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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Dar Global Plc | LSE:DAR | London | Ordinary Share | GB00BQXNJY41 | ORD USD0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.55 | -6.83% | 7.50 | 7.00 | 7.50 | 7.55 | 7.50 | 7.55 | 2,241 | 08:29:38 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 360.58M | 83.23M | 0.4623 | 16.22 | 1.45B |
From Dec 2022 to Dec 2024
TIDMDAR
RNS Number : 9061N
Dar Global PLC
28 September 2023
Dar Global PLC
(Incorporate in England and Wales)
Company Number: 14388348
ISIN: GB00BQXNJY41
LEI: 213800XRFXQ1KEWACW80
28 September 2023
DAR GLOBAL PLC ('Dar Global', or the 'Company', or the 'Group')
Half-year results for the six-month period ended 30 June 2023
Strong financial performance in milestone period, following successful IPO
Dar Global, the luxury international real estate developer, today announces its unaudited interim results for the six months ended 30 June 2023.
Ziad El Chaar, Chief Executive, commented:
"2023 has been a milestone year for the Company with our successful listing on the London Stock Exchange in February representing a significant step forward in supporting our ambitious growth trajectory.
"We are delighted to have delivered a strong first half performance. The launch of our first project in continental Europe in June with Tierra Viva in conjunction with legendary Automobili Lamborghini, with a Gross Development Value (GDV) in excess of EUR280 million and comprising 53 grand villas overlooking the Mediterranean sea, was a pivotal moment for Dar Global. Off plan sales in AIDA, our largest active project, have generated significant interest with 115 units already contracted and further strong demand expected as subsequent phases are launched. Additionally, we announced our debut in the hospitality industry in the Maldives as we unveiled our long-term strategic partnership with Dolce & Gabbana.
"These developments along with our portfolio of brand partnerships and our global presence across eight sales offices covering key markets underscores a highly differentiated international business model serving an affluent customer base less sensitive to prevailing macro-economic conditions.
"The second half has started strongly and we are well positioned to weather some of the challenges facing the sector through the strength of our balance sheet, building partnerships with other global luxury brands and further expanding our pipeline of opportunities."
Financial Highlights
-- Profit before tax for the period HY 2023 at US$20.8 million (HY 2022: US$3.7 million), as both the Urban Oasis Tower and DaVinci Tower by Pagani progress towards completion
-- Revenue for the period of US$108.4 million (HY 2022: US$27.5 million) with a gross profit of US$45.7 million (HY 2022: US$12.4 million) - resulting in a gross profit margin of 42%
-- Portfolio GDV increased to US$5.0 billion as of 30 June 2023 across 11 active projects in the UK, Spain, UAE, Oman, Qatar and Bosnia (31 December 2022: 10 active projects with GDV of US$4.7 billion), including projects with a GDV of US$2.2 billion which had been launched by 30 June 2023
-- Customer demand for both newly launched and existing projects remain strong with contracted sales rising to 1,281 units as of 30 June 2023, amounting to a total sales value of c. US$839 million (c. 17% of the total portfolio GDV of US$ 5.0 billion and c. 38% of total launched GDV of c. US$2.2 billion)
-- Strong balance sheet with cash position of US$175.7 million, comprising free cash of c. US$64.4 million, restricted escrow cash of US$103.9 million and escrow retention balance of US$7.4 million
-- Increased net asset value of US$400 million at 30 June 2023 vs. US$281 million at 31 December 2022, a growth of c. 42%
-- Total liquidity of c. US$290.2 million (including undrawn debt facilities ([1]) ), providing a platform to pursue opportunistic growth and expand the current portfolio of assets
Half year summary financials:
Hot Features
Premium
Summary Profit & Loss HY 2023 (US$M) HY 2022 (US$M) Change
(%)
------------------------- -------
Unaudited Unaudited
------------------------- --------------- --------------- -------
Revenue 108.4 27.5 294%
Gross profit 45.7 12.4 269%
Gross profit margin [2] 42% 45% -
------------------------- --------------- --------------- -------
EBITDA 22.5 5.9 281%
EBITDA margin 20.8% 21.5% -
------------------------- --------------- --------------- -------
Profit before tax 20.8 3.7 462%
Summary Financial Position As of 30 June As of 31 December Change
2023 (US$M) 2022 (US$M) (US$M)
-------------------------------- --------
Unaudited Unaudited
-------------------------------- -------------- ------------------ --------
Assets
Cash and cash equivalents 175.7 118.5 +57.2
Trade and unbilled receivables 113.8 40.6 +73.2
Advances, deposits and other
receivables 95.3 81.1 +14.2
Development properties 306.9 302.3 +4.6
Liabilities
Trade and other payables 24.3 30.7 -6.4
Advance from customers 139.0 94.5 +44.5
Loans and borrowings 63.7 69.7 -6.0
Development property liability 75.5 72.5 +3.0
Equity
Net asset value 399.6 281.4 +118.2
Net asset value per share
(in US$)* 2.2 1.6 +0.6
*Net asset value per share based on share capital as on 30-June-2023
Highlights during the period
-- Dar Global was admitted to the Main Market of the London Stock Exchange on 28 February 2023
-- The Company launched its first project in continental Europe on 21 June 2023 - Tierra Viva, in collaboration with Automobili Lamborghini. This architectural jewel is set within the ultra-exclusive locality of Benahavis, close to Marbella on the south coast of Spain. With a GDV of c. EUR282 million, it comprises of 53 grand villas with panoramic views of the Mediterranean sea and is inspired by the iconic design of Automobili Lamborghini. Tierra Viva marks a significant milestone for the Company as its entry into the European ultra-luxury market, as well as for Automobili Lamborghini being its first residential project on its home continent
-- Off-plan sales in AIDA, Dar Global's largest active project, commenced in Q2 and have generated significant interest from customers worldwide, resulting in contracted sales of 115 units in the three months from the launch of Phase 1 till 30 June 2023. The Company expects continued strong demand as subsequent phases are launched
-- In April 2023, Dar Global unveiled its partnership with the world-renowned luxury brand, Dolce & Gabbana, for the Company's debut in the hospitality industry in the Maldives. This partnership marks the launch of a bespoke hospitality project that seamlessly merges the unrivalled style and sophistication of Dolce & Gabbana with Dar Global's unparalleled attention to detail and world-class standards.
-- Since the period end, Dar Global announced the launch of Marea, interiors by Missoni - its second residential development project along the Costa del Sol in the south of Spain bringing the Company's launched Spanish portfolio GDV to c. EUR350 million. This launch showcases the Company's commitment to Europe and further progress in delivering on its ambitious growth strategy across international markets
About Dar Global
Dar Global PLC is a highly differentiated international real estate business. It focuses predominantly on developing real estate projects comprising second homes for internationally mobile customers, in some of the most desirable locations across the Middle East and Europe, including downtown Dubai, Muscat in Oman and the Costa del Sol region in the South of Spain.
Dar Global was originally established to house and develop the international (based outside the Kingdom of Saudi Arabia) assets of Dar Al Arkan Real Estate Development PJSC ("DAARE"), a leading real estate developer in the Kingdom of Saudi Arabia. Listed on the Saudi Stock Exchange since 2007, Dar Al Arkan has delivered over 15,300 residential units with total assets of c. US$8.3 billion.
The Company intends to expand its focus to hospitality assets. The aim is to acquire or build hotels and sell them after a period of three to five years of operation once the hotels or resorts' revenue streams stabilise. Target markets include Spain, Dubai, Maldives, Athens and London.
Dar Global was admitted to the Main Market of the London Stock Exchange on 28 February 2023.
Please visit www.DarGlobal.co.uk
For further information, please contact:
Dar Global
Abhilash Paul, Head of Investor Relations +44 (0) 20 8156 5573
apaul@darglobal.co.uk
ir@darglobal.co.uk
Powerscourt +44 (0) 20 7250 1446
Justin Griffiths / Nick Dibden / Louisa darglobal@powerscourt-group.com
Henry
Company Secretary
Link Company Matters
6(th) Floor, 65 Gresham Street, London
EC2V 7NQ
Management Presentation
The Company's half year results presentation will be available on the Investor Relations section of Dar Global's website (https://darglobal.co.uk/investor/) shortly after 7:00am on 28 September 2023.
Chief Executive's Review / Group Overview
At Dar Global, the strategic priorities are anchored in its commitment to becoming a leading force in the global luxury real estate market. Building on its key strengths and established strategies, the Company is poised to achieve sustainable growth and value creation.
The Company remains focused on second / vacation homes in prime locations across the Middle East and Europe. As of 30 June 2023, the Company has successfully expanded its project portfolio to eleven projects spread across six jurisdictions including the UAE, Spain, Oman, Qatar, the United Kingdom and Bosnia. Its unique ability to tap into global wealth super trends and attract affluent customers underscores its commitment to offering exceptional properties to a discerning clientele.
Emphasizing capital efficiency, the Company has leveraged joint development agreements (JDA) to optimize project financing and enhance its return profile. By partnering with landowners through innovative payment structures for some of its larger projects in Oman, Qatar and the UAE, it avoids the need to obtain funding to purchase land for these projects, effectively financing the projects from payments made by customers purchasing residential units on an off-plan basis. This reduction in capital expenditure requirements for JDAs allows the Company to accelerate its growth and simultaneously develop a larger number of projects than in the circumstances when it purchases land for all its projects.
Dar Global continues to expand its portfolio of co-branded projects with the launch of Tierra Viva, in partnership with Automobili Lamborghini situated in Benahavis, next to Marbella along the Costa del Sol in the south of Spain. The ultra luxury villas in Tierra Viva represent Automobili Lamborghini's first real estate project in Europe and have generated significant interest worldwide since its launch at the end of June 2023. The Company also unveiled its partnership with the world-renowned luxury brand, Dolce & Gabbana for its debut in the hospitality industry. This partnership extends Dar Global's geographical footprint into the Maldives and extends its growth strategy beyond residential projects, with a newfound focus on hospitality assets. The Company envisions a diverse revenue stream through the acquisition or construction of hotels, capitalizing on its expertise in real estate development. With target markets including Maldives, Dubai, Athens and London, the Company aims to introduce hospitality experiences that align with its reputation for excellence.
The Company's global distribution network is a key differentiator and central to its success. It continues to expand its reach with sales offices in eight global cities and collaborations with brokers across 63 countries. Strategic additions to its internal marketing and sales capabilities further enhance this network. By nurturing these relationships and expanding its sales team, the Company aims to sell a majority of its residential units through its own channels, enhancing profitability and customer engagement. This sales model is especially effective given a portion of the Company's customers may consider purchasing more than one property across different locations for investment purposes or for personal use. Marketing all project launches in new geographies to a captive customer base allows the Company to spread the customer acquisition cost across a number of units, further improving its return profile.
Looking ahead, Dar Global remains steadfast in its pursuit of excellence, confident that its strategic priorities and long-term goals will continue to shape its success and define its legacy, despite the macro-economic uncertainties. The Company is well-positioned to benefit from the challenges faced by its competitors and the broader real estate market.
Business Performance and Project Update
Dar Global's commitment to excellence has yielded positive results in a challenging economic landscape. Despite prevailing macroeconomic headwinds, the Company has continued its growth trajectory and sales momentum across all active projects, while maintaining a prudent and discerning approach to ongoing investment decisions.
The Company is pleased to provide an update on its development projects and contracted sales for HY 2023.
UAE - Four active projects
Dubai's prime residential market remains strong in 2023 with 13% of transactions (by total value) taking place within this segment of the broader residential real estate market in Dubai, according to Knight Frank. The demand for prime residential property has been so intense that Dubai experienced a record 44% increase in prime home prices in 2022 - the highest level globally. Knight Frank saw an 11.6% increase in the average transacted price in Q2 of this year, taking the annualised rate of price growth for 2023 to 48.8%.
Despite the surging demand for prime property in the city and the rapid increase in prices, Dubai remains one of the world's most affordable luxury home markets, which adds to the city's appeal amongst international buyers. Limited new inventory, coupled with a continued influx of ultra-high net worth individuals acquiring second / vacation homes in Dubai's prime neighbourhoods should continue to support additional growth in property prices. As of 30 June 2023, Dar Global has four projects in Dubai with a total GDV of US$1,017 million comprising 1,156 units, of which 980 units have been sold resulting in 69% of the total GDV being sold.
Urban Oasis Tower - The Urban Oasis Tower is a 34-storey residential development located on the Dubai Canal and will contain bespoke apartments with interiors designed in collaboration Missoni, the Italian fashion designer. Construction is 88% completed with expected project completion in Q1 2024.
DaVinci Tower by Pagani - The refurbishment stage of the DaVinci Tower project, in partnership with Italian supercar brand Pagani is expected to be fully completed by Q2 2024. The fit-out works for the project was awarded to the globally renowned contractor Shapoorji Pallonji Mideast (L.L.C) in May this year .
W Residences - The W Residences project was launched in early 2022. The Company has begun the main works on the project and has awarded the construction contract to China State Construction Engineering Corporation Middle East (CSCEC ME), the world's largest transnational multidisciplinary conglomerate in civil, industrial engineering and real estate development. The project is now expected to be fully completed in Q1 2026, earlier than previous guidance of Q2 2026.
DG1 - The Company unveiled DG1 as its first 'own-brand' development in March 2023. This 20-storey tower will comprise 221 units, including one, two, and three-bedroom apartments and Dar Global has partnered with Gensler Architects on the design of the tower . The launch of Dar Global's signature brand with DG1 is set to create a new benchmark in Dubai's luxury living space, making it a highly desirable asset. Construction on the project is expected to start in Q4 2023 and complete in Q4 2026.
Qatar - One active project comprising of five residential buildings
Qatar's housing market is normalising in 2023 post the construction boom in the lead up to the 2022 FIFA World Cup hosted in the country. In the first half of 2023, the supply of residential inventory in Qatar saw a boost from developments specifically reserved for visitors to the FIFA World Cup, such properties have now been released to the market and as a result both the prices to rent and purchase a residential property have largely reverted to the pre World Cup levels. As of 30 June 2023, Dar Global has one project in Qatar with a total GDV of US$361 million comprising 303 units, of which 68 units have been sold resulting in 17% of the total GDV being sold.
Les Vagues - The Les Vagues project features 303 opulent sea-front residences of one, two and three-bedroom apartments. Construction is expected to commence in Q4 2023 and the project is expected to be completed by in Q4 2026.
Oman - A master plan comprising of a Trump branded golf course, a club house, residential units and hotels
The residential real estate market in Muscat, Oman has seen steady growth over the recent years, with a focus on developing new residential projects. More recently, land prices in the Sultanate rose by an average of c. 15% in Q2 2023 when compared with Q2 2022 and the price of residential units was up approximately 6% in the same period, as per the National Center for Statistics and Information of Oman. As of 30 June 2023, Dar Global has one project in Oman with a total GDV of US$2,404 million spread across ten phases. Phase one with a GDV of US$411 million has been launched and 115 of its 368 units have been sold resulting in 14% of the launched GDV being sold.
AIDA - The AIDA project is expected to be phased over 10 years, with a plan to launch one phase per year. AIDA is set to redefine luxury living with its breath-taking views, immersive experiences, and spectacular outdoor landscapes. The project is being developed sustainably, preserving the area's topography and unique environmental features, which adds to its appeal.
The first phase of the project was launched in the second half of March 2023 and generated significant interest from customers worldwide. Infrastructure works commenced in Q2 2023 with phase one expected to complete in Q1 2027 and the entire project to complete in December 2034. This project is being developed in partnership with the OMRAN GROUP (Oman Tourism Development Company) and the Trump Organisation.
United Kingdom
While Prime Central London, where Dar Global operates is, in many ways, in a class of its own compared with the wider housing sector, uncertainty surrounding the short-term economic outlook is impacting prices here as well. That said, with more than half of all owner-occupier homes in this area having no mortgage secured against them, and cash purchases continuing to make up a large proportion of sales between April and June according to JLL - it is likely that the recent mortgage rate volatility will have less of an impact on this part of the housing market.
As well as being less reliant on debt to fund purchases, the prime central London market benefits from its appeal to both a domestic and international audience. Data from Heathrow indicates that the number of people arriving at the airport increased in Q2 2023 when compared with the same period last year. Specifically, the number of travellers from the Middle East and from North America have risen in double digit percentage terms. The sterling continues to strengthen and recover from the lows of 2022, but it still offers good value for overseas buyers using non-sterling currencies for their purchases. Dollar-based investors are now paying 35% less than they were in 2014, due largely to favourable exchange rates, while Chinese investors are paying 24% less. Therefore, the fundamentals of prime central London look stronger than both the UK and Greater London averages over the coming years.
Old Park Lane - Situated on the corner of Old Park Lane and Piccadilly and overlooking Green Park, 149 Old Park Lane is a sophisticated landmark building with an important role in London's architectural heritage. Refurbishment works are in progress and are expected to complete by Q1 2024.
Spain - Two active projects and one sizeable land parcel across the south of Spain, primarily in the Costa De Sol region
The appetite for residential property along the Costa del Sol remains strong with the pace of transactions increasing in 2023 compared to 2022. The Spanish economy this year has been less buoyant than last year and with inflation above 3% and interest rates above 4% - the number of mortgage transactions have decreased year over year, indicating an overall slowdown in the residential market. However, according to the Malaga Property Observatory, OMAU, 45% of buyers in the Costa del Sol make their purchases without a loan, suggesting that the regional market is less affected by rising interest rates.
Property prices in Marbella and Malaga city have continued their upward trajectory in 2023. According to Gesvalt, a real estate consultancy in Spain, prices in these cities along the Costa del Sol have gone up faster in H1 2023 when compared to the prior six months in H2 2022. Overseas buyers remain very active in the Costa del Sol real estate market with 70% of all homes sold in the region in 2023 purchased by international buyers, according to Spain's Notaries' Association. This reaffirms the increasing popularity for residential real estate investment among international buyers.
Tierra Viva - In June 2023, Dar Global launched this ultra-luxury project comprising of 53 exclusive villas. Construction is expected to commence in Q4 2023 and the project is expected to be completed in Q4 2026.
Manilva (Tabano) - In September 2022, Dar Global acquired six plots of land in the municipality of Manilva in the province of Malaga on the border with the province of Cadiz in southern Spain. The plots are located approximately 45 minutes from Marbella by car and are close to several polo clubs and one of the best beach areas of Costa del Sol. The total land area of the Tabano project is 4,650,092 square meters.
The Tabano project is currently in the early permitting stage and is expected to be completed in December 2029. AECOM consultants have been appointed for the development of the concept master plan and associated infrastructure plan.
Marea, interiors by Missoni - Dar Global unveiled its second project in Spain on 30 August 2023, bringing the company's total launched assets in the country to a GDV of c. EUR350 million. This project is located in one of the most sought-after enclaves of the Andalusian coast, not far from the Finca Cortesin resort which has an 18-hole championship golf course rated among Spain's best golf courses. Following the strong reception for Tierra Viva, the Company expects to generate significant interest in Marea, interiors by Missoni over the coming months. Construction is expected to commence in Q2 2024 and the project is expected to be completed in Q2 2027.
Bosnia
Sidra - Sidra is a development project in Bosnia, situated in Ravne, Vares, 38 km outside Sarajevo, the capital of Bosnia. The Project has been awarded to M/s Cestohnik as the main contractor for carrying out infrastructure works, which are currently underway and the works are expected to complete in Q4 2024.
Strong Balance Sheet & Net Cash Position
Dar Global boasts a resilient balance sheet, firmly supported by a cash position of US$175.7 million (including free cash of US$64.4 million, and restricted cash of US$ 111.3 million including escrow and escrow retentions). This strength strategically positions the Company to capitalize on current market conditions. Amidst the prevailing macro-economic uncertainties that have dampened the broader residential real estate sector, Dar Global's capital light model enables the Company to adopt an opportunistic approach. This encompasses an exploration of potential transactions such as targeted asset acquisitions, refurbishment projects, acquisition of distressed assets, synergistic joint ventures, acquiring land banks, and other investments across the geographical expanse where the Company currently operates.
Outlook
Dar Global is positioned for steady growth as it confidently navigates an ever-evolving economic landscape. With its strong performance in the first half of 2023, the Company has demonstrated not only resilience but robust performance in its industry. The exceptional growth in revenue and profit is a testament to Dar Global's singular focus on second / vacation homes targeting affluent customers who are less impacted by the current macro uncertainties.
Guidance for Full Year 2023
As contracted off-plan sales continue its current pace and construction commences on our projects in Oman (AIDA Phase 1), Qatar (Les Vagues) and Spain (Tierra Viva) as planned in Q4 2023, we continue to grow our footprint and build on our credibility as an accomplished global luxury developer with a solid track record of designing world class residences in the most desirable locations. This momentum sets the stage for us to capitalize on emerging trends and continue exceeding expectations of creating shareholder value.
Revenues recognised remain contingent on both construction progress and the proportion of sales completed in the relevant timeframe. Looking forward to the remainder of the financial year, Dar Global anticipates building on its impressive momentum. The Company is performing in line with management expectations and we look forward to continued progress into year end.
Continued Expansion:
With a strong balance sheet and the business performing beyond expectations, Dar Global is ready to expand its footprint further. While the Company remains steadfast in its commitment to the current geographies, it is also eyeing new horizons. Dar Global's track record of success and financial strength positions it to explore fresh opportunities across international markets, diversifying its presence and deepening its impact.
As Dar Global continues to innovate and execute its ambitious growth strategy, the Company looks forward to updating its stakeholders on upcoming milestones in the months ahead.
Cautionary statement regarding forward-looking statements
This release may include statements that are, or may be deemed to be, 'forward-looking statements'. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms 'believes', 'estimates', 'plans', 'projects', 'anticipates', 'expects', 'intends', 'may', 'will' or 'should' or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward-looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, changes in its business strategy, political and economic uncertainty. Save as required by the Listing and Disclosure Guidance and Transparency Rules, the Company is under no obligation to update the information contained in this release. Past performance cannot be relied on as a guide to future performance.
Going concern statement
The Board of Directors conducted an evaluation of the Group's business plan and its anticipated funding needs for the medium-term, comparing them to the level of committed loan facilities and existing cash reserves. As of June 30 2023, the Group holds unrestricted cash balance of US$64.4 million and total liquidity of US$290.2 million (including undrawn debt facilities). Additionally, the Group will receive funds from customers for units sold, as per contracted payment plans and from sales of unsold units.
Throughout this assessment, we have considered the inherent uncertainties associated with future financial projections. Where applicable, we have applied severe yet plausible sensitivities to the key factors impacting the Group's financial performance.
Based on this evaluation, the Directors hold a reasonable expectation that the Group possesses ample resources to sustain its operations for the foreseeable future, extending no less than 12 months from the date of these Condensed Consolidated Interim Financial Statements. Therefore, they have opted to continue using the going concern basis of accounting when preparing the Group's Condensed Consolidated Interim Financial Statements.
Principal risks and uncertainties
The principal business risks and uncertainties facing Dar Global for the next six months are:
-- portfolio concentration in early-stage projects and related completion uncertainties (costs, delays, quality),
-- dependence on contractors to mitigate construction-related risks, -- joint development and joint venture risks,
-- global economic and political uncertainties, in particular knock-on effects on oil markets impacting our customer's wealth and default rates,
-- the Group's limited operating history,
-- the due diligence process the Group undertakes in connection with new projects is still maturing,
-- key personnel risk, in particular at the executive level, -- uncertainties in obtaining regulatory approvals, -- evolving environmental laws, -- cyber and data risks
Directors' responsibility statement
This statement, which should be read in conjunction with the independent review of the auditors set out before the condensed consolidated interim financial statements (the "interim financial statements"), is made to enable shareholders to distinguish the respective responsibilities of the Directors and the auditors in relation to the interim financial statements which the Directors confirm have been presented on a going concern basis.
The Directors consider that the Group has used appropriate accounting policies, consistently applied and supported by reasonable and appropriate judgements and estimates. A copy of the interim financial statements of the Group is placed on the website of Dar Global Plc: www.darglobal.co.uk. The Directors are responsible for the maintenance and integrity of the information on the website. Information published on the internet is accessible in many countries with different legal requirements. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.
The Directors confirm that this condensed set of interim financial statements has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the United Kingdom and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the IPO Prospectus..
On 9 August 2023, the Company announced that Shivaraman Iyer stepped down from the Board as an Executive Director of the Company, with effect from 8 August 2023. Mr. Iyer will continue in his role as Chief Financial Officer and will also remain part of the Company's executive management team. This change enhances the ratio of independent and non-executive members of the Board.
A list of current Directors is maintained on Dar Global Plc's website, with further announcements to be made in due course.
On behalf of the Board
David Hunter
Chairman
28 September 2023
INDEPENT REVIEW REPORT TO DAR GLOBAL PLC
Conclusion
We have been engaged by the Company to review the condensed set of consolidated financial statements in the interim financial report for the six months ended 30 June 2023 of the Company and its subsidiaries (together, the "Group"), which comprises the statement of financial position, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the interim financial report for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued by the Financial Reporting Council for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the interim financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Scope of review section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However future events or conditions may cause the Group to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group will continue in operation.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2.1, the annual consolidated financial statements of the Group are prepared in accordance with International Financial Reporting Standards. The directors are responsible for preparing the condensed set of consolidated financial statements included in the interim financial report in accordance with IAS 34 Interim Financial Reporting.
In preparing the interim financial report, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the interim financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the scope of review paragraph of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man
27 September 2023
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of financial position
(In United States dollar)
June 30, December
31,
2023 2022
Note (Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents 5 168,325,398 112,612,385
Trade and unbilled receivables 6 113,856,383 40,552,740
Advances, deposits and other receivables 7 95,266,118 81,131,849
Development properties 8 306,918,591 302,274,899
Escrow retentions 9 7,432,170 5,853,253
Investment in joint venture 10 5,129,139 4,681,667
Loan to joint venture 11 2,098,027 1,991,953
Due from related party 19 6,978,473 5,310,572
Property and equipment 12 2,418,159 842,131
Right-of-use assets 13 6,907,860 2,643,470
--------------- ---------------
TOTAL ASSETS 715,330,318 557,894,919
========= =========
LIABILITIES AND EQUITY
LIABILITIES
Trade and other payables 14 24,320,312 30,691,284
Advances from customers 15 139,007,025 94,456,096
Retention payable 16 4,410,940 4,038,203
Development property liability 17 75,457,098 72,467,693
Loans and borrowings 18 63,725,576 69,668,662
Due to related party 19 1,506,825 2,101,668
Employees' end of service benefits 310,461 325,910
Lease liabilities 13 6,959,753 2,743,815
-
---------------- ---------------
TOTAL LIABILITIES 315,697,990 276,493,331
---------------- ---------------
EQUITY
Share capital 20 1,800,216 22,395,109
Share premium 21 88,781,078 259,263,179
Retained earnings 307,531,749 -
Foreign currency translation reserve 1,110,844 (256,700)
Statutory reserve 408,441 -
--------------- ---------------
TOTAL EQUITY 399,632,328 281,401,588
--------------- ---------------
TOTAL LIABILITIES AND EQUITY 715,330,318 557,894,919
========= =========
The accompanying notes from 1 to 34 form an integral part of these condensed consolidated interim financial statements.
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of profit or loss and other comprehensive income
(In United States dollar) Six-month period ended
June 30, June 30, 2022
2023
Note (Unaudited) (Unaudited)
Revenue 22 108,419,405 27,510,602
Cost of revenue 22 (62,698,442) (15,130,428)
--------------- ---------------
Gross profit 45,720,963 12,380,174
Other income 23 1,743,005
Selling and marketing expenses 24 (13,185,382) (1,931,815)
General and administrative expenses 25 (12,928,893) (4,552,537)
Finance costs 26 (1,853,291) (2,219,259)
Finance income 26 1,332,942 15,059
Share of loss from joint venture 10 (31,553) -
Profit before tax 20,797,791 3,691,622
Income tax expenses 2.5 - -
--------------- -------------
Profit for the period 20,797,791 3,691,622
========= ========
Other comprehensive income
Items that are or may be classified
subsequently to profit or loss
Increase in foreign currency translation 1,110,844 -
reserve
--------------- -------------
Total comprehensive income for the
period 21,908,635 3,691,622
======== =========
Profits attributable to:
Owners of the company 20,797,791 3,691,622
Non-controlling Interests - -
--------------- -------------
20,797,791 3,691,622
Total comprehensive attributable ========= ========
to:
Owners of the company 21,908,635 3,691,622
Non-controlling Interests - -
---------------- -------------
21,908,635 3,691,622
Earnings per share attributable to ========= =======
owner of the Company:
- basic and diluted earnings per
share (USD) 27 0.08 12.31
---------------- --------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA)
Net finance costs 520,349 2,204,200
Depreciation on property and equipment
and right-of-use assets 1,172,123 77,268
------------- ---------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 22,490,263 5,973,090
======== =========
The accompanying notes from 1 to 34 form an integral part of these condensed consolidated interim financial statements.
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of changes in equity
(In United States dollar)
Foreign
currency
Share Statutory translation Retained Capital Total
capital reserve reserve earnings Share premium Contribution equity
Balance as at
January 1, 2022
(Unaudited) 816,882 - - - - 19,333,349 20,150,231
Profit for the
period - - - 3,691,622 - - 3,691,622
Other
comprehensive
income - - - (714,417) - - (714,417)
Total
comprehensive
income for
the period - - - 2,977,205 - - 2,977,205
Transactions
with owners of
the
company
Capital
contribution
for the period* - - - - - 14,101,420 14,101,420
Transferred from
capital
contribution - - - 2,219,259 - (2,219,259) -
Statutory
reserve - 408,441 - (408,441) - - -
Total
transactions
with owners
of the Company - 408,441 - 1,810,818 - 11,882,161 14,101,420
---------- ---------- -------------- ------------ ------------ -------------- --------------
Balance as at
June 30, 2022
(Unaudited) 816,882 408,441 - 4,788,023 - 31,215,510 37,228,856
====== ====== ======== ======= ======= ======== ========
Balance as at
January 1, 2023
(Unaudited) 22,395,109 - - - 259,263,179 - 281,658,288
Profit for the
period - - - 20,797,791 - - 20,797,791
Other
comprehensive
income - - 1,110,844 - - - 1,110,844
Total
comprehensive
income for
the period - - 1,110,844 20,797,791 - - 21,908,635
Transaction with
owners of the
Company
Issue of shares
related to
acquisition
of subsidiary
(notes 20 & 21) 3,666,666 - - - 20,398,935 - 24,065,601
Issue of
ordinary shares
(notes
20 & 21) 216,216 - - - 71,783,588 - 71,999,804
Reduction of
share capital
(notes
20 & 21) (24,477,775) - - 287,142,399 (262,664,624) - -
Statutory
reserve - 408,441 - (408,441) - - -
Total
transactions
with owners
of the Company (20,594,893) 408,441 - 286,733,958 (170,482,101) - 96,065,405
------------ ------------ ------------ ---------------- -------------- ----------- ---------------
Balance as at
June 30, 2023
(Unaudited) 1,800,216 408,441 1,110,844 307,531,749 88,781,078 - 399,632,328
======= ======= ======= ========= ======== ====== =========
* This represents the difference between the carrying value of the "Due to related Parties" i.e., the amount of cash received net of losses absorbed, and their fair value on the initial recognition.
The accompanying notes from 1 to 34 form an integral part of these condensed consolidated interim financial statements.
Dar Global PLC and its subsidiaries
London - United Kingdom
Condensed consolidated statement of cashflows
for the period ended 30 June 2023
June 30, June 30,
2023 2022
Note (Unaudited) (Unaudited)
Cash flows from operating activities
Profit for the period 20,797,791 3,691,622
Adjustments for:
Depreciation on property and equipment 25 328,301 77,268
Depreciation on right-of-use assets 25 843,822 -
Provision for employees' end of
service benefits 6,024 24,796
Finance costs 26 1,853,291 2,219,259
Finance income 26 (1,332,942) (15,059)
Share of loss from joint venture 10 31,553 -
-------------- -------------
Operating profit before working
capital changes 22,527,840 5,997,886
Working capital changes:
Trade and unbilled receivables (73,303,643) (12,001,581)
Advances, deposits and other receivables (14,134,269) (43,566,829)
Development properties (1,654,287) (11,947,117)
Escrow retentions (1,578,917) (3,302,010)
Trade and other payables (6,370,972) 7,902,265
Advances from Customers 44,550,929 55,304,297
Retention Payable 372,737 1,147,523
Employees' end of service benefits (21,476)
paid -
--------------- ------------
Net cash used in operating activities (29,612,058) (465,566)
--------------- ------------
Cash flows from investing activities
Acquisition of property and equipment 12 (1,904,329) (86,228)
Funds transferred to related party 19 (1,667,901) -
Investment in joint venture (447,472) -
Interest income 26 1,332,942 15,059
-------------- -----------
Net cash used in investing activities (2,686,760) (71,169)
Cash flows from financing activities -------------- -----------
Loan received from related parties - 56,058,203
Proceeds from bank borrowings 18 2,224,527 -
Repayment of bank borrowings 18 (8,167,613) -
Interest expense on borrowings 26 (1,697,297) -
Proceeds from initial public offerings 71,999,804 -
Funds received from parent company 23,470,759 -
Lease payments 13 (1,048,266) -
--------------- --------------
Net cash generated from financing
activities 86,781,914 56,058,203
--------------- --------------
Net increase in cash and cash
balances 54,483,096 55,521,468
Effect of translation of foreign 1,229,917
currency -
Cash and cash equivalents, beginning
of the period 112,612,385 18,573,311
--------------- --------------
Cash and cash equivalents at
the end of the period 168,325,398 74,094,779
Cash and cash equivalents: --------------- --------------
Cash in hand 21,516 312
Cash at banks 168,303,882 74,094,467
--------------- --------------
168,325,398 74,094,779
========= ========
The accompanying notes from 1 to 34 form an integral part of these condensed consolidated interim financial statements.
Dar Global PLC and its subsidiaries
London - United Kingdom
Notes to the condensed consolidated interim financial statements
(In United States dollar)
1 Legal status and business activities
1.1 Dar Global PLC (the "Company") is public limited company, limited by shares, incorporated, domiciled, and registered in England and Wales. The Company operates under a Company Number 14388348 issued by the registrar of the companies for England and Wales. The majority of shares of the Company is held by Dar Al Arkan Global Real Estate Development LLC ("Parent company") in United Arab Emirates ("UAE") and the Ultimate parent company is Dar Al Arkan Real Estate Development Company, KSA.
1.2 The registered address of the Company is located at Link Company Matters Limited 6th Floor, 65 Gresham Street, London, EC2V 7NQ, United Kingdom.
1.3 These condensed consolidated interim financial statements ("interim financial statements") represent the results of Dar Global PLC and its subsidiaries (the "Group"), set out in note 1.4.
1.4 The Company has the following subsidiaries over which it has control :
Name of subsidiary Percentage of Percentage of voting License / Principal activities
and domicile effective holding rights Registration No.
M/s. Dar Al Arkan
Properties L.L.C., Commercial license Development and sale
Dubai - UAE * 100% 100% no. 791860 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Al Arkan Global
UK Holdings LTD - Company registration Development and sale
United Kingdom 100% 100% no. 13881707 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Al Arkan Holding
UK PLC - United Company registration Development and sale
Kingdom 100% 100% no. 14385758 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Global UK No. 1
LTD - United Kingdom Company registration Development and sale
** 100% 100% no. 14751868 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Global UK No. 2
LTD - United Kingdom Company registration Development and sale
** 100% 100% no. 14751750 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Global UK No. 3
LTD - United Kingdom Company registration Development and sale
** 100% 100% no. 14751915 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Al Arkan Spain SL Company registration Development and sale
- Spain 100% 100% no. B09896390 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Benahavis I, S.L Company registration Development and sale
- Spain 100% 100% no. B72530843 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Company registration Development and sale
Daranavis S.L - Spain 100% 100% no. B72530850 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
Dar Tabano, S.L - Company registration Development and sale
Spain 100% 100% no. B72530835 of real estate.
---------------------- ---------------------- ---------------------- ----------------------
1.4 The Company has the following subsidiaries over which it will exercise effective control: (continued)
Name of subsidiary and Percentage of Percentage of voting License / Principal activities
domicile effective holding rights Registration No.
M/s. Prime Real Estate
D.o.o Sarajevo - Company registration Development and sale
Bosnia * 100% 100% no. 65-01-0672-17 of real estate.
---------------------- ---------------------- ---------------------- ---------------------
M/s. Luxury Real
Estate D.o.o. Company registration Development and sale
Sarajevo - Bosnia * 100% 100% no. 65-01-0698-17 of real estate.
---------------------- ---------------------- ---------------------- ---------------------
M/s. Dar Al Arkan
Property Development
D.o.o Sarajevo - Company registration Development and sale
Bosnia * 100% 100% no. 65-01-0676-17 of real estate.
---------------------- ---------------------- ---------------------- ---------------------
M/s. Beijing Dar Al 100% 100% Company registration Economic and trade
Arkan Consulting Co. no. 91110105MA7 consulting,
Ltd. * EQ79Y9Q Engineering
consulting, business
management
consulting,
corporate
planning, real
estate information
consulting,
undertaking
exhibition
activities,
advertising
design, production,
agency and release,
development of real
estate, technical
consulting and
technical services,
computer and graphic
design.
---------------------- ---------------------- ---------------------- ---------------------
Aqtab Properties LLC
-UAE (Formerly Dar Al
Arkan Global Property Commercial license Purchase and sale of
Development LLC) * 100% 100% no. 997901 real estate
---------------------- ---------------------- ---------------------- ---------------------
1.4 The Company has the following subsidiaries over which it will exercise effective control: (continued)
Name of subsidiary Percentage of Percentage of voting License / Principal activities
and domicile effective holding rights Registration No.
Dar Al Arkan
International
Properties LLC - UAE Commercial license Purchase and sale of
* 100% 100% no. 997919 real estate
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan
International
Property Development Commercial license Purchase and sale of
LLC - UAE * 100% 100% no. 997915 real estate
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan Property 100% 100% Commercial license Real estate
Development SPC - no. 1402786 development,
Oman Construction of
buildings (general
constructions of
residential and
non-residential
buildings
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan Holdings Commercial license Development and sale
Ltd (ADGM) - UAE * 100% 100% no. 000008662 of real estate.
---------------------- ---------------------- --------------------- -----------------------
Dar Al Arkan
Properties L.L.C -
Branch Of Abu Dhabi Commercial license Development and sale
1 - UAE ** 100% 100% no. CN-4765091 of real estate.
---------------------- ---------------------- --------------------- -----------------------
* These entities have become part of the group as on 25 January 2023 pursuant to the acquisition of Dar Al Arkan Holdings Ltd (ADGM) by the Company through issuance of shares to the Parent company (note 20).
** These entities have been formed by the Group during the year 2023.
2 Significant accounting policies 2.1 Statement of compliance
The interim financial statements have been prepared in accordance with the principles of IAS 34 Interim Financial Reporting as adopted for use in the UK.
All values are rounded to the nearest Unit in USD except where otherwise indicated. Each entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
This is the first reporting period, as the Company was incorporated on 30 September 2022. The first annual financial statements of the Company, which will be for the period ended 31 December 2023, will be prepared in accordance with UK adopted International Accounting Standards and in conformity with the requirements of the Companies Act 2006. The significant accounting policies are set out below. These accounting policies elected by the group is on the presumption that the group existed in the comparatives for the period in which it was under common control. The comparatives represent the results of Dar Al Arkan Global Real Estate Development LLC and those legal entities that Dar Al Arkan Global Real Estate Development LLC has transferred to Dar Global PLC. Forming part of the same group, the entities included in the comparatives are considered to be under common management. Management considers the combination is appropriate in view of the intention to show the comparatives.
The interim financial statements have been prepared on a historical cost basis except financial assets and financial liabilities that have been measured at fair value (note 28). Historical cost is generally based on the fair value of the consideration given in exchange for assets.
2.2 Basis of preparation
Basis of consolidation
The interim financial statements comprise the financial statements of the Company and the subsidiaries ('the Group'), plus the Group's share of the results and net assets of its joint ventures and associates.
The financial information contained within these interim results does not constitute full statutory accounts as defined in section 434 of the Companies Act 2006.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The Financial Statements of subsidiaries are included in the consolidated Financial Statements from the date that control commences until the date that control ceases.
Joint ventures
A joint venture is a contract under which the Group and other parties undertake an activity or invest in an entity, under joint control. The Group uses equity accounting for such entities, carrying its investment at cost plus the movement in the Group's share of net assets after acquisition, less impairment.
Group restructure
A group restructuring exercise was carried out during the period as follows:
On 24 January 2023, the Parent company assigned the bene t of certain shareholder loans to Dar Al Arkan Holdings Ltd (ADGM) - UAE in exchange for an issuance of new ordinary shares by Dar Al Arkan Holdings Ltd (ADGM) - UAE on a dollar for dollar basis.
On 25 January 2023, the entire issued share capital of Dar Al Arkan Holdings Ltd (ADGM) and its subsidiaries ("Trading Group") was transferred to the Company by the Parent company in consideration for the issuance of new ordinary shares by the Company.
The Trading Group and the Company were under common control by parent company at the time of the transaction.
The acquisition by the Company of the Trading Group is a common control transaction under IFRS 3. The consolidation of this Group has been prepared using the book value accounting. In the statement of financial position, the acquiree's identifiable assets, liabilities are recognised at their book values at the acquisition date. The results of merged operations following the Group's restructure in the period are included in the consolidated statement of comprehensive income as if the Group has always existed. Comparative figures are provided on the basis that the merged group always existed.
On 28 January 2023, the Company undertook a reduction of capital by cancelling certain ordinary shares, in order to create distributable reserves and reduce the number of ordinary shares in issue to 158,400,000 in aggregate.
Going concern
The Company listed on London Stock Exchange on 28 February 2023 and raised net proceeds of USD 72 million of new equity in order to fund the operations, working capital and continuing development work. The Group's forecasts and projections based on the current trends in sales and development and after taking account of the funds currently held, show that the Company and the Group will be able to operate within the level of cash reserves.
Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern.
The Directors therefore have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for a period of 12 months from the date of approval of these financial statements and consider the going concern basis to be appropriate.
Adoption of new and revised standards
The Group has adopted all relevant amendments to existing standards and interpretations issued by the International Accounting Standard Board (IASB) that are effective for the respective financial period ends presented, with no material impact on its consolidated interim results or financial position.
The Group's investment in joint ventures is accounted for using the equity method of accounting. Under the equity method of accounting, investments in joint ventures are carried in the consolidated statement of financial position at cost, plus post-acquisition changes in the Group's share of net assets of the joint venture companies, less any impairment in value.
The Group did not implement the requirements of any other standards or interpretations that were in issue but were not required to be adopted. No other standards or interpretations have been issued that are expected to have a material impact on the interim financial statements.
The preparation of the interim financial statement requires estimates and assumptions to be made that may affect the amounts reported in the interim financial statement and accompanying notes. Actual amounts could differ from the estimates included in the interim financial statements herein. The preparation of the interim financial statements on the basis set out, requires the use of certain critical accounting estimates. It also requires judgement to be exercised in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim financial statements, are disclosed in note 2.21.
2.3 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
2.4 Foreign currency
The transactions in currencies other than the Group's presentation currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in the consolidated statement of profit or loss in the period in which they arise.
In preparing the separate financial information of the individual subsidiaries, the transactions in currencies other than the subsidiaries functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Any gain or loss on translation from functional currency of subsidiaries to presentation currency of the Group is taken to statement of other comprehensive income.
Foreign exchange differences
Exchange differences on monetary items are recognized in consolidated statement of profit or loss in the period in which they arise except for exchange differences that relate to assets under construction for future productive use. These are included in the cost of those assets when they are regarded as an adjustment to interest costs on foreign currency borrowings.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period. Financial assets measured at amortized cost, exchange differences are recognized in the consolidated statement of profit or loss.
2.5 Property and equipment
Property and equipment is stated at cost less accumulated depreciation and identified impairment loss, if any. The cost comprise of purchase price, together with any incidental expense of acquisition.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance expenses are charged to the statement of profit or loss during the financial period in which they are incurred.
Depreciation is spread over its useful lives so as to write off the cost of property and equipment, using the straight-line method over its useful lives as follows:
Assets Life years
Leasehold improvements 3
Furniture and fixtures 5
Computers and office equipment 4-5
When part of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.
The leasehold improvements are being depreciated over the period from when it became available for use up to the end of the lease term.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
The gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the combined statement of profit or loss.
2.6 Leases
Leases are accounted for by recognising a right-of-use asset and a lease liability except for:
- Leases of low value assets; and - Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
-- amounts expected to be payable under any residual value guarantee;
-- the exercise price of any purchase option granted in favor of the group if it is reasonably certain to assess that option;
-- any penalties payable for terminating the lease, if the term of the lease has been estimated based on termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
-- lease payments made at or before commencement of the lease; -- initial direct costs incurred; and
-- the amount of any provision recognized where the group is contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
2.7 Joint operations
A significant portion of land plots, on which the Group's projects are located, is sourced through the contribution of land by the Group's joint development partners, which allows the Group to secure land for its projects with minimal upfront cash contributions. The Group adopts capital light model of Joint Development Agreement where the land is contributed by the joint development partner and also certain percentage of profit is shared. The entire project is controlled and managed by the Group which includes funding, sales, development, marketing, collections, loss absorption if any etc.
This arrangement under IFRS11 "Joint arrangements" has been classified as a joint operation where each party to the joint operation (or each "Joint operator") recognised its share of the assets, liabilities, revenue, and expenses of the joint arrangement. The share is determined based on the rights and obligation of each party as set out in the contractual terms.
2.8 Development properties
Properties constructed or in the course of construction for sale in the ordinary course of business are classified as development properties and are stated at the lower of cost or net realizable value. Cost includes cost of acquisition of land, cost of construction including planning and design cost, commission, borrowing costs, cost of acquiring development rights and other direct costs attributable to the development.
Net realizable value is the estimated selling price in the ordinary course of business, based on market prices at the reporting date and discounted for the time value of money, if material, less costs to completion and the estimated costs of sale.
The management reviews the carrying values of the development properties on each reporting date.
2.9 Impairment of non-financial assets.
Non-financial assets of the Group mainly include development properties, advances to suppliers and contractors, right-of-use assets and property and equipment. At the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the condensed consolidated statement of profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the condensed consolidated statement of profit or loss.
2.10 Financial instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.
2.11 Financial assets
Classification
The Group classifies its financial assets at amortized cost.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.
Financial assets comprise of cash and cash equivalents, trade receivables, advances deposits and other receivables, due from related parties and other escrow retentions.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Trade and other receivables (including due from related parties)
Receivable balances that are held to collect are subsequently measured at the lower of amortized cost or the present value of estimated future cash flows. The present value of estimated future cash flows is determined through the use of value adjustments for uncollectible amounts. The Group assesses on a forward-looking basis the expected credit losses associated with its receivables and adjusts the value to the expected collectible amounts.
Receivables are written off when they are deemed uncollectible because of bankruptcy or other forms of receivership of the debtors. The assessment of expected credit losses on receivables takes into account credit-risk concentration, collective debt risk based on average historical losses, specific circumstances such as serious adverse economic conditions in a specific country or region and other forward-looking information.
For accounts receivable, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables .
Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another Group. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for the amounts, it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset.
2.12 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. All financial liabilities are recognized initially at fair value and, in the case of loans, borrowings and payables, net of directly attributable transaction costs.
The Group's financial liabilities include accounts payables and provisions, other payables, development property liabilities, advance from customers and due to related parties.
Accounts and other payables
Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Accounts and other payables are recognized initially at fair value and subsequently are measured at amortized cost using effective interest method.
Loans and borrowings
Term loans are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the consolidated income statement when the liabilities are derecognised as well as through the amortisation process.
Development Property liabilities
Development Property liabilities represents the amount payable for the acquisition of development properties on a deferred payment plan basis including variable consideration. Initially, these amounts are stated at the fair value of the consideration payable. Subsequently, at each reporting date the development property liabilities are measured at fair value and the difference between the fair value and carrying value are recognised in the condensed consolidated income statement.
Advances from customers
Advances received from customers include instalments received from customers for properties sold either before the revenue recognition criteria have been met or in excess of the project's stage of completion. These funds are later recognized in the profit or loss statement once the revenue recognition criteria are satisfied. Additionally, advances from customers may be derecognized from the books when either the customer or the Group terminates the contract.
Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. When an existing financial liability is replaced by another, from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the combined statement of profit or loss.
Where the loan payable (or part thereof) is forgiven by a shareholder, the loan is derecognised at its carrying value, and an equity contribution is reflected at that same carrying value, this contribution is reflected as a loss absorbed by a shareholder. No gain or loss is recognised in profit or loss.
2.13 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position, when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
2.14 Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
2.15 Revenue recognition
Revenue from contracts with customers
The Group recognizes revenue from contracts with customers based on a five step model as set out in IFRS 15 Revenue from contracts with customers.
Step 1 . Identify the contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met. This is evidenced by issuance of signed Sale and Purchase Agreement ("SPA") to the customer and meeting specified threshold of project completion and collection from the customers.
Step 2 . Identify the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer. The performance obligation for the Group is to deliver the constructed property to the customers along with the ancillary rights such as the right to use amenities and other related infrastructure facilities available. Accordingly, one performance obligation has been identified for each unit to be sold. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements.
Step 3. Determine the transaction price: The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for delivering the property to its customers. The agreed transaction price is a part of signed SPA issued to each customer. Revenue excludes taxes and duty, and includes an adjustment for significant financing component ("SFC") as the payment plan for the projects extends beyond twelve months from the reporting period. No adjustment has been made for variable consideration as the group does not have any contracts with variable consideration.
Step 4. Allocate the transaction price to the performance obligations in the contract: The Group allocates the transaction price to each unit sold, consistent with the performance obligation identified in Step 2.
Step 5. Recognize revenue when (or as) the entity satisfies a performance obligation.
The Group satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:
1. The customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs; or
2. The Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
3. The Group's performance does not create an asset with an alternative use to the Group and the entity has an enforceable right to payment for performance completed to date.
The Group determines the satisfaction of performance obligation separately for each of its contracts and recognize revenue accordingly.
For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which the performance obligation is satisfied.
When the Group satisfies a performance obligation by delivering the promised goods or services it creates a contract asset based on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognized this gives rise to a contract liability.
2.16 Cost of revenue
Cost of revenue represent cost for purchase of land, construction costs, consultant costs, utilities cost, and other related direct costs recognized to statement of profit or loss on percentage of completion.
2.17 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds. All other borrowing costs are recognised in the consolidated statement of profit or loss in the year in which they are incurred.
2.18 Escrow Accounts
Escrow accounts represent bank accounts where money is held in with the bank, acting as an escrow agent, and available for use only if all the pre-determined conditions are fulfilled. The funds paid by customers for their apartments in off-plan sales are required to be deposited into escrow accounts held by banks accredited by the local governing bodies.
For Escrow retention, in line with UAE laws an escrow agent must retain five per cent. of the total value of each escrow account once the developer obtains the building completion certificate to ensure coverage of defects in the property post-handover. The retained amount will be released to the developer one year from the registration of the residential units in the name of purchasers of such units.
2.19 Equity and reserves
Share capital represents the nominal value of shares that have been issued. Share premium represents the excess consideration received over the nominal value of share capital upon the sale of shares, less any incidental costs of issue.
The retained earnings represent distributable reserves.
The foreign currency translation reserve is used to record exchange difference arising from translation of the financial statements of foreign subsidiaries, associates and joint ventures.
2.20 Statutory Reserve
According to Article 241 of the UAE Federal Law No. (2) of 2015, 10% of annual net profits after NCI are allocated to the statutory reserve for the entities registered in UAE. The transfers to the statutory reserve may be suspended when the reserve reaches 50% of the paid-up capital.
2.21 Significant accounting judgements, estimates and Assumptions
In the application of the Group's accounting policies, which are described in policy notes, the management are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The significant judgments and estimates made by management, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below.
Critical judgements in applying accounting policies
In the process of applying the Group's accounting policies, which are described above, and due to the nature of operations, management makes the following judgment that has the most significant effect on the amounts recognized in the combined interim financial statements.
Identifying a contract
The group assesses for each development and for each customer the point in time at which a contract exists. This requires assessing the point in each the development where there is certainty that it will continue to completion, as well as assessing the point in time at which consideration from the customer is probable - this assessment takes into account the legal requirements and history of collections.
Timing of satisfaction of performance obligations
The Group is required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time in order to determine the appropriate method of recognizing revenue. The Group has assessed that based on the sale and purchase agreements entered into with customers and the provisions of relevant laws and regulations, where contracts are entered into to provide real estate assets to customer, the Group does not create an asset with an alternative use to the Group and usually has an enforceable right to payment for performance completed to date. In these circumstances the Group recognizes revenue over time.
Determination of transaction prices
The Group is required to determine the transaction price in respect of each of its contracts with customers. In making such judgment the Group assess the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component in the contract and any non-cash consideration in the contract.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Impairment of financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group's past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in the relevant notes to the condensed consolidated financial statements.
Measurement of progress when revenue is recognized over time
The Group has elected to apply the input method to measure the progress of performance obligations where revenue is recognized over time. The Group considers that the use of the input method which requires revenue recognition on the basis of the Group's efforts to the satisfaction of the performance obligation provides the best reference of revenue actually earned. In applying the input method, the Group estimates the cost to complete the projects in order to determine the amount of revenue to be recognized.
Cost to complete the projects
The Group estimates the cost to complete the projects in order to determine the cost attributable to revenue being recognized. These estimates include the cost of providing infrastructure, potential claims by contractors as evaluated by the project consultant and the cost of meeting other contractual obligations to the customers.
Net realisable value of development properties
Development properties are stated at the lower of cost and estimated net realisable value. The cost of work-in-progress comprises construction costs and other related direct costs. Net realisable value is the estimated selling price in the ordinary course of business, less cost of completion and selling expenses.
Contingent consideration payable to joint developer
For each joint development agreement, the Group estimates the contingent consideration payable to the joint developer. In order to determine the contingent consideration, the Group estimates the total sales price, the total cost of development properties including potential claims by contractors and the estimated cost of meeting other contractual obligations.
3 New standards and amendments 3.1 New standards and amendments applicable as on January 01, 2023
The following standards and amendments apply for the first time to the financial reporting periods commencing on or after January 01, 2023.
- IFRS 17 Insurance Contracts - Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 - Definition of Accounting Estimate - Amendments to IAS 8
- Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12
The management believes that the adoption of the above amendments effective for the current accounting period has not had any material impact on the recognition, measurement, presentation, and disclosure of items in the condensed consolidated financial statements.
3.2 New standards and amendments issued but not effective for the current annual period
The following standards and interpretations had been issued but not yet mandatory for annual reporting periods ending June 30, 2023.
Description Effective for annual periods beginning on or after
Non-current liabilities with Covenants - Amendments to January 1, 2024
IAS 1
Classification of Liabilities as Current or Noncurrent
- Amendments to IAS 1 January 1, 2024
Lease liability in a Sale and Leaseback - Amendments to January 1, 2024
IFRS 16
Sale or Contribution of Assets between an investor and Effective date
its Associate or Joint Venture - IFRS deferred indefinitely
10 and IAS 28
Management anticipates that these new standards, interpretations and amendments will be adopted in the financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, may have no material impact on the financial statements in the period of initial application.
4 Segment Information
Management monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. The only segment is real estate development.
Business segment
The only business segment is Real estate development which represents 100% of the revenue and total assets.
Geographic segments
The following tables include revenue and other segment information for the six-month period ended 30 June 2023 and 30 June 2022. Certain assets information for geographic segments is presented as at 30 June 2023 and 31 December 2022.
The Group has divided its operations into two categories i.e. Domestic (UK) and International (all other countries where Group has its operations)
Domestic International
USD USD
Six-month period ended 30 June 2023:
Revenue - 108,419,405
Profit for the period (2,537,728) 23,335,519
Six-month period ended 30 June 2022:
Revenue - 27,510,602
Profit for the period (202,980) 3,894,602
As at 30 June 2023
Total assets 49,239,217 666,091,101
Total liabilities 1,730,490 313,967,500
As at 31 December 2022
Total assets 9,637,947 548,256,972
Total liabilities 1,373,566 275,119,765
5 Cash and cash equivalents
As at June
30, As at December
2023 31, 2022
---------------- ----------------
(Unaudited) (Unaudited)
Cash in hand 21,516 14,709
Cash at bank
* Current accounts 29,534,635 40,936,094
* Escrow retention accounts (refer to (a) below) 7,432,170 5,853,253
* Escrow accounts (refer to (b) below) 103,869,247 71,661,582
34,900,000 -
* Short-term deposits (refer to (c) below)
---------------- ----------------
175,757,568 118,465,638
Less: Escrow retention accounts (note
9) (7,432,170) (5,853,253)
---------------- ---------------
168,325,398 112,612,385
========= =========
a) The above represents Escrow retention accounts maintained with a commercial bank in accordance with Law No. 8 of 2007 relating to Trust Accounts Regulation and Real Estate Regulatory Authority (RERA) requirements in Dubai - United Arab Emirates. The retention balance shall be released after one year from the completion of the project.
b) The above represents Escrow accounts maintained with a commercial bank in accordance with the local laws issued by the governing body of the respective countries. This escrow account can be used for making payments directly related to the projects subject to the regulations. The significant increase in the balances during the period is mainly due to collections from customers as per the payment plan.
c) The above represents term deposit held with commercial bank in United Kingdom with maturity period of less than 90 days. This deposit earns interest at the rate of 5.55% per annum.
Management has concluded that the Expected Credit Loss (ECL) for all bank balances is immaterial as these balances are held with banks/financial institutions whose credit risk rating by international rating agencies has been assessed as low.
6 Trade and unbilled receivables
As at June
30, As At December
2023 31, 2022
---------------- ----------------
(Unaudited) (Unaudited)
Unbilled receivables (refer to (a)
below) 106,597,138 39,152,132
Trade receivables (refer to (b) below) 7,259,245 1,400,608
---------------- ----------------
113,856,383 40,552,740
Less: Provision for impairment on - -
trade receivables
---------------- ----------------
Net receivables 113,856,383 40,552,740
========= =========
Not more than 12 months outstanding 113,856,383 40,552,740
More than 12 months outstanding - -
---------------- ----------------
113,856,383 40,552,740
========= =========
a) Unbilled receivables are contract assets which relate to the Group's right to receive consideration for work completed but not billed as at the reporting date. These are transferred to trade receivables when invoiced as per milestones agreed in contracts with the customers.
b) At reporting date, the ageing analysis of net trade and unbilled receivables is as follows:
As at June
30, As At December
2023 31, 2022
---------------- ----------------
(Unaudited) (Unaudited)
Current (Not past due) 106,597,138 39,164,419
Not more than 30 days 3,427,262 142,777
Between 31 to 60 days 282,930 368,428
Between 61 to 90 days 103,009 114,212
More than 90 days 3,446,044 762,904
---------------- ----------------
Total 113,856,383 40,552,740
========= =========
Refer note 29(d) on credit risks of trade and unbilled receivables, which explains how the Group manages and measures credit quality of trade and unbilled receivables that are neither past due nor impaired.
7 Advances, deposits and other receivables
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Prepayments (refer to (a) below) 42,940,885 44,540,626
Advances to suppliers and contractors 11,110,631 3,640,981
Margin deposit (refer to (b) below) 28,344,452 21,592,920
Other deposits 2,574,801 824,130
Other receivables 657,471 486,009
VAT refundable 9,637,878 10,047,183
--------------- ---------------
95,266,118 81,131,849
========= =========
7 Advances, deposits and other receivables (continued)
As at June
30, As at December
2023 31,2022
---------------- ----------------
Less than 12 months 30,914,369 38,543,988
More than 12 months 64,351,749 42,587,861
---------------- ----------------
95,266,118 81,131,849
========= =========
a) The above mainly includes incremental cost of obtaining a contract such as sales commission paid to brokers and employees for the sale of properties, amounting to USD 40,275,224 (2022: USD 36,413,568) and will be amortized consistent with the pattern of revenue in the future.
b) The above represents margin deposits held with a bank against project guarantee (note 32).
c) Prepayments includes USD 73,997 for commission paid to a related party (note 19)
8 Development properties
As at June
30, As at December
2023 31,2022
--------------- ---------------
(Unaudited) (Unaudited)
Balance at the beginning of the period
/ year 302,274,899 176,796,423
Additions during the period / year 67,342,134 176,829,733
Cost of revenue (62,698,442) (51,351,257)
--------------- ---------------
Balance at the end of the period/year 306,918,591 302,274,899
========= =========
Properties acquired, constructed or in the course of construction for sale in the ordinary course of business are classified as development properties and include the costs of:
-- Freehold and leasehold rights for land;
-- Amounts paid to contractors for construction including the cost of construction of infrastructure; and
-- Planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, borrowing costs, cost of acquiring development rights construction overheads and other related costs.
Common overhead cost (directly attributable to the projects) is allocated to various projects and forms part of the estimated cost to complete a project in order to determine the cost attributable to revenue being recognised.
The Group assesses the net realizable value of development properties for impairment on each reporting date and the management believes that the net realizable value of above development properties is higher than its carrying value as on the reporting date.
Development properties in the UAE include land provided by Joint Development Agreement (JDA) partner on December 9, 2021, under a JDA. On initial recognition the property has been recognized at fair value of the consideration payable i.e., at USD 29,875,519 which is computed based on a deferred payment plan as defined in the sale and purchase agreement ("SPA") (note 17). Under the arrangement with Uranus, profits will be shared equally between the parties.
Development properties include an amount of USD 95,302,927 (December 2022 : USD 95,302,927) which is registered as primary mortgage in the favour of commercial bank in Dubai against the borrowings (note 18).
The development properties are located in United Arab Emirates, United Kingdom, Bosnia, Spain and Oman.
9 Escrow retentions
As at June
30, As at December
2023 31,2022
--------------- ---------------
(Unaudited) (Unaudited)
Escrow retention accounts - more than
12 months (note 5) 7,432,170 5,853,253
======== ========
10 Investment in joint venture
As at June
30, As at December
2023 31,2022
--------------- ---------------
(Unaudited) (Unaudited)
149 OPL Ltd 5,129,139 4,681,667
======== ========
On 3 November 2022, the Group entered into joint venture for the purpose of acquiring, developing and selling the property under the name of 149 OPL Ltd ("joint venture") domiciled in the United Kingdom.
In accordance with the joint venture agreement, the Group and the other investor have subscribed to deep discount bonds issued by 149 OPL Ltd in the proportion of their respective ownership interest. On 3 November 2022, the Group has subscribed for bonds with nominal value of USD 5,919,512 at a discounted price of USD 4,932,926. Further, the discount rate is 10% per annum and maturity period for the bond is two years.
June 30, December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Revenue - -
Net loss (41,903) (439,221)
Other comprehensive income - -
-------------- --------------
Total comprehensive loss (41,903) (439,221)
Group's share of loss (31,553) (330,733)
======== ========
The following table summarises the financial position of Group's joint venture for the period/year ended:
As at June
30, As at December
2023 31,2022
---------------- ----------------
Total assets 21,473,995 18,837,517
Total liabilities 14,662,390 12,620,164
-------------- --------------
Net assets (6,811,605) (6,217,353)
Group's share of net liabilities (5,129,139) (4,681,667)
======== ========
11 Loan to joint venture
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
149 OPL Ltd 2,098,027 1,991,953
======== ========
Loan to joint venture is unsecured, repayable on demand and do not carry any interest.
12 Property and equipment
Computers
Leasehold Furniture and office Capital
improvements and fixtures equipment work-in-progress Total
Cost (unaudited)
As at January
1, 2022 451,483 326,252 368,281 - 1,146,016
Additions 599 24,457 227,550 576,016 828,622
Disposals (201,073) - - - (201,073)
------------ ------------ ------------- ------------ -------------
As at December
31, 2022 251,009 350,709 595,831 576,016 1,773,565
Additions 185,473 991,444 601,213 126,199 1,904,329
Transfer from
Capital work-in-progress 196,008 399,120 - (595,128) -
---------- ------------ ------------ ------------ ------------
As at June 30,
2023 632,490 1,741,273 1,197,044 107,087 3,677,894
---------- ------------ ------------ ----------- ------------
Accumulated depreciation (unaudited)
As at January
1, 2022 193,888 246,590 325,745 - 766,223
Charge for the
period 62,115 66,391 41,699 - 170,205
Disposals (4,994) - - - (4,994)
---------- ---------- ------------ ------------ ------------
As at December
31, 2022 251,009 312,981 367,444 - 931,434
Charge for the
period 49,650 120,496 158,155 - 328,301
---------- ------------ ------------ ------------ ------------
As at June 30,
2023 300,659 433,477 525,599 - 1,259,735
---------- ------------ ------------ ------------ ------------
Carrying value
as
At June 30, 2023 331,831 1,307,796 671,445 107,087 2,418,159
====== ====== ====== ======= =======
As at December
31, 2022 - 37,728 228,387 576,016 842,131
====== ====== ====== ======= =======
13 Right-of-use assets and Lease liabilities
The carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the year:
As at June
Right-of-use assets 30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Balance at the beginning of the period/year 2,643,470 -
Additions during the period/year 5,094,849 3,510,427
Depreciation charge for the period/year (843,822) (866,957)
Foreign exchange gain 13,363 -
-------------- --------------
Balance at the end of the period/year 6,907,860 2,643,470
======== ========
As at June
Lease liabilities 30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Balance at the beginning of the period/year 2,743,815 -
Additions during the period/year 5,094,849 3,510,427
Interest expense for the period/year 155,993 161,790
Payments for the period/year (1,021,679) (928,402)
Foreign exchange loss (13,225) -
------------ ------------
Balance at the end of the period/year 6,959,753 2,743,815
======= =======
Less than 12 months 2,681,168 1,054,322
More than 12 months 4,278,585 1,689,493
------------ ------------
6,959,753 2,743,815
======= =======
14 Trade and other payables
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Trade payables 5,573,899 1,823,906
Accruals 17,158,422 28,601,037
Other payables 1,587,991 266,341
-------------- --------------
24,320,312 30,691,284
======== ========
Less than 12 months 24,320,312 30,691,284
More than 12 months - -
------------- -------------
24,320,312 30,691,284
======== ========
15 Advance from customers
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Balance at the beginning of the period/year 94,456,096 33,999,178
Revenue recognized during the period/year (62,698,442) (90,565,312)
Advances received from the customers
during the period/year - Net 107,249,371 151,022,230
--------------- --------------
Balance at the end of the period/year 139,007,025 94,456,096
========= ========
The above represent contractual liabilities arising from the property sales agreement with the customers including advance consideration received from them.
The aggregate amount of the sale price allocated to the performance obligations of the Group that are fully or partially unsatisfied as at 30 June 2023 is USD 117,966,983 (31 December 2022: USD 125,492,668). The Group expects to recognise these unsatisfied performance obligations as revenue over a period of 1 to 5 years.
16 Retention payable
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Retention payable for construction
works - not more than 12 months 4,410,940 4,038,203
Retention payable for construction
works - more than 12 months - -
------------ ------------
4,410,940 4,038,203
======= =======
17 Development property liability
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Long term liability - Land 75,457,098 72,467,693
-------------- --------------
75,457,098 72,467,693
======== ========
The above represents amount payable for the land contributed by joint development partner under the JDA. This liability is secured against development property (note 8). The property has been purchased on a deferred payment plan with the final instalment due on the completion of the project i.e. on or before December 31, 2025. The interest cost is capitalized which represents a difference between the fair value at the date of initial recognition and the discounted value as at the period ended June 30, 2023.
18 Loans and borrowings
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Balance at the beginning of the period/year 69,668,662 -
Add: Drawdown during the period/year 2,224,527 69,668,662
Less: Repayments during the period/year (8,167,613) -
-------------- --------------
63,725,576 69,668,662
======== ========
18 Loans and borrowings (continued)
As at June
Loans and borrowings maturity profile: 30, As at December
2023 31,2022
---------------- ----------------
Not more than 12 months 6,798,747 4,482,821
More than 12 months 56,926,829 65,185,841
-------------- --------------
63,725,576 69,668,662
======== ========
The Group has following secured interest-bearing borrowings:
- During the year 2022, the Group entered into a financing facility with a commercial bank for an amount of USD 87,134,105 of which the Group had drawn down USD 65,350,579. This facility is secured against development property (note 8) in United Arab Emirates, carries interest at 3 months EIBOR plus 2.55% per annum and is repayable by November 2027.The facility is presented in the consolidated financial statements at USD 56,926,829.
- During the year 2022, the Group entered into a USD 4,574,220 financing facility with a commercial bank in Spain which has been fully drawn. This facility carries interest at 3 months EURIBOR plus 2.449% per annum and is repayable by September 2023.
- Additionally, during the current period, the Group entered into a USD 2,224,557 financing facility with a commercial bank in Spain which has been fully drawn. This facility carries interest at 3 months EURIBOR plus 2.50% per annum and is repayable by October 2023.
- The Group has an undrawn facility from a commercial bank in UAE, obtained on 25 April 2023 in the amount of USD 204 million, which is guaranteed by Dar Al Arkan Global Real Estate Development and Dar Al Arkan Real Estate Development Company.
19 Related party transactions
The Group enters into transactions with other entities that fall within the definition of a related party as contained in IAS 24, Related party disclosures. Related parties comprise entities under common ownership and/or common management and control; their partners and key management personnel.
The management decides on the terms and conditions of the transactions and services received/rendered from/to related parties as well as other charges, if applicable.
a) Due from related party
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Entity under common control
Dar Al Arkan For Real Estate Development
W.L.L, Qatar 6,978,473 5,310,572
======== ========
These above balances are interest bearing at the rate of 6% per anum and shall be repayable by 21 November 2026.
b) Due to related party
As at June
30, As at December
2023 31,2022
---------------- ----------------
Parent company (Unaudited) (Unaudited)
Dar Al Arkan Global Real Estate
Development LLC, UAE 1,506,825 2,101,668
======== ========
These balances are unsecured, interest free and is repayable on demand.
c) Transactions with key management personnel
As at June As at June
30, 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Short term benefits 1,386,312 126,404
Employees' end-of-service benefits 216,953 -
------------ -------------
1,603,265 126,404
======= =======
d) Other related party transactions
As at June As at June
30, 30,
2023 2022
---------------- ----------------
Issuance of shares for acquisition
of subsidiary
Parent company 282,670,733 -
Issuance and redemption of preference
shares
Parent company 61,900 -
Loan granted/(received)
Entity under common control of Ultimate
parent company 1,667,901 -
Parent company 594,842 (58,991,879)
Share of loss
Joint venture 31,553 -
As at June As at June
30, 30,
2023 2022
---------------- ----------------
Interest income
Entity under common control of Ultimate
parent company 303,166 -
Joint venture 258,274 -
Professional fees
Ultimate parent company 81,688 -
Prepayments
Entity under common control of Ultimate
parent company 73,997 -
During February 2023, the Company entered into revolving credit agreement of USD 200 million with the Ultimate parent entity to finance the general corporate purposes of the Group. As at June 30, 2023 the entire facility is undrawn.
20 Share capital
As at December
As at June 30, 2023 31, 2022
(Unaudited) (Unaudited)
Ordinary shares Number Amount Number Amount
Ca lled up and fully paid-up share capital
Opening 2,239,510,913 22,395,109 - -
Issuance of shares for
acquisition of subsidiary* 366,666,594 3,666,666 2,239,510,913 22,395,109
Issuance of ordinary shares* 21,621,612 216,216 - -
Capital reduction** (2,447,777,507) (24,477,775) - -
--------------- -------------- ----------------- --------------
180,021,612 1,800,216 2,239,510,913 22,395,109
========= ======== ========== ========
* On 25th January 2023, the Company issued 366,666,594 ordinary shares to Parent entity for acquisition of Dar Al Arkan Holdings Ltd (ADGM) - UAE.
Additionally, on 28th February 2023, the Company issued 21,621,612 ordinary shares at a price of USD 3.33 by way of a private placement on the London Stock Exchange to qualified investors.
**On 30th January 2023, the Company completed a capital reduction, reducing the issued share capital by USD 24,477,775 through the cancellation of 2,447,777,507 shares, this amount and its related share premium has been transferred to retained earnings as it is distributable.
21 Share premium
As at June
30, As at December
2023 31,2022
---------------- ----------------
(Unaudited) (Unaudited)
Share premium 88,781,078 259,263,179
-------------- ---------------
88,781,078 259,263,179
======== =========
Additional net assets of USD 279,004,068 received on 25th January 2023 for the issuance of 366,666,594 shares of USD 0.01 each to the Parent entity in exchange of acquisition of shares in Dar Al Arkan Holdings Limited (ADGM) - UAE amounting to USD 282,670,732 (Note 20).
On 30th January 2023, the Company completed a capital reduction, reducing the issued share capital by USD 24,477,775 through the cancellation of 2,447,777,507 shares, the share premium relating to this reduction amounting to USD 262,664,624 has been transferred to retained earnings as it is distributable.
Additionally, share premium includes an amount of USD 71,783,588 premium received on 28th February 2023, on issuance of 21,621,612 ordinary shares of USD 0.01 each at a price of USD 3.33 (Note 20).
22 Revenue
Six-month period ended
June 30, June 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Revenue is recognised over time as
provided below:
Sale of residential units 108,196,392 27,510,602
Other revenue:
Interest income from customer contracts 223,013 -
--------------- --------------
108,419,405 27,510,602
========= ========
Cost of revenue
Cost of residential units 62,698,442 15,130,428
========= ========
Revenue from sale of residential units is net of discount against transaction prices for certain units sold with a significant financing component and Dubai Land Department (DLD) fee waiver amounting to USD 5,906,542 (2022: USD 941,013).
23 Other income
Six-month period ended
June 30, June 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Income from termination of units (note
(i) below) 1,057,294 -
Foreign exchange gain 668,350 -
Others 17,361 -
--------------- --------------
1,743,005.00 -
========= ========
(i) This represents instalments collected from customers that have been forfeited due to termination of contracts on account of cancellation of units booked.
24 Selling and marketing expenses
Six-month period ended
June 30, June 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Sales commission 10,119,319 1,215,820
Marketing expenses 3,066,063 715,995
-------------- --------------
13,185,382 1,931,815
======== ========
25 General and administrative expenses
Six-month period ended
June 30, June 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Salaries and related benefits 7,358,332 3,079,291
Legal and professional expenses (note
(i) below) 1,645,372 424,094
Depreciation on right-of-use assets
(note 13) 843,822 -
IT related expenses 518,061 -
Bank charges 333,737 157,125
Utilities 361,049 72,604
Depreciation on property and equipment
(note 12) 328,301 77,268
Rent 311,429 554,091
Board of Directors Fees 259,167 -
Travelling expenses 257,262 16,452
June 30, June 30,
2023 2022
---------------- ---------------
(Unaudited) (Unaudited)
Other expenses 712,361 171,612
-------------- --------------
12,928,893 4,552,537
======== ========
(i) This includes professional fees amounting to USD 81,688 (June 30, 2022: Nil) payable to the Ultimate parent entity.
26 Net finance costs
Six-month period ended
June 30, June 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Finance costs
Interest expense on bank borrowings 1,697,297 -
Interest on lease liability (note
13) 155,994 -
Interest expense on un-winding of
loans received from related parties - 2,219,259
------------ --------------
1,853,291 2,219,259
======= ========
Finance income
Interest income 771,502 15,059
Interest income from loan to related
party (note 19) 303,166 -
Income from investment in bonds of
joint venture 258,274 -
-------------- --------------
1,332,942 15,059
======== ========
Net finance costs 520,349 2,204,200
======== ========
27 Earning Per Share
Basic earnings per share amounts are calculated by dividing net profit or loss for the year attributable to the owners of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit or loss attributable to the owners of the Company (after adjusting for interest on the convertible notes) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The information necessary to calculate basic and diluted earnings per share is as follows:
Six-month period ended
June 30, June 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Earnings:
Profit/(loss) attributable to the
owners of the Company for basic earnings 20,797,791 3,691,622
======== =======
Number of shares in thousands
Weighted-average number of ordinary
shares for basic/diluted earnings
per share 269,916,428 300,000
========= =======
Earnings per share:
* basic and diluted earnings per share (USD) 0.08 12.31
======== ========
28 Financial instruments
a) Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset and financial liability are disclosed in note 2 to the interim financial statements.
b) The Group considers that the carrying amount of financial assets and liabilities are reasonable approximation of fair values.
As at As at
June 30, June 30,
December December
2023 31, 2022 2023 31, 2022
Financial
assets Carrying amount Fair Value
Cash and cash equivalents 168,325,398 112,612,385 168,325,398 112,612,385
Trade and unbilled receivables 113,856,383 40,552,740 113,856,383 40,552,740
Advances, deposits and
other receivables 31,576,724 22,903,059 31,576,724 22,903,059
Escrow retentions 7,432,170 5,853,253 7,432,170 5,853,253
Due from related party 6,978,473 5,310,572 6,978,473 5,310,572
Loan to joint venture 2,098,027 1,991,953 2,098,027 1,991,953
--------------- --------------- --------------- ---------------
330,267,175 189,223,962 330,267,175 189,223,962
========= ========= ========= =========
Financial liabilities
Trade and other payables 22,732,321 30,424,943 22,732,321 30,424,943
Retention payable 4,410,940 4,038,203 4,410,940 4,038,203
Loans and borrowings 63,725,576 69,668,662 63,725,576 69,668,662
Development property liability 75,457,098 72,467,693 75,457,098 72,467,693
Due to related party 1,506,825 2,101,668 1,506,825 2,101,668
Lease liabilities 6,959,753 2,743,815 6,959,753 2,743,815
--------------- --------------- --------------- ---------------
174,792,513 181,444,984 174,792,513 181,444,984
========= ========= ========= =========
Financial instruments comprise of financial assets and financial liabilities.
Financial assets consist of accounts receivable, cash and cash equivalents, due from related parties, loan to joint venture and other receivables excluding prepayments, advances to suppliers and contractors and VAT refundable. Financial liabilities consist of other payables, interest bearing loans and borrowings, development property liabilities, lease liabilities and accounts payables and provisions excluding VAT payable.
29 Financial risk management objectives
The Group management set out the Group's overall business strategies and its risk management philosophy. The Group's overall financial risk management program seeks to minimize potential adverse effects on the financial performance of the Group. The Group policies include financial risk management policies covering specific areas, such as market risk (including foreign exchange risk, interest rate risk), liquidity risk and credit risk. Periodic reviews are undertaken to ensure that the Group's policy guidelines are complied with.
There has been no change to the Group's exposure to these financial risks or the manner in which it manages and measures the risk.
The Group is exposed to the following risks related to financial instruments. The Group has not framed formal risk management policies, however, the risks are monitored by management on a continuous basis. The Group does not enter into or trade in financial instruments, investment in securities, including derivative financial instruments, for speculative or risk management purposes.
a) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise.
The Group's significant monetary assets and liabilities denominated in foreign currencies are in AED which is pegged to USD. As the AED is currently pegged to the USD, balances are not considered to represent significant currency risk.
b) Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative financial instruments as at 30 June 2023. The analysis is prepared assuming the amount of liabilities outstanding at the reporting date was outstanding for the whole year.
A 50-basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the change in Group's profit for the period ended 30 June 2023 would not have material change. This is mainly attributable to the Group's exposure to variable rate financial instruments.
c) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the management which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and equity from shareholders.
c) Liquidity risk management (continued)
The table on the following page summarizes the maturity profile of the Group's financial liabilities. The contractual maturities of the financial liabilities have been determined on the basis of the remaining period at the condensed consolidated statement of financial position date to the contractual maturity date. The maturity profile of these liabilities at the condensed consolidated statement of financial position date based on contractual repayment arrangements are shown in the table below:
Contractual Cashflows
Less More
Carrying than than
amount Total 1 year 1-2 years 2-5 years 5 years
30 June 2023
Financial liabilities
Payables 22,732,321 22,732,321 22,732,321 - - -
Retention
payable 4,410,940 4,410,940 - - 4,410,940 -
Loans and
borrowings 63,725,576 77,641,275 11,380,929 16,454,225 49,806,121 -
Development
property
liability 75,457,098 92,579,986 - - 92,579,986 -
Lease liabilities 6,959,753 7,693,792 2,681,168 2,475,885 2,425,805 110,934
Due to related
party 1,506,825 1,506,825 1,506,825 - - -
-------------- -------------- ------------- ------------- ------------- ----------
174,792,513 206,565,139 38,301,243 18,930,110 149,222,852 110,934
======== ======== ======== ======== ======== ======
31 December 2022
Financial liabilities
Payables 30,424,943 30,424,943 30,424,943 - - -
Retention
payable 4,038,203 4,038,203 - - 4,038,203 -
Loans and
borrowings 69,668,662 86,742,249 10,499,907 9,530,293 66,712,049 -
Development
property
liability 72,467,693 92,579,986 - - 92,579,986 -
Lease liabilities 2,743,815 3,000,489 1,054,322 932,719 780,380 233,068
Due to related
party 2,101,668 2,101,668 2,101,668 - - -
--------------- --------------- ------------- ------------- --------------- ----------
181,444,984 218,887,538 44,080,840 10,463,012 164,110,618 233,068
========= ========= ======== ======== ========= ======
d) Credit risk management
Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties. The Group's exposures are continuously monitored and their credit exposure is reviewed by the management regularly.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The carrying amounts of the financial assets recorded in the condensed consolidated financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risks.
30 Capital risk management
The capital structure of the Group consists of cash and cash equivalents, debt, which includes interest-bearing loans and borrowings as disclosed in note 18 and equity as disclosed in the condensed consolidated financial statements.
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the equity balance. The Group's overall strategy remains unchanged from prior year. The Group is not subject to any externally imposed capital requirements.
31 Contingent liabilities
As at June
30, As at December
2023 31, 2022
---------------- ----------------
(Unaudited) (Unaudited)
Letters of guarantee 28,344,452 21,592,920
======== ========
Under the Real Estate Regulatory Agency (RERA) regulations, the Group is required to provide letters of guarantees to the Dubai Land Department for all of its projects located in the United Arab Emirates in the amount of 20 per cent. of the construction costs for such projects. The Group holds margin deposits equivalent to the amount of the letters of guarantee at the bank providing such letters of guarantee. The guarantee margin deposit is refundable on completion of the project.
Except for the above and ongoing business obligations which are under normal course of business, there has been no other known contingent liability on Group's condensed consolidated financial statements as of reporting date.
32 Commitments
As at June
30, As at December
2023 31, 2022
---------------- ----------------
(Unaudited) (Unaudited)
Contracted commitments for development
properties
(note 8) 134,517,699 21,780,570
========= =========
Except for the above and ongoing business obligations which are under normal course of business, there has been no other known commitment on Group's co financial statements as of reporting date.
33 Auditors Remuneration
Six-month period ended
June 30, June 30,
2023 2022
---------------- ----------------
(Unaudited) (Unaudited)
Audit fees 437,587 -
RERA Audit - UAE 2,722 1,634
Review of the Quarterly financial
statements - 2,723
--------------- ---------------
440,309 4,357
========= =========
34 Events after the reporting period
Subsequent to 30 June 2023, there have been no events that require disclosure or adjustment to these condensed consolidated financial statements
Alternative performance measures
The Group uses a number of alternative performance measures (APM) which are not defined within IFRS. The Directors use the APMs, along with IFRS measures to assess the operational performance of the Group. Definitions and reconciliations of the financial APMs used compared to IFRS measures, are included below:
Adjusted performance metrics
Adjusted performance metrics reconciled to statutory reported measures are shown below. The Directors consider these performance metrics provide additional information regarding the Group's core operations and business performance.
(In US$)
Particulars January 1, January 1, 2022
2023 to June to June 30,
30, 2023 2022
-------------------------- -------------------------------
Gross Profit 45,720,963 12,380,174
-------------------------- -------------------------------
Gross Profit % 42% 45%
-------------------------- -------------------------------
Net Finance costs (520,349) (2,204,200)
-------------------------- -------------------------------
Share of loss from joint venture (31,553) -
-------------------------- -------------------------------
Profit / (Loss) for the year before
tax 20,797,791 3,691,622
-------------------------- -------------------------------
Profit / (Loss) for the year % 19% 13%
-------------------------- -------------------------------
Depreciation on property and equipment
and right-of-use assets 1,172,123 77,268
-------------------------- -------------------------------
Net Finance costs 520,349 2,204,200
-------------------------- -------------------------------
EBITDA 22,490,263 5,973,090
-------------------------- -------------------------------
Profits attributable to owners
of the company for basic earnings 20,797,791 3,691,622
-------------------------- -------------------------------
Weighted average number of ordinary
shares for basic/diluted earnings
per share 269,916,428 300,000
-------------------------- -------------------------------
Earnings per share attributable
to owner of the Company:
- Basic and Diluted Earnings per
share (USD) 0.08 12.31
-------------------------- -------------------------------
Underlying gross profit and gross margin
The Directors consider this to be an important indicator of the underlying trading performance of the Group.
Underlying profit before taxation
This is the profit before taxation. The Directors consider this to be an important indicator of the profitability of the Group before taxation.
Net cash
Net cash is cash and cash-equivalents plus non-current and current interest-bearing loans and borrowings. Net cash Illustrates the Group's overall liquidity position and general financial resilience.
The company has a cash position of US$175.7 million, comprising free cash of c. US$64.4 million and restricted cash of c. US$111.3 million (including escrow and escrow retention) across all project accounts. The total borrowings as at 30(th) June 2023 was US$ 63.7 million.
Net cash post deduction of borrowings is US$ 112 million (total cash position - borrowings).
[1] Drawdown subject to terms and conditions
[2] HY 2023 operating profit includes revenue and cost recognised for DaVinci Tower by Pagani with an operating profit margin of 37% along with those for Urban Oasis Tower. HY 2022 only included Urban Oasis Tower recognition which was at an operating profit margin of 45%.
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