165	13,299
Loans and borrowings	1,794,864			٠	1,794,864
Amounts due to related parties Liabilities directly associated with	95,771	237,107	220,424	6,616	559,918
assets held for sale	8,015				8,015
	4,705,739	239,220	223,376	125,556	5,293,891
Net position	14,521,088	(145, 704)	(1,975)	(125, 556)	14,247,853

34 FINANCIAL RISK MANAGEMENT continued

Foreign currency risk continued

31 December 2021

	AED	SYP	MAD	Others	Total
	AED'000	AED'000	AED'000	AED'000	AED'000
Assets
Property and equipment	269,460	124	425,085		694,669
Investment properties Right of use assets	6,468,137 93,743	92,737			6,560,874
Investment in associates	32,027				93,743
Investment in joint ventures	6,720		602		32,027
Intangible assets and goodwill	78,639				7,322
Investments assets carried at fair value through					78,639
other comprehensive income	467,557			ä,
Investments carried at fair value through					467,557
profit or loss	62,383				62,383
Trade and other receivables	526,814	5	6,816		533,635
Amounts due from related parties	111,617	1,072		ä,	112,689
Inventory properties	7,473		36		7,509
Development work in progress	1,202,812			۷	1,202,812
Cash and bank balances	1,668,419	110	126		1,668,655
Asset held for sale	1,058,031				1,058,031
	12,053,832	94,048	432,665		12,580,545
Liabilities
Trade and other payables	1,963,989	352	32,234	66	1,996,641
Lease liabilities	108,107				108,107
Provision for employees'
end of service benefits	13,126	251			13,377
Loans and borrowings	2,323,186				2,323,186
Amounts due to related parties	486,143				486,143
Liabilities directly associated with
assets held for sale	8,105				8,105
	4,902,656	603	32,234	66	4,935,559
Net position	$-7,151,176$	93,445	400,431	(66)	7,644,986

Foreign currency sensitivity analysis

The Group is exposed to currencies not denominated in USD or AED, as the USD is pegged to the AED. The major exposure to foreign currencies at the end of reporting period relates to SYP and MAD. The following table demonstrates the sensitivity of AED on the Group's profit and equity to a reasonably possible change by 5% against following foreign currencies, with all other variables held constant. The Group's exposure to foreign currency changes for all other currencies is not material.

	Effect on equity 2022 AED'000	Effect on equity 2021 AED '000
Syrian Pound (SYP)	(7,285)	4,672
Moroccan Dirham (MAD)	(99)	20,022
Others	(6,278)	(3)

34 FINANCIAL RISK MANAGEMENT continued

Price risk

The Group is exposed to equity securities price risk because of quoted investments held by the Group. The Group's quoted investment portfolio amounted to AED 2,746,169 thousand (2021: AED 118,070 thousand). At the reporting date if the prices of investments were 5% higher/lower with all other variables held constant, the Group's equity and profit or loss would have increased/decreased as follows:

	2022 AED'000	2021 AED'000
Impact on the Group's profit for the year (increase/decrease) Impact on the Group's other comprehensive income for the	135.427	3,119
year (increase/decrease)	1.882	2.784

Liquidity risk

Liquidity risk is the risk that the Group will be unable to meet its funding requirements. The maturity profile of financial liabilities is monitored by management to ensure adequate liquidity is maintained.

Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Group Finance. The Group finance monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group's debts financing plans, covenant compliance and compliance with internal consolidation statement of financial position targets.

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:

	Less than 3 months AED'000	3 to 12 months AED'000	1 to 5 years AED'000	$>$ 5 years years AED'000	Total AED'000
At 31 December 2022
Trade payables	621,276				621,276
Amounts due to related parties	559,918				559,918
Loans and borrowings	33,964	259,065	1,717,120	181,144	2,191,293
Lease liabilities	26,620	7,500	37,499	169,701	241,320
	1,203,828	2,369,064	1.769.632	350.845	3,090,148
At 31 December 2021
Trade payables	390,544				390,544
Amounts due to related parties	486,143				486,143
Loans and borrowings	75,112	207,081	1,620,895	926,312	2,829,400
Lease liabilities	19,120	7,500	37,499	177,201	241,320
	938,984	1,347,515	1.687,101	1,103,513	3,307,980

34 FINANCIAL RISK MANAGEMENT continued

Interest rate risk

The following table demonstrates the sensitivity of the consolidated statement of comprehensive income to reasonably possible changes in interest rates, with all other variables held constant. The sensitivity of the consolidated statement of comprehensive income is the effect of the assumed changes in interest rates on the Group's profit for one year, based on the floating rate financial assets and liabilities held at 31 December 2022.

	(Decrease) increase in profit for the year AED'000
2022 $+100$ increase in basis points - 100 decrease in basis points	(6,308) 6,308
2021 + 100 increase in basis points - 100 decrease in basis points	(5,270) 5,270

35 EXPOSURE TO ABRAAJ GROUP

	2022 AED'000	2021 AED'000
Infrastructure Growth Capital* Abraaj Buyout Fund II	$\sim$	13,538
		13.538

*During the year, the Group based on the instruction of the fund manager impaired the investment of AED 13,538 thousand in Infrastructure Growth Capital.

36 COMPARATIVE INFORMATION

The comparative figures have been reclassified to conform to the current period presentation. Such reclassifications have no effect on the previously reported profit or retained earnings of the Group.