Union Properties PJSC — Interim / Quarterly Report 2021

Aug 15, 2021

Union Properties P.J.S.C and its Subsidiaries

Unaudited interim condensed consolidated financial statements 30 June 2021

Union Properties Public Joint Stock Company and its subsidiaries Unaudited interim condensed consolidated financial statements

30 June 2021
Contents Page(s)
Report on review of interim condensed consolidated financial statements ............................................ 1
Interim condensed consolidated statement of profit or loss and other comprehensive income ....... 2-3
Interim condensed consolidated statement of financial position ............................................................ 4
Interim condensed consolidated statement of cash flows ....................................................................... 5
Interim condensed consolidated statement of changes in equity ............................................................ 6
Notes to the interim condensed consolidated financial statements ................................................ 7 – 18

P.O. Box 5713 Abu Dhabi - UAE auh@mazars.ae Tel: +971 2 665 5035

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www.mazars.com

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF UNION PROPERTIES P.J.S.C

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Union Properties P.J.S.C (the “Company” ) and its subsidiaries (together referred to as the “Group” ) which comprise the interim condensed consolidated statement of financial position as at June 30, 2021, the related interim condensed consolidated statement of profit or loss and other comprehensive income, the interim condensed consolidated statement of changes in equity and interim condensed consolidated statement of cash flows for the six months period then ended and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34 – Interim Financial Reporting (IAS 34) as issued by International Accounting Standard Board (IASB). Our responsibility is to express a conclusion of these interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing. Consequently, it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

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

For: MAZARS Chartered Accountants LLC (Abu Dhabi Br.1)

By: Jaffer A. Rupawala Registered Auditor Number: 852 Abu Dhabi, August 14, 2021

Mazars Chartered Accountants LLC Registered with the Department of Economic Development, License No. CN 1554165

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1

Union Properties Public Joint Stock Company and its subsidiaries

Interim condensed consolidated statement of profit or loss and other comprehensive income (unaudited)

For the six-month period ended 30 June 2021

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Six-month period ended
30 June
2021 2020
Notes AED’000 AED’000
Revenue from contracts with customers 16 197,448 195,794
Net gain/(loss) on financial instruments at FVTPL 9 8,404 (74,276)
-
Share of profits from associates, net 2,338
Gain on fair valuation of investment properties 6 78,854 -
Loss on sale of investment properties 6 (23,285) (19,836)
Finance income 1,022 741
Other income 5 32,968 9,157
Direct costs 16 (163,361) (151,009)
Administrative and general expenses 16 (55,148) (57,963)
Finance cost 16 (44,518) (65,373)
Profit/(loss) for the period 32,384 (160,427)
- -
Other comprehensive income for the period
Total comprehensive income/(loss) for the period 32,384 (160,427)
Basic and diluted earnings per share (AED) 11 0.0075 (0.0374)
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The notes from 1 to 18 form an integral part of these interim condensed consolidated financial statements.

2

Union Properties Public Joint Stock Company and its subsidiaries

Interim condensed consolidated statement of profit or loss and other comprehensive income (unaudited)

For the three-month period ended 30 June 2021

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Three month period ended 30
June
2021 2020
Notes AED’000 AED’000
Revenue from contracts with customers 16 99,189 83,262
Net gain/(loss) on financial instruments at FVTPL 9 5,624 (10,296)
-
Share of profit from associates, net 2,338
Gain on fair valuation of investment properties 6 78,854 -
Loss on sale of investment properties 6 (30,251) (336)
Finance income 510 683
Other income 5 10,118 8,173
Direct costs 16 (85,619) (67,918)
Administrative and general expenses 16 (29,756) (28,237)
Finance cost 16 (21,838) (26,228)
Profit/(loss) for the period 26,831 (38,559)
- -
Other comprehensive income for the period
Total comprehensive income/(loss) for the period 26,831 (38,559)
Basic and diluted earnings per share (AED) 11 0.006 (0.009)
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The notes from 1 to 18 form an integral part of these interim condensed consolidated financial statements.

3

Union Properties Public Joint Stock Company and its subsidiaries Interim condensed consolidated statement of financial position

As at 30 June 2021

Notes ASSETS Non-current assets Property, plant and equipment Right-of-use assets Investment properties 6 Development properties Investments in an associate Investments at fair value through profit or loss 9 Non-current receivables 7 Total non-current assets Current assets Investments at fair value through profit or loss 9 Inventories Contract assets Trade and other receivables 7 Due from related parties 8 Cash and cash equivalents 10 Total current assets Total assets EQUITY AND LIABILITIES Equity Share capital Statutory reserve Asset revaluation surplus Accumulated losses Total equity attributable to the shareholders of the Company Non-current liabilities Non-current portion of bank loans 12 Contract liabilities Lease liabilities Provision for staff terminal benefits Total non-current liabilities Current liabilities Trade and other payables 13 Contract liabilities Lease liabilities Bank overdrafts 14 Current portion of bank loans 12 Total current liabilities Total liabilities Total equity and liabilities	Unaudited 30 June 2021 AED’000 345,677 24,032 4,499,741 7,504 87,368 - 5,535 4,969,857 158,441 8,571 221,506 598,863 2,073 42,203 1,031,657 6,001,514 4,289,540 352,978 212,689 (1,928,689) 2,926,518 398,745 8,118 18,572 35,370 460,805 1,254,812 104,520 4,643 200,044 1,050,172 2,614,191 3,074,996 6,001,514	Audited 31 December 2020 AED’000 348,076 26,371 4,612,744 7,504 87,368 114,608 33,194
		5,229,865
		37,276 7,913 218,864 394,888 7,648 45,400
		711,989
		5,941,854
		4,289,540 352,978 212,689 (1,961,073)
		2,894,134
		463,056 8,118 20,333 32,935
		524,442
		1,237,010 88,692 5,084 192,235 1,000,257
		2,523,278
		3,047,720
		5,941,854

.

The interim condensed consolidated financial statements were authorised for issue on 14 August 2021 by the Board of Directors and signed on its behalf by:

Directors and signed on its behalf by:
________	________
Board Member	General Manager

The notes from 1 to 18 form an integral part of these interim condensed consolidated financial statements.

4

Union Properties Public Joint Stock Company and its subsidiaries Interim condensed consolidated statement of cash flows (unaudited)

For the six-month period ended 30 June 2021

Note Operating activities Profit/(loss) for the period Adjustments for: Depreciation of property, plant and equipment Depreciation of right of use assets Loss on sale of investment properties Gain on fair valuation of investment properties Share of results of associates, net (Gain)/loss on financial instruments at FVTPL, net Gain on disposal of property, plant and equipment Finance income Finance cost Operating profit before working capital changes Change in non-current receivables Change in inventories Change in contract assets Change in trade and other receivables Change in due from related parties Change in non-current payables Change in trade and other payables and contract liabilities Change in staff terminal benefits (net) Net cash from operating activities Investing activities Additions to property, plant and equipment Proceeds from/investments in financial instruments at FVTPL, net Proceeds from disposal of property, plant and equipment Proceeds from sale of investment properties Interest income received Changes in deposits with banks Net cash from investing activities Financing activities Proceed from long-term bank loans Repayment of long-term bank loans Advances to banks against loan principal and interest Interest paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 10	Six-month period ended 30 June	Six-month period ended 30 June
	2021 AED’000 32,384 5,721 2,339 23,285 (78,854) - (8,404) 7,095 (1,022) 44,518 27,062 (658) 14,141 (63,880) 5,575 (153) 20,746 2,435 5,268 (6,203) 1,847 363 56,946 35 1,403 54,391 31,412 (45,808) (42,000) (16,481) (72,877) (13,218) (172,765) (185,983)	2020 AED’000 (160,427) 6,676 2,466 19,836 - (2,338) 74,276 - (741) 65,373
		5,121 (847) 16,317 33,099 - 16,158 (41,110) 1,618
		30,356
		(3,597) 2,113 31 31,580 29 (2,091)
		28,065
		36,107 (64,446) (30,000) (17,431)
		(75,770)
		(17,349) (247,895)
		(265,244)

The notes from 1 to 18 form an integral part of these interim condensed consolidated financial statements.

5

Union Properties Public Joint Stock Company and its subsidiaries Interim condensed consolidated statement of changes in equity (unaudited)

For the six-month period ended 30 June 2021

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Currency Asset
Share Statutory translation revaluation Accumlated
capital reserve reserve surplus losses Total
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
At 1 January 2020 (audited) 4,289,540 332,880 15,508 212,689 (2,141,959) 2,708,658
Total comprehensive loss for the period - - - - (160,427) (160,427)
At 30 June 2020 (unaudited) 4,289,540 332,880 15,508 212,689 (2,302,386) 2,548,231
-
At 1 January 2021 (audited) 4,289,540 352,978 212,689 (1,961,073) 2,894,134
Total comprehensive income for the period - - - - 32,384 32,384
-
At 30 June 2021 (unaudited) 4,289,540 352,978 212,689 (1,928,689) 2,926,518
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The notes from 1 to 18 form an integral part of these interim condensed consolidated financial statements.

6

Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements

1 LEGAL STATUS AND PRINCIPAL ACTIVITIES

Union Properties Public Joint Stock Company (“the Company”) was incorporated on 28 October 1993 as a public joint stock company by a United Arab Emirates Ministerial decree. The Company’s registered office address is P.O. Box 24649, Dubai, United Arab Emirates (“UAE”).

The principal activities of the Company are investment in and development of properties, the management and maintenance of owned properties including the operation of cold stores, the undertaking of property related services on behalf of other parties (including related parties) and acting as the holding company of its subsidiaries and investing in other entities.

The Company and its subsidiaries are collectively referred to as “the Group”.

2 NEW STANDARDS, AMENDMENT TO STANDARDS AND INTERPRETATIONS

There are no new standards issued, however, there are number of amendments to standards which are effective from January 1, 2021 and has been explained in Group annual consolidated financial statements as at year ended December 31, 2020 but they do not have a material impact on the Group’s interim condensed consolidated financial statements.

3 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The interim condensed consolidated financial statements of the Group are prepared in accordance with International Accounting Standard 34: Interim Financial Reporting and applicable requirements of the United Arab Emirates laws.

The interim condensed consolidated financial statements do not contain all information and disclosures required for full financial statements prepared in accordance with International Financial Reporting Standards (IFRS), and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2020. The same accounting policies, methods of computation, significant accounting judgments and estimates and assumptions are followed in these interim condensed consolidated financial statements as compared with the most recent annual consolidated financial statements.

The interim condensed consolidated financial statements have been prepared in United Arab Emirates Dirhams (AED), which is the Company’s functional and presentation currency, and all values are rounded to the nearest thousand except where otherwise indicated.

The interim condensed consolidated financial statements have been prepared on a historical cost basis except for financial assets at fair value through profit and loss and investment properties that have been measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The results for the six-month period ended 30 June 2021 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2021.

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Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

4 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

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

In preparing these interim condensed consolidated financial statements, the significant judgements made by the management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2020.

5 OTHER INCOME

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Unaudited Unaudited
30 June 2021 30 June 2020
-
Reversals of liabilities (refer note below) 20,298
- -
Gain on disposal of property, plant and equipment
Miscellaneous income 12,670 9,157
- -
Income from government grant (refer note 25)
32,968 9,157
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The reversals of liabilities are mainly related to payables and accruals in relation to completed projects and cancelation of contracts for which management assessed that no settlement will be required against.

6 INVESTMENT PROPERTIES

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Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
At 1 January 4,612,744 4,111,636
-
Transfer from property, plant and equipment 8,570
Gain on fair valuation 78,854 743,549
Sale of investment properties (191,857) (251,011)
Closing balance 4,499,741 4,612,744
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The Group follows the fair value model under IAS 40 (Revised 2003) where investment property defined as land and buildings owned for the purpose of generating rental income or capital appreciation, or both, are fair valued based on an open market valuation. The most recent valuation was carried out on 30 June 2021 by an independent registered valuer, ValuStrat Consulting FZCO, who carried out the valuation in accordance with RICS Appraisal and the Valuation Manual issued by the Royal Institute of Chartered Surveyors. The independent valuers have been appointed to provide the fair value of the Group’s investment property portfolio on a semi annual basis.

Based on the above, fair value gain of AED 78.9 million has been recognised in the consolidated statement of profit or loss for the six months period ended 30 June 2021 (2020: nil). The Group also sold investment properties with a carrying value of AED 191.9 million for a consideration of AED 168.6 million.

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Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

6 INVESTMENT PROPERTIES (CONTINUED)

During the previous years, the Group had undertaken a full review of the Masterplan for Dubai Motorcity and had submitted a formal request to the concerned regulatory authorities for the issuance of revised affection plans with amended Gross Floor Areas (the “GFA’s”). Furthermore, in accordance with the directions of Dubai Development Authority, the Group had appointed approved independent third party surveyors to perform a detailed survey of the entire land bank at Dubai Motorcity. Based on the official third party surveyor reports, the Group got an attestation from Dubai Land for an additional GFA and thereafter also got an approval of the Traffic Impact Study from Road and Transport Authority during the period ended 30 June 2021. Based on surveyor reports, valuation and approvals received from the experts and authorities, the management continued with inclusion of the additional GFA to the value of AED 1,312 Million in the valuation of the Motorcity land bank in the Group financial statements as at 30 June 2021 (31 December 2020: AED 1,249 million), on the understanding that the approvals expected to be updated on the Dubai Development Authority system at the earliest.

7 TRADE AND OTHER RECEIVABLES

Financial instruments Trade receivables Retention receivables Property sales receivables Less: allowance for expected credit losses Other receivables Total (A) Non-financial instruments Advances to contractors Advances to banks against loan principal and interest Prepayments and advances Total (B) Total (A+B) Non-current receivables	Unaudited 30 June 2021 AED’000 1,999,311 52,839 149,750 2,201,900 (1,838,741) 363,159 48,957 412,116 54,454 112,000 20,293 186,747 598,863		Audited 31 December 2020 AED’000 1,955,931 52,059 46,104
			2,054,094 (1,837,352)
			216,742 64,441
			281,183
			26,241 70,000 17,464
			113,705
			394,888
			Audited 31 December 2020 AED’000 5,167 28,027 33,194
Retention receivables Property sales receivables	Unaudited 30 June 2021 AED’000 5,535 - 5,535

Impairment losses

Set out below is the information about the credit risk exposure on the Group’s trade and retention receivables using a provision matrix:

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Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

7 TRADE AND OTHER RECEIVABLES (CONTINUED)

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Trade receivables
Past due
Retentions 1-90 91-365 >365
receivable Current days days days Total
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
30 June 2021
Expected credit loss rate 69.30% 0.00% 0.00% 0.00% 99.48%
Gross amount 58,374 199,909 44,779 96,662 1,807,711 2,207,435
Expected credit loss 40,456 - - - 1,798,285 1,838,741
31 December 2020
Expected credit loss rate 81.76% 3.59% 14.79% 7.75% 98.51%
Gross amount 57,226 74,515 58,632 100,900 1,787,549 2,078,822
Expected credit loss 40,456 - 11,094 11,095 1,774,707 1,837,352
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The movement in the allowance for expected credit losses in respect of trade and retention receivables during the period/year is as follows:

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Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
At 1 January 1,837,352 1,831,650
Addition for the period/year 1,389 7,991
Amounts written off - (2,289)
Closing balance 1,838,741 1,837,352
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8 TRANSACTIONS WITH RELATED PARTIES

The Group, in the normal course of business, enters into transactions with other enterprises, which fall within the definition of a related party contained in IAS 24. Such transactions are carried out at agreed rates. The significant transactions with related parties, other than those already disclosed separately elsewhere in the interim condensed consolidated financial statements are as follows:

Compensation to key management personnel are as follows : - Salaries and other short-term employee benefits - Provision towards staff terminal benefits	Unaudited 30 June 2021 AED’000 5,718 395	Unaudited 30 June 2020 AED’000 4,785 309

Balances with related parties in the consolidated statement of financial position represent balances due from an equity accounted investee of AED 2.1 million (31 December 2020: AED 7.6 million) .

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Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

9 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

The Group holds investment securities which are classified as investments at fair value through profit or loss in accordance with IFRS 9.

During the six-month period ended 30 June 2021, the Group sold investments in funds and invested in various listed equity investments, having a fair value of AED 158.4 million at the reporting date (31 December 2020: AED 151.9 million), which resulted in a net profit on change in fair value of AED 8.4 million during the six month period ended 30 June 2021 (2020: net loss of AED 74.3 million) .

The Group also has an investment in a real estate fund valued at AED 0.8 million at end of the period (2020: AED 0.8 million) .

10 CASH AND CASH EQUIVALENTS

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Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
Cash in hand 1,481 889
Cash at bank
–
in deposit accounts held under lien 21,042 14,781
–
in current accounts 12,580 18,581
– in other deposit accounts 7,100 11,149
42,203 45,400
Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
Cash and cash equivalents comprise:
Cash in hand and at banks (excluding deposits under lien) 14,061 19,470
Bank overdrafts (200,044) (192,235)
(185,983) (172,765)
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11 BASIC AND DILUTED EARNINGS PER SHARE

Profit/(loss) attributable to shareholders (AED’000) Weighted average number of shares Basic and diluted earnings per share (AED)	2021 2020 32,384 (160,427) 4,289,540,134 4,289,540,134 0.0075 (0.0374) Six month period ended 30 June Unaudited	2021 2020 26,831 (38,559) 4,289,540,134 4,289,540,134 0.0063 (0.0090) Three month period ended 30 June Unaudited	2021 2020 26,831 (38,559) 4,289,540,134 4,289,540,134 0.0063 (0.0090) Three month period ended 30 June Unaudited
			(0.0090)

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Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

12 BANK LOANS

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Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
Balance 1,448,917 1,463,313
Less: Current portion (1,050,172) (1,000,257)
Non-current portion 398,745 463,056
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The bank loans carry interest at commercial rates.

The movement in bank loans during the period/year was as follows:

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Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
At 1 January 1,463,313 1,518,304
Availed during the period/year 31,412 47,697
Repayments during the period/year (45,808) (102,688)
At the end of the period/year 1,448,917 1,463,313
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At 30 June 2021, the two loans that have been classified as current liabilities at year-ended 2020 due to breach in contractual payments continue to be classified as current liabilities. Subsequent to 30 June 2021, the Group is in advanced discussions with the bank to rectify the breach.

During the 6 months period ended 30 June 2021, the Company has finalized sale of certain mortgaged units and agreed with bank that the cash proceed will be settled towards the loan outstanding, the Company has received an amount of AED 85 million in their escrow bank account on 10 August 2021 which was underlying under the property sales receivables as at 30 June 2021 and the Company further confirmed the bank to process the transfer of the funds towards the loan outstanding.

12

Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

13 TRADE AND OTHER PAYABLES

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Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
Financial instruments
Trade payables 320,045 323,471
Retention payables 39,580 39,355
Other payables and accruals 895,187 874,184
Total 1,254,812 1,237,010
Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
Provisions and accruals against contracting business 572,076 518,716
Provision for staff related payables 33,091 42,415
Provisions and accruals for payment to contractors cost 36,763 36,504
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14 BANK OVERDRAFTS

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Unaudited Audited
30 June 2021 31 December 2020
AED’000 AED’000
Bank overdrafts 200,044 192,235
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Significant terms and conditions

Bank overdrafts have been obtained from local and foreign banks to finance the working capital requirements of the Group, which carry interest at commercial rates.

Securities

Bank overdrafts are secured by:

• Promissory notes;

• Joint and several guarantees of the Company;

• A letter of undertaking by the Company not to reduce its shareholding in Thermo LLC (“a subsidiary”) as long as the banking facilities are outstanding; and

• Assignment of certain contract and retention receivables.

13

Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

15 FINANCIAL INSTRUMENTS

Financial assets of the Group include non-current receivables, investments at FVTPL, trade and other receivables, amounts due from related parties and cash in hand and at banks. Financial liabilities of the Group include trade and other payables, lease liabilities, short-term bank borrowings, long-term bank loans and non-current payables. The table below sets out the Group’s classification of each class of financial assets and financial liabilities and their fair values for the current and the comparative periods:

30 June 2021 (unaudited) Financial assets Non-current receivables Investments at FVTPL Trade and other receivables Due from related parties Cash in hand and at banks Total Financial liabilities Trade and other payables Lease liabilities Bank overdrafts Bank loans Total	At fair value through profit or loss AED’000 - 158,441 - - - 158,441 - - - - -	At amorized cost AED’000 5,535 - 412,116 2,073 42,203 461,927 1,254,812 23,215 200,044 1,448,917 2,926,988	Carrying amount AED’000 5,535 158,441 412,116 2,073 42,203 620,368 1,254,812 23,215 200,044 1,448,917 2,926,988	Fair value AED’000 5,535 158,441 412,116 2,073 42,203
				620,368
				1,254,812 23,215 200,044 1,448,917
				2,926,988
31 December 2020 (audited) Financial assets Non-current receivables Investments at FVTPL Trade and other receivables Due from related parties Cash in hand and at banks Total Financial liabilities Trade and other payables Bank overdrafts Bank loans Lease liabilities Total	At fair value through profit or loss AED’000 - 151,884 - - - 151,884 - - - - -	At amorized cost AED’000 33,194 - 281,183 7,648 45,400 367,425 1,237,010 192,235 1,463,313 25,417 2,917,975	Carrying amount AED’000 33,194 151,884 281,183 7,648 45,400 519,309 1,237,010 192,235 1,463,313 25,417 2,917,975	Fair value AED’000 33,194 151,884 281,183 7,648 45,400
				519,309
				1,237,010 192,235 1,463,313 25,417
				2,917,975

14

Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

15 FINANCIAL INSTRUMENTS (CONTINUED)

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: 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); and

• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group holds investments at fair value through profit or loss. The fair value of quoted securities is determined by reference to their quoted bid prices as at the reporting date. Investments in marketable securities are stated at cost where no observable market data is available. Accordingly, the fair value hierarchy is set out as below:

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Level 1 Level 3 Total
AED'000 AED'000 AED'000
30 June 2021 (unaudited)
Investments at fair value through profit or loss 157,685 756 158,441
31 December 2020 (audited)
Investments at fair value through profit or loss 151,128 756 151,884
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There have been no reclassifications made during the current period or in the previous year/period.

Level 1:

Opening balance Additions Sales Transfer from investment in associate Total gains or losses – net: Closing balance	Unaudited 30 June 2021 AED’000 151,128 111,940 (113,787) - 8,404 157,685	Audited 31 December 2020 AED’000 196,164 830,395 (833,313) 1,213 (43,331) 151,128	Unaudited 30 June 2020 AED’000 196,756 411,722 (413,835) - (74,276)
			120,367

16 SEGMENT REPORTING

Business segments

The Group’s activities include four main business segments, namely, real estate property management, contracting activities, investing activities, and sales of goods and services. The details of segment revenue, segment result, segment assets and segment liabilities are as follows:

15

Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

16 SEGMENT REPORTING (CONTINUED)

Six-month period ended 30 June 2021 (unaudited) Segment revenue Gain on financial instruments at FVTPL Gain on valuation of properties Loss on sale of investment properties Finance income Other income Direct cost Administrative and general expenses Finance cost Profit/(loss) for the period Capital expenditure Depreciation of property, plant and equipment Depreciation of right of use assets As at 30 June 2021 (unaudited) Segment assets Investments in associates Total assets Segment liabilities Six-month period ended 30 June 2020 (unaudited) Segment revenue Loss on financial instruments at FVTPL Share of profit from associates Loss on sale of investment properties Finance income Other income Direct cost Administrative and general expenses Finance cost Profit/(loss) for the period Capital expenditure Depreciation of property, plant and equipment Depreciation of right of use assets As at 31 December 2020 (audited) Segment assets Investment in associates Total assets Segment liabilities	Real estate AED’000 21,975 - 78,854 (23,285) 987 29,597 (21,694) (29,819) (21,167) 35,448 1,224 2,775 1,882 4,905,095 - 4,905,095 1,166,662 32,954 - - (19,836) 671 6,976 (19,734) (33,839) (28,987) (61,795) 1,869 3,934 2,014 4,865,732 - 4,865,732 1,212,680 ~~1,212,680~~	Contracting AED’000 28,226 - - - 35 208 (23,855) (4,112) (18,335) (17,833) 709 998 - 294,404 - 294,404 1,610,578 36,290 - - - 70 3 (30,080) (3,963) (21,542) (19,222) 667 1,564 - 285,016 - 285,016 1,536,599 ~~1,536,599~~	Goods and services AED’000 147,247 - - - - 3,157 (117,812) (18,801) (2,275) 11,516 4,270 1,912 457 556,622 - 556,622 187,483 126,550 - - - - 2,166 (101,195) (16,324) (3,288) 7,909 1,061 1,139 452 552,222 - 552,222 191,024 ~~191,024~~	Investments AED’000 - 8,404 - - - 6 - (2,416) (2,741) 3,253 - 36 - 158,025 87,368 245,393 110,273 - (74,276) 2,338 - - 12 - (3,837) (11,556) (87,319) - 39 - 151,516 87,368 238,884 107,417 ~~107,417~~	Total
					AED’000 197,448 8,404 78,854 (23,285) 1,022 32,968 (163,361) (55,148) (44,518)
					32,384
					6,203 5,721 2,339
					5,914,146 87,368
					6,001,514
					3,074,996
					195,794 (74,276) 2,338 (19,836) 741 9,157 (151,009) (57,963) (65,373)
					(160,427)
					3,597 6,676 2,466
					5,854,486 87,368
					5,941,854
					3,047,720

16

Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

16 SEGMENT REPORTING (CONTINUED)

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Goods and
Real estate Contracting services Investments Total
AED’000 AED’000 AED’000 AED’000 AED’000
Three month period ended 30 June 2021 (unaudited)
-
Segment revenue 10,830 15,479 72,880 99,189
Gain on financial instruments at FVTPL - - - 5,624 5,624
- - -
Gain on valuation of properties 78,854 78,854
- - -
Loss on sale of investment properties (30,251) (30,251)
Finance income 494 16 - - 510
Other income 8,282 94 1,742 - 10,118
Direct cost (13,012) (13,416) (59,191) - (85,619)
Administrative and general expenses (16,623) (1,928) (9,991) (1,214) (29,756)
Finance cost (10,407) (9,092) (881) (1,458) (21,838)
Profit/(loss) for the period 28,167 (8,847) 4,559 2,952 26,831
- - - - -
Capital expenditure
Depreciation of property, plant and equipment 1,771 481 834 - 3,086
Depreciation of right of use assets 942 - 228 - 1,170
Three month period ended 30 June 2020 (unaudited)
-
Segment revenue 14,476 15,082 53,704 83,262
Loss on financial instruments at FVTPL - - - (10,296) (10,296)
- - -
Share of profit from associates 2,338 2,338
- - -
Loss on sale of investment properties (336) (336)
Finance income 631 52 - - 683
Other income 6,197 1 1,972 3 8,173
Direct cost (10,057) (12,610) (45,251) - (67,918)
Administrative and general expenses (16,821) (1,987) (7,835) (1,594) (28,237)
Finance cost (13,007) (10,359) (2,529) (333) (26,228)
Profit/(loss) for the period (18,917) (9,821) 61 (9,882) (38,559)
- - -
Capital expenditure (40,753) (40,753)
Depreciation of property, plant and equipment 1,981 756 467 19 3,223
Depreciation of right of use assets 1,007 - 226 - 1,233
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17 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

Company and its subsidiaries Commitments: Capital commitments Contingent liabilities: Letters of guarantee Associate Contingent liabilities: Letters of guarantee	Unaudited 30 June 2021 AED’000 9,415 289,195 252,500	Audited 31 December 2020 AED’000 12,015
		309,960
		252,500

17

Union Properties Public Joint Stock Company and its subsidiaries Notes to the interim condensed consolidated financial statements (continued)

18 COVID-19 IMPACT

The existence of novel coronavirus (Covid-19) was confirmed in early 2020 and its spread across the globe is causing disruptions to businesses and economic activity. During the current period, the Group has not witnessed any material impact on overall business, therefore, management is not anticipating any steep reduction in gross turnover during the rest of the year.

The Group has implemented procedures and protocols during the situation. Remote working plans have been initiated and measures were taken to ensure uninterrupted business.

The Group will continue to monitor impact on its operations and will take necessary actions as needed.

18