Eshraq Investments : Quarterly Result 4 2023

ESHRAQ INVESTMENTS PJSC

Reports and consolidated financial statements for the year ended 31 December 2023

ESHRAQ INVESTMENTS PJSC

Reports and consolidated financial statements for the year ended 31 December 2023

	Pages
Report of the Board of Directors		1
Independent auditor's report		2 - 8
Consolidated statement of financial position	9	- 10
Consolidated statement of profit or loss		11
Consolidated statement of comprehensive income		12
Consolidated statement of changes in equity		13
Consolidated statement of cash flows	14	- 16
Notes to the consolidated financial statements	17	- 72

Deloitte & Touche (M.E.)

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Abu Dhabi Global Market Square

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P.O. Box 990

Abu Dhabi

United Arab Emirates

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INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

ESHRAQ INVESTMENTS PJSC

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Opinion

We have audited the consolidated financial statements of Eshraq Investments PJSC (the "Company") and its subsidiaries (together, the "Group"), which comprise the consolidated statement of financial position as at 31 December 2023 and the consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policies information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2023, and its consolidated financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS Accounting Standards) (IFRSs).

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current year. We have communicated the key audit matters to the Audit Committee, but they are not a comprehensive reflection of all matters that were identified by our audit and that were discussed with the Audit Committee. On the following pages, we have described the key audit matters we identified and have included a summary of the audit procedures we performed to address those matters.

The key audit matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Akbar Ahmad (1141), Cynthia Corby (995), Faeza Sohawon (5508), Firas Anabtawi (5482), Georges Najem (809), Jazala Hamad (1267), Mohammad Jallad (1164), Mohammad Khamees Al Tah (717), Musa Ramahi (872), Mutasem M. Dajani (726), Nurani Subramanian Sundar (5540), Obada Alkowatly (1056), Rama Padmanabha Acharya (701) and Samir Madbak (386) are registered practicing auditors with the UAE Ministry of Economy.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

ESHRAQ INVESTMENTS PJSC (CONTINUED)

Key Audit Matters (continued)

Key audit matter	How our audit addressed the key audit matter
Valuation of Investment properties
The aggregated value of the Group's investment	We evaluated the design and implementation of
properties was AED 688 million as of 31 December	controls over the determination of fair value of
2023, representing 30% of total assets (2022: AED	properties.
835 million and 28% of total assets). The unrealised
fair value gain recorded in the consolidated	We assessed the skills, competence, independence
statement of profit or loss amounted to AED 1	and objectivity of the independent valuers and read
million (2022: gain of	their terms of engagement with the Group to
AED 51 million). The Group measures these	determine whether there were any matters that
investment properties at their fair value. The	might have affected their objectivity or may have
measurement is inherently subjective due to the	imposed scope limitations on their work.
individual nature and location of each investment
property which considerably influences the	We reviewed a sample of investment properties
expected rental income or sales price.	valued by external valuers, and also involved our
	internal real estate valuation expert to review a
The determination of the fair value of Group's	sample of those properties, and assessed whether
investment properties is based on valuations	the valuation of the properties was performed in
performed by independent valuers using the market	accordance with the requirements of IFRSs.
comparable approach and income capitalisation
approach.	We assessed the accuracy of the input data, on a
	sample basis, used by the independent valuers and
The Group's determination of fair value for the	challenged the key assumptions used by the
investment properties requires valuers and	independent valuers, including sale prices per
management to make significant estimates and	square meter.
assumptions related to sales of comparable
properties, future rental rates, capitalisation rates	Where we identified estimates that were outside
and discount rates when observable information is	acceptable parameters, we discussed these with the
not available or when significant adjustments are	valuers and management to understand the rationale
made to the observable market information.	behind the estimates made.
The valuation of these investment properties is a	We performed sensitivity analyses on the
significant judgement area and is based on a	significant assumptions to evaluate the extent of
number of assumptions. The existence of significant	their impact on the determination of fair values.
estimation uncertainty warrants specific audit focus
in this area as any bias or error in determining the	We reperformed the mathematical accuracy of the
fair value could lead to a material misstatement in	valuations, where applicable.
the consolidated financial statements.
	We agreed the results of the valuations performed
	by the independent valuers to the amounts reported
	in the consolidated financial statements.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

ESHRAQ INVESTMENTS PJSC (CONTINUED)

Key Audit Matters (continued)

Key audit matter	How our audit addressed the key audit matter
Valuation of Investment properties (continued)

We have identified the valuation of investment properties as a key audit matter as the fair value is determined based on non-observable inputs and requires management to apply significant judgements in determining the fair value of investment properties.

Refer to note 3 in the consolidated financial statements for accounting policy on investment properties, note 4 for critical accounting judgements and key sources of estimation uncertainty involved with the fair valuation of investment properties and notes 6 in the consolidated financial statements for further details related to investment properties.

We assessed the disclosure in the consolidated financial statements relating to this matter against the requirements of IFRSs.

Valuation of Investment in Goldilocks Investment Company Limited ("Goldilocks")

The Group has an investment in Goldilocks with a carrying amount of AED 1,337 million as at 31 December 2023 (2022: AED 1,753 million). This investment is valued in accordance with level 3 in the fair value hierarchy wherein inputs into the determination of fair value are unobservable for the asset. This required complex valuation techniques to be adopted. The fund employed external experts to assist management in determining the fair value of Goldilocks.

The fair value was determined based on the net asset value of Goldilocks as at 31 December 2023.

The Group investment in the Fund represents 58.7% of the total assets. Due to the materiality and size of the investment in the context of the financial statements as a whole, this is considered of most significance in the audit of the financial statements and thus, we have considered this to be a key audit matter.

We performed the following audit procedures, inter alia, relating to this key audit matter:

We evaluated the controls over the determination of the fair value of Goldilocks to determine if they had been appropriately designed and implemented.

We assessed the accuracy of the input data, fund's assumptions and methodology supporting the fair value of the investment.

We assessed the skills, competence, independence and objectivity of the external experts used by the fund to value the investment and reviewed their terms of engagement with the fund to determine whether their scope was sufficient for audit purposes.

We used our own valuation specialists to challenge and corroborate the findings of the external experts using our experience, market data and information from similar valuations.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

ESHRAQ INVESTMENTS PJSC (CONTINUED)

Key Audit Matters (continued)

Key audit matter

How our audit addressed the key audit matter

Valuation of Investment in Goldilocks Investment Company Limited ("Goldilocks") (continued)

Refer to note 9 for more information relating to the determination of fair value of Goldilocks.

Where we identified estimates that were outside acceptable parameters, we discussed these with the valuers and management to understand the rationale behind the estimates made.

We reperformed the mathematical accuracy of the valuations, where applicable.

We agreed the results of the valuations performed by the independent valuers to the amounts reported in the consolidated financial statements.

We assessed the disclosure in the consolidated financial statements relating to this matter against the requirements of IFRSs.

Other Information

The Board of Directors are responsible for the other information. The other information comprises the Report of Board of Directors, which we obtained prior to the date of this auditor's report, and the Group's Annual Report, which is expected to be made available to us after that date. The other information does not include the consolidated financial statements and our auditor's report thereon.

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

ESHRAQ INVESTMENTS PJSC (CONTINUED)

Other Information (continued)

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we will read the Group's Annual Report, if we conclude that there is a material misstatement therein, we will be required to communicate the matter to those charged with governance and consider whether a reportable irregularity exists in terms of the auditing standards, which must be reported.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

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

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

ESHRAQ INVESTMENTS PJSC (CONTINUED)

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements (continued)

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

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

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

ESHRAQ INVESTMENTS PJSC (CONTINUED)

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

31 December 2023:

• We have obtained all the information we considered necessary for the purposes of our audit;
• The consolidated financial statements have been prepared and comply, in all material respects, with the applicable provisions of the UAE Federal Law No. (32) of 2021;
• The Group has maintained proper books of account;
• The financial information included in the Report of the Board of Directors is consistent with the books of account and records of the Group;
• As disclosed in Notes 7 and 9, the Group has invested in shares during the financial year ended 31 December 2023;
• Note 20 reflects the disclosures relating to related party transactions and the terms under which they were conducted;
• Based on the information that has been made available to us nothing has come to our attention which causes us to believe that the Group has contravened during the financial year ended 31 December 2023 any of the applicable provisions of the UAE Federal Law No. (32) of 2021 or in respect of the Group, its Memorandum and Articles of Association which would materially affect its activities or its financial position as at 31 December 2023; and
• During the year 31 December 2023, the Group has not made any social contributions.

Deloitte & Touche (M.E.)

Firas Anabtawi

Registration Number 5482

19 March 2024

Abu Dhabi

United Arab Emirates