DAMAC Properties Dubai : Financial Statements 2021 - English

Damac Properties Dubai Co. P.J.S.C.

Consolidated Financial Statements

For the year ended 31 December 2021

Table of contents

Pages

Directors' Report

1

Independent Auditor's Report

2 - 9

Consolidated statement of financial position

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 - 15

Notes to the consolidated financial statements

16 - 69

Key audit matter

How the matter was addressed in our audit

Valuation of properties held for development and sale

The Group holds properties for development and sales of AED 8,585 million, which comprise completed residential and commercial properties (AED 1,819 million), land held for mixed-use development and sale (AED 2,626 million) and properties under construction (AED 4,140 million).

The Group determines whether its properties held for development and sale exhibit any indicators of impairment and if so, compares the recoverable amount of each property to its carrying amount. The Group applies significant estimates in determining the recoverable amount of properties held for development and sale. Changes in these estimates could have a significant impact on the determination of the recoverable amount of properties held for development and sale. Key inputs used by management in their valuation exercise include future projected cash flows and comparable property transactions, which are influenced by prevailing market conditions and the specific characteristics of each property in the portfolio.

In addition, the Group also appoints professionally qualified external valuers to determine the fair value of the Group's portfolio of properties held for development and sale.

The estimation of property cost and net realisable value is a key process as a change in the Group's forecast estimate of sales price and construction cost could have a material impact on the carrying value of the properties held for development and sale in the Group's consolidated financial statements.

In the event that the carrying amount of a property is higher than its recoverable amount, the Group will adjust the property to its recoverable amount and recognise an impairment loss.

Refer to note 5 for details about judgements applied and estimates made in determining the valauation of properties held for development and sale.

Our audit procedures included, but were not limited to, the following:

We obtained an understanding of the process implemented by the Group in valuing properties held for development and sale.

We assessed the controls over the valuation process to determine if they had been designed and implemented appropriately.

We considered if there were any properties which had not been considered for an assessment of the recoverable amount by management.

Experience of Valuer and relevance of their work

We confirmed that the approach used in the external valuation were consistent with the requirements of the Royal Institute of Chartered Surveyors.

We assessed the Valuer's skills, objectivity, competence and independence.

We read Valuer's terms of engagement with the Group to determine if it was sufficient for audit purposes.

Data provided to the Valuer

We tested samples for the data provided to the Valuer by the Group. This data included costs incurred to date, costs to complete, historical sales prices, outstanding receivables to be collected and information relating to unsold inventories.