Reem Investments...

CONSOLIDATED FINANCIAL STATEMENTS ANDCHAIRMAN’S REPORT

Reem Investments PJSC

31 DECEMBER 2017

31 DECEMBER 2017

Reem Investments PJSCCHAIRMAN’S REPORT

31 DECEMBER 2017

Reem Investments PJSCAUDITOR’S REPORT AND

CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED INCOME STATEMENT Year ended 31 December 2017 2017 2016 Notes AED ‘000 AED ‘000 Revenue from sale of land - 20,620 Direct costs - (21,219) Rental income 17,043 5,093 GROSS PROFIT 17,043 4,494 Net gain on disposal of investments 826,760 12,583 Impairment loss on investments (8,414) (3,855) Share of results of associates 7 (37) (2) Dividend income 110,530 102,314 Interest and other income 3 70,246 73,176 (Loss) gain on revaluation of investment properties, net 9 (5,828) 49,203 1,010,300 237,913 Administrative expenses (25,670) (18,418) Directors’ fees (2,650) (2,650) PROFIT FOR THE YEAR 4 981,980 216,845 The attached notes 1 to 21 form part of these consolidated financial statements.

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2017 2017 2016 AED ‘000 AED ‘000 PROFIT FOR THE YEAR 981,980 216,845 Other comprehensive income Items that may be reclassified subsequently to the consolidated income statements Reclassification of net realised gain on de-recognition of available for sale investments (827,881) - Change in fair value of available for sale investments, net (61,790) 72,251 Other comprehensive (loss) income (889,671) 72,251 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 92,309 289,096 The attached notes 1 to 21 form part of these consolidated financial statements.

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CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 December 2017 2017 2016 Notes AED ‘000 AED ‘000 OPERATING ACTIVITIES Profit for the year 981,980 216,845 Adjustments for: Share of results of associates 7 37 2 Depreciation 8 632 666 Net gain on disposal of investments (826,760) (12,583) Dividend income (110,530) (102,314) (Loss) gain on revaluation of investment properties, net 9 5,828 (49,203) Interest income 3 (48,137) (35,510) Impairment loss on investments 8,414 3,855 Provision for employees’ end of service benefits 15 239 294 11,703 22,052 Working capital changes: Accounts receivable and prepayments 228,815 50,090 Accounts payable and accruals (36,594) (14,287) Advances received from customers - (20,620) Cash from operations 203,924 37,235 Employees’ end of service benefits paid 15 (222) (256) Net cash from operating activities 203,702 36,979 INVESTING ACTIVITIES Purchase of investments (167,375) (273,191) Proceeds from sale of investments 82,290 141,694 Purchase of property and equipment 8 (28) (68) Bank time deposits with original maturities in excess of three months 70,624 74,730 Purchase of properties under development, net (121,211) (18,525) Interest income received 3 48,137 35,510 Dividend income received 110,530 102,314 Net cash from investing activities 22,967 62,464 FINANCING ACTIVITIES Dividends paid (108,850) (93,300) Bank borrowings 6,888 - Net cash used in financing activities (101,962) (93,300) INCREASE IN CASH AND CASH EQUIVALENTS 124,707 6,143 Cash and cash equivalents at 1 January 117,991 111,848 CASH AND CASH EQUIVALENTS AT 31 DECEMBER 11 242,698 117,991 Significant non-cash transactions, which have been excluded from the cash flow statement are as follows: Cumulative changes in fair value of available for sale investments (61,790) 72,251 Transfer to investment properties (note 9) - 113,835 The attached notes 1 to 21 form part of these consolidated financial statements.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 December 2017 Cumulative changes in fair value of available- Share Statutory Retained Proposed for-sale capital reserve earnings dividends investments Total Note AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 Balance at 1 January 2016 777,500 388,750 2,980,557 93,300 861,757 5,101,864 Total comprehensive income - - 216,845 - 72,251 289,096 Proposed cash dividends 14 - - (108,850) 108,850 - - Dividend paid - - - (93,300) - (93,300) Balance at 31 December 2016 777,500 388,750 3,088,552 108,850 934,008 5,297,660 Balance at 1 January 2017 777,500 388,750 3,088,552 108,850 934,008 5,297,660 Total comprehensive income - - 981,980 - (889,671) 92,309 Proposed cash dividends 14 - - (108,850) 108,850 - - Dividend paid - - - (108,850) - (108,850) Balance at 31 December 2017 777,500 388,750 3,961,682 108,850 44,337 5,281,119 The attached notes 1 to 21 form part of these consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 1 ACTIVITIES Reem Investments PJSC (“Reem”) is a private joint stock company incorporated in Abu Dhabi, United Arab Emirates on 29 May 2005 under the UAE Federal Law No (8) of 1984 as amended. The Federal Law No. 2 of 2015,

concerning Commercial Companies has come into effect from 1 July 2015, replacing the Federal Law No. 8 of 1984. The principal activities of Reem and its subsidiaries (together referred to as the “Company”) include real estate development and sale and investment in real estate and securities in UAE and abroad. The registered address of the Company is P O Box 37646, Abu Dhabi, United Arab Emirates. During 2017, management commenced negotiations to merge Reem with another company in the UAE. As at the date of approval of these consolidated financial statements, there are no binding arrangements entered into in this regard. If they materialise, such arrangements shall be subject to the approval of the shareholders. The consolidated financial statements of the Company for the year ended 31 December 2017 were authorised for issue in accordance with a resolution of the Board of Directors on 22 February 2018. 2.1 BASIS OF PREPARATION The consolidated financial statements are prepared under the historical cost convention except for investments and investment properties which have been measured at fair value. The consolidated financial statements are presented in United Arab Emirates Dirhams (AED) which is the functional currency of the Company. Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and applicable requirements of the UAE laws. Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its following subsidiaries: Country of Percentage Subsidiary Activity incorporation of holding 2017 2016 Reem Developers LLC Real estate development United Arab Emirates 100% 100% Reem for Energy Investment Services LLC Oil and gas projects United Arab Emirates 100% 100% Reem Investment Overseas Limited Investment holding Mauritius 100% 100% Reem Developers LLC was established on 29 May 2006 and its principal activities are the investment in and establishing and managing real estate, commercial and industrial projects. Reem for Energy Investment Services LLC was established on 23 January 2007 and its principal activities are the investment in and establishing and managing power and industrial projects. It commenced its effective commercial operations during 2015. Reem Investment Overseas Limited was established on 14 December 2006 and its principal activities was holding of investments. The company is in liquidation process with regulatory authorities of Mauritius. The financial statements of the subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. The Company exercises control over all of the subsidiaries listed above. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.1 BASIS OF PREPARATION continued Basis of consolidation continued Specifically, the Company controls an investee if and only if the Company has: Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of

the investee); Exposure, or rights, to variable returns from its involvement with the investee; and The ability to use its power over the investee to affect its returns. When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the other vote holders of the investee; Rights arising from other contractual arrangements; and The Company’s voting rights and potential voting rights. The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are consolidated from the date the Company gains control until the date the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Company’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Company are eliminated in full on consolidation. Non-controlling interests represent the portion of the profit and net assets in subsidiaries not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated statement of financial position, separately from the Company’s shareholders’ equity. 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES The Company applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2017. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. The nature and the effect of these changes are disclosed below. Although these new standards and amendments applied for the first time in 2017, they did not have a material impact on the consolidated financial statements of the Company. Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses Annual Improvements 2014-2016 Cycle These improvements are effective for annual periods beginning on or after 1 January 2017. They include: Amendments to IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure

requirements in IFRS 12. The adoption of the above amendments did not have any significant impact on the Company.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.3 STANDARDS ISSUED BUT NOT YET EFFECTIVE The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s consolidated financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective: Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate

or Joint Venture; IFRS 2 Classification and Measurement of Share-based Payment Transactions - Amendments to IFRS 2; IFRS 16 Leases; IFRS 17 Insurance Contracts ; • Amendments to IAS 40: Transfer of Investment Property IFRS 9 Financial Instruments; and IFRS 15 Revenue from Contracts with Customers. The Company is currently evaluating the impact, but does not anticipate that adopting these standards and interpretations would have a material impact on its consolidated financial statements. 2.4 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position 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. Valuation of unquoted equity investments Valuation of unquoted equity investments is normally based on one of the following: recent arm’s length market transactions; current fair value of another instrument that is substantially the same; the expected cash flows discounted at current rates applicable for items with similar terms and risk

characteristics; or other valuation models. The determination of the cash flows and discount factors for unquoted equity investments requires significant estimation. Fair valuation of investment properties Investment properties have been recorded at fair value on the basis of valuations made third party valuers and by the Company’s internal valuers. These valuations have been made based on assumptions and conditions on the date of valuation, and accordingly may change significantly in future periods. Cost to complete the projects The Company estimates the cost to complete the projects in order to determine the cost attributable to revenue being recognised. These estimates include the cost of providing infrastructure activities, sub-contractors and the cost of meeting other contractual obligations to customers.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.4 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS continued Judgements In the process of applying the Company’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial statements: Classification of investments Management decides on acquisition of an investment whether it should be classified as held to maturity, held for trading, carried at fair value through income statement, or available for sale. For those deemed to be held to maturity, management ensures that the requirements of IAS 39 are met and in particular the Company has the intention and ability to hold these to maturity. The Company classifies investments as trading if they are acquired primarily for the purpose of making a short term profit by the dealers. Classification of investments as fair value through income statement depends on how management monitors the performance of these investments. When they are not classified as held for trading but have readily available reliable fair values and the changes in fair values are reported as part of profit or loss in the management accounts, they are classified as fair value through income statement. All other investments are classified as available for sale. Impairment of investments The Company treats available for sale investments as impaired when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires considerable judgment and includes factors such as normal volatility in share price for quoted equities and the future cash flows and discount factors for unquoted equities. The impairment loss on available for sale investments recorded during the year ended 31 December 2017 amounted to AED 8,414 thousand (2016: AED 3,855 thousand). 2.5 SIGNIFICANT ACCOUNTING POLICIES Revenue recognition Revenue on sale of plots of land is recognized on the basis of the accrual method as and when all of the following conditions are met: A sale is consummated and contracts are signed; The buyer’s investment, to the date of the financial statements, is adequate (20% and above) to demonstrate

a commitment to pay for the property; The Company’s receivable is not subject to future subordination; The Company has transferred to the buyer the usual risks and rewards of ownership in a transaction that is

in substance a sale; and Work to be completed is both easily measurable and accrued or is not significant in relation to the overall

value of the contract. If all, except for the last criterion listed above are fulfilled and where the Company has an obligation to carry out infrastructure and other surface-related works, income is recognized to the extent of completion of these obligations.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.5 SIGNIFICANT ACCOUNTING POLICIES continued Interest income Interest income is recognised as the interest accrues using the effective interest method, under which the rate used exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Dividends Revenue is recognised when the right to receive the dividend is established. Government grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the Company receives non-monetary grants with no conditions attached thereto, the asset and grant are recorded at fair value and the grant is recognised in the income statement in the year in which it is received. In the case of other non-monetary grants, the grant is set up as deferred income at its fair value and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments. Investment properties Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal. Leases Company as lessor Where the Company determines that a lease transfers substantially all of the risks and benefits of ownership of the asset through a contractual arrangement to the lessee, the arrangement is considered as a finance lease. The amounts due from the lessee are recorded in the balance sheet as financial assets (finance lease receivable) and are carried at the amount of the net investment in the lease after making provision for bad and doubtful debts. Property and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Buildings 20 years Leasehold improvements 5 years Fixtures and fittings 4 years Computer equipment 3 years Office equipment and others 4 years The carrying amounts are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed this estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.5 SIGNIFICANT ACCOUNTING POLICIES continued Properties under development Properties acquired, constructed or in the course of construction for sale are classified as properties under development. Unsold properties are stated at the lower of cost or net realisable value. The cost of properties under development includes the cost of land and other related expenditure which are capitalised as and when activities that are necessary to get the properties ready for sale are in progress. Net realisable value represents the estimated selling price less costs to be incurred in selling property. The property is considered to be complete when all related activities, including infrastructure and facilities for the entire project, have been completed. Investments These are classified as follows: Held to maturity Available for sale Investments carried at fair value through income statement Held for trading All investments are initially recognised at cost, being the fair value of the consideration given including acquisition charges (except for investments carried at fair value through the income statement) associated with the investment. Premiums and discounts on investments (excluding those carried at fair value through income statement) are amortised using the effective interest rate method and taken to interest income. Held to maturity Investments which have fixed or determinable payments and are intended to be held to maturity, are carried at amortised cost, less provision for impairment in value. Available for sale After initial recognition, investments which are classified “available for sale” are remeasured at fair value. Fair value changes which are not part of an effective hedging relationship are reported as a separate component of equity until the investment is derecognised or the investment is determined to be impaired. On derecognition, the cumulative gain or loss previously reported as “cumulative changes in fair value” within equity is included in the consolidated income statement. Investments carried at fair value through income statement Investments are classified as fair value through income statement if the fair value of the investment can be reliably measured and the classification as fair value through income statement is as per the documented strategy of the Company. Investments classified as “Investments at fair value through income statement” upon initial recognition are subsequently remeasured at fair value with all changes in fair value being recorded in the consolidated income statement. Held for trading These are initially recognised at cost, being the fair value of the consideration given and subsequently remeasured at fair value. All related realised and unrealised gains or losses are included in the consolidated income statement. Investments in associates The Company’s investments in associates are accounted for under the equity method of accounting. These are entities in which the Company has between 20% to 50% of the voting power or over which it exercises significant influence and which are neither subsidiaries nor joint ventures. Investments in associates are carried in the balance sheet at cost, plus post acquisition changes in the Company’s share of net assets of the associates, less any impairment in value. The Company’s share of the results of the associates is recorded in the consolidated income statement.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.5 SIGNIFICANT ACCOUNTING POLICIES continued Impairment of uncollectibility of financial assets An assessment is made at each balance sheet date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, any impairment loss is recognised in the income statement. Impairment is determined as follows: For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment

loss previously recognised in the income statement; For assets carried at cost, impairment is the difference between carrying value and the present value of future

cash flows discounted at the current market rate of return for a similar financial asset. For available-for-sale equity investments, reversals of impairment losses are recorded as increases in cumulative changes in fair value through equity. Cash and cash equivalents Cash and cash equivalents consist of cash at hand, bank balances and short-term deposits with an original maturity of three months or less. Receivables Receivables are stated at original invoice amount less a provision for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery. Employees’ end of service benefits The Company provides end of service benefits to its expatriate employees. The entitlement to these benefits is based upon the employees’ final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. With respect to its national employees, the Company makes contributions to Abu Dhabi Retirement Pensions and Benefits Fund calculated as a percentage of the employees’ salaries. The Company’s obligations are limited to these contributions, which are expensed when due. Bank borrowing All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition, loans and borrowings are subsequently measured at amortised cost using the effective interest method. Interest is charged as an expense or capitalized as it accrues, with unpaid amounts not yet due in respect of bank loans included in outstanding loans and borrowings. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period which they are incurred.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.5 SIGNIFICANT ACCOUNTING POLICIES continued Accounts payable and accruals Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not. Provisions Provisions are recognised when the Company has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured. Fair value measurement The Company measures financial instruments and non-financial assets such as assets held for sale, at fair value at each statement of financial position date. 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 by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: • Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities • Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable • Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the consolidated financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2.5 SIGNIFICANT ACCOUNTING POLICIES continued Fair value measurement continued The management determines the policies and procedures for both recurring fair value measurement and for non-recurring measurement, such as assets held for sale. External valuers are involved for valuation of significant assets, such as investment properties. Selection criteria for valuers include market knowledge, reputation, independence and whether professional standards are maintained. The management decides, after discussions with the Company’s external valuers, which valuation techniques and inputs to use for each case. The management, in conjunction with the Company’s external valuers, also compares the changes in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For investments and derivatives quoted in an active market, fair value is determined by reference to quoted market prices. Bid prices are used for assets and ask prices are used for liabilities. The fair value of investments in mutual funds, private equity funds or similar investment vehicles are based on the last net asset value published by the fund manager. For other investments, a reasonable estimate of the fair value is determined by reference to the price of recent market transactions involving such investments, current market value of instruments which are substantially the same, or is based on the expected discounted cash flows. The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount payable on demand. The fair value of forward exchange contracts is calculated by reference to forward exchange rates with similar maturities. For other derivatives without quoted prices in an active market, fair value is determined based on quotations received from counter party financial institutions or established third party valuation models. The fair value of unquoted investments is determined by reference to discounted cash flows, pricing models, net asset base of investee companies or broker over-the-counter quotes. Financial instruments Financial instruments include investments, receivables, bank balances and cash, bank borrowings, payables and certain other assets and liabilities. The fair value of interest bearing items is estimated based on discounted cash flows using interest rates for items with similar terms and risk characteristics. The fair value of investments traded in organised markets is determined by reference to quoted market bid prices. For unquoted investments, fair value is determined by reference to the market value of a similar investment or is based on expected discounted cash flows. 3 INTEREST AND OTHER INCOME 2017 2016 AED ‘000 AED ‘000 Interest income on fixed deposits 19,579 18,217 Interest income on bonds 21,031 17,293 Interest income on receivables 7,527 29,543 Other income 22,109 8,123 70,246 73,176 Interest income on receivables represent interest realised in respect of prior year land sales under a rescheduling agreement entered into during the year.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 4 PROFIT FOR THE YEAR Profit for the year is stated after charging the following costs: 2017 2016 AED ‘000 AED ‘000 Staff costs: Salaries and wages 6,818 7,028 End of service benefits, net 239 294 Other benefits 1,519 2,014 8,576 9,336 Depreciation 632 666 Advertisement and marketing 33 1,591 Directors’ fees 2,650 2,650 5 PROPERTIES UNDER DEVELOPMENT 2017 2016 AED ‘000 AED ‘000 Land 1,102,399 1,102,399 Development expenditure 608,311 487,100 1,710,710 1,589,499 Properties under development represent land on which infrastructure, landscaping and construction works is in progress. 6 INVESTMENTS 2017 2016 AED ‘000 AED ‘000 Held for trading Investments in quoted equities 42,103 45,392 Available for sale investments Investments in quoted equities 1,472,280 1,438,892 Investments in unquoted equities – stated at cost 140,503 148,851 Investment in managed funds 102,234 115,143 Bonds 296,579 291,660 2,011,596 1,994,546 Total 2,053,699 2,039,938

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 6 INVESTMENTS continued Available for sale investments amounting to AED 196,147 thousand (2016: AED 201,623 thousand) are stated at cost, less provision for impairment, due to the lack of suitable methods for arriving at fair value. Investments in managed funds represent investments made in funds which invest in equities, debt securities and derivatives with the objective of generating superior returns on a risk-adjusted basis using a diversified portfolio approach. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Total Level 1 Level 2 Level 3 fair value AED ‘000 AED ‘000 AED ‘000 AED ‘000 31 December 2017 Investment in quoted equities 1,514,383 - - 1,514,383 Investment in managed funds - 46,590 - 46,590 Bonds 296,579 - - 296,579 1,810,962 46,590 - 1,857,552 31 December 2016 Investment in quoted equities 1,484,284 - - 1,484,284 Investment in managed funds - 62,371 - 62,371 Bonds 291,660 - - 291,660 1,775,944 62,371 - 1,838,315 7 INVESTMENT IN ASSOCIATES Associates comprise the following: Country of Percentage of holding incorporation 2017 2016 Bunya Enterprises LLC United Arab Emirates 33% 33% Green Emirates Properties PJSC United Arab Emirates 20% 20% Bunya Enterprises LLC is a limited liability company incorporated in the Emirate of Abu Dhabi and is engaged in consultancy and management of civil works and development of properties. Green Emirates Properties PJSC is a private joint stock company incorporated in the Emirate of Abu Dhabi and is engaged in the ownership, management and investment in real estate properties in United Arab Emirates and overseas. Summarised financial information on the investment in associates is set out below:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 7 INVESTMENT IN ASSOCIATES continued Share of associates’ statements of financial position: 2017 2016 AED ‘000 AED ‘000 Assets 58,445 58,669 Liabilities (82,458) (82,645) Net assets (24,013) (23,976) Green Emirates Properties PJSC – net assets 2,037 2,074 Bunya Enterprises LLC – net payable (classified under accounts payable and accruals) (26,050) (26,050) Net assets (24,013) (23,976) Share of associates revenues and losses: 2017 2016 AED ‘000 AED ‘000 Revenues 13 36 Loss (37) (2)

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 8 PROPERTY AND EQUIPMENT

Furniture Office Computer Freehold Leasehold and fixtures equipment equipment land improvements Buildings Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 2017 Cost: At 1 January 2017 609 1,645 1,186 6,000 4,773 17,820 32,033 Additions - - 28 - - - 28 At 31 December 2017 609 1,645 1,214 6,000 4,773 17,820 32,061 Depreciation: At 1 January 2017 609 1,645 1,120 - 4,773 10,278 18,425 Charge for the year - - 25 - - 607 632 At 31 December 2017 609 1,645 1,145 - 4,773 10,885 19,057 Net carrying amount: At 31 December 2017 - - 69 6,000 - 6,935 13,004 2016 Cost: At 1 January 2016 609 1,645 1,118 6,000 4,773 17,820 31,965 Additions - - 68 - - - 68 At 31 December 2016 609 1,645 1,186 6,000 4,773 17,820 32,033 Depreciation: At 1 January 2016 609 1,636 1,118 - 4,773 9,622 17,758 Charge for the year - 9 2 - - 655 666 At 31 December 2016 609 1,645 1,120 - 4,773 10,277 18,424 Net carrying amount: At 31 December 2016 - - 66 6,000 - 7,543 13,609 The freehold land represents land granted by the Government of Abu Dhabi in 2007 and stated at fair value at the time of grant, determined by an independent firm of surveyors. The fair value of the grant was recorded in the consolidated statement of income. There are no unfulfilled conditions or contingencies attached to the grant. 9 INVESTMENT PROPERTIES 2017 2016 AED ‘000 AED ‘000 Balance at 1 January 215,053 52,015 Additions during the year - 113,835 (Loss) gain on revaluation of investment property, net (5,828) 49,203 Balance at 31 December 209,225 215,053 Investment properties are stated at fair value based on an independent valuation performed during the year. In the opinion of management, there is no change in value as at year end. The fair values have been determined on the basis of market value at which the assets could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction at the date of valuation. Fair value of the properties is based on the valuations performed by third party valuers. The valuers are accredited with recognised and relevant professional qualification and with recent experience in the location and category of investment properties being valued. The fair values have been determined based on varying valuation models depending on the intended use of the investment properties; in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation Standards.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 9 INVESTMENT PROPERTIES continued Investment properties amounting to AED nil thousand (2016: AED 22,425 thousand) were valued by the Company’s internal valuation experts. The fair values of investment properties held by the Company as at 31 December 2017 and 2016 fall under level 3 of the fair value hierarchy adopted by the Company. Rental income earned by the Company from its investment properties, which are leased out under operating leases, amounted to AED 9,406 thousand (2016: AED 1,905 thousand). 10 ACCOUNTS RECEIVABLE AND PREPAYMENTS Accounts receivable and prepayments have been classified in the statement of financial position as follows: 2017 2016 AED ‘000 AED ‘000 Non-current: Accrued income relating to sale of land 373,643 488,914 Current: Accrued income relating to sale of land 2,963 112,654 Advance made to contractors 59,807 37,948 Interest receivable 5,615 6,737 Prepayments and other receivables 266 24,856 68,651 182,195 Accounts receivable include AED 374 million (2016: AED 374 million) which represent balances that are overdue for a period of more than one year. The Company retains legal title over the land until the buyer remits the full balance of the sale and therefore, management considers the related account balance as fully collateralised. 11 CASH AND CASH EQUIVALENTS Cash and cash equivalents in the consolidated statement of cash flows consist of the following consolidated statement of financial position amounts: 2017 2016 AED ‘000 AED ‘000 Bank balances and cash 1,001,344 947,261 Less: bank time deposits with original maturities in excess of three months (758,646) (829,270) 242,698 117,991 Bank balances include term deposits of AED 758,646 thousand (2016: AED 829,270 thousand) with a local commercial bank. These are denominated in UAE Dirhams, short term in nature, with an average effective interest rate of 2% (2016: 1.2% to 2.6%).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 12 SHARE CAPITAL Authorised, issued and fully paid 2017 2016 AED ‘000 AED ‘000 77,750,000 (2016: 77,750,000) ordinary shares of AED 10 each 777,500 777,500 13 STATUTORY RESERVE In accordance with the UAE Federal Law No. (2) of 2015 and the Articles of Association of the Company, 10% of the profit for the year is transferred to a statutory reserve until it reaches 50% of the share capital. The Company resolved to discontinue annual transfers as the reserve totals 50% of the nominal value of the paid up share capital. The statutory reserve is not available for distribution. 14 PROPOSED DIVIDENDS For the year ended 31 December 2017, the Board of Directors has proposed to pay a cash dividend of AED 1.4 per share (2016: AED 1.4 per share) amounting to AED 108,850 thousand (2016: AED 108,850 thousand) out of the profits for the year subject to the approval of the shareholders at the Annual General Meeting. 15 EMPLOYEES’ END OF SERVICE BENEFITS Movements in the provision recognised in the consolidated statement of financial position are as follows: 2017 2016 AED ‘000 AED ‘000 Balance at 1 January 1,211 1,173 Provided during the year, net 239 294 End of service benefits paid (222) (256) Balance at 31 December 1,228 1,211 16 TERM LOAN During the year, the Company has availed a term loan facility of AED 173 million from a local bank to finance construction of residential building on plot No. C106 - 107. The loan bears interest of 6 Month EIBOR plus 2.50% per annum and is repayable in 8 equal semi-annual instalments commencing on 31 March 2020 with the remaining balance to be paid as a final instalment on 30 September 2023. The loan is mainly secured by first degree registered mortgage over the property to be constructed (Land & Building on plot No. C106 - 107). The drawn down loan and accrued interest as at 31 December 2017 amount to AED 6,888 thousand (2016: nil).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 17 ACCOUNTS PAYABLE AND ACCRUALS 2017 2016 AED ‘000 AED ‘000 Trade and other payables 31,435 49,765 Other liabilities and accruals 99,934 118,198 131,369 167,963 18 RELATED PARTY TRANSACTIONS Related parties represent associated companies, major shareholders and key management personnel of the Company, and companies of which they are principal owners. Pricing policies and terms of these transactions are approved by the Company’s management. Significant transactions with related parties: Bank balances amounting to AED 964,417 thousand as at 31 December 2017 (2016: AED 901,871 thousand) are held

with a related party.

Compensation of key management personnel The fees for directors and other members of key management during the year were as follows: 2017 2016 AED ‘000 AED ‘000 Short term benefits 2,436 2,461 Other benefits 435 367 2,871 2,828 Directors’ fees 2,650 2,650 19 COMMITMENTS Expenditure commitments comprise of the following: 2017 2016 AED ‘000 AED ‘000 Commitments for capital expenditures on properties under development 373,321 521,418

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 20 FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments comprise financial assets and financial liabilities. Except for certain unquoted investments (note 6), the fair value of financial instruments is not materially different from their carrying values. 21 RISK MANAGEMENT Equity risk The Company’s exposure to market risk arises primarily on account of fluctuations in market prices of its quoted investments and the performance of the investee companies in its unquoted investments. Market risk on investments is managed through appropriate due diligence in the selection of investments and by subsequent periodic review and monitoring procedures. In addition, appropriate exit strategies are determined for unquoted investments, in case of adverse events. The following table demonstrates the sensitivity of the cumulative change in fair value to reasonably possible changes in equity prices, with all other variables held constant. The effect of decreases in equity prices is expected to be equal to the effect of the increases shown. Change in Effect on Change in Effect on equity price equity equity price equity 2017 2017 2016 2016 AED ‘000 AED ‘000 Abu Dhabi Securities Exchange 10% 135,882 10% 131,787 Dubai Financial Market Index 10% 14,157 10% 14,248 London Stock Exchange Index 10% 899 10% 1,480 Qatar Stock Exchange 10% - 10% 150 Saudi Stock Exchange 10% 209 10% 453 Muscat Securities Market 10% 291 10% 311 Capital management The primary objective of the Company’s capital management is to ensure that the Company maintains healthy capital ratios in order to support its business, to maximise shareholders’ value and to ensure that the Company complies with externally imposed capital requirements. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment to shareholders or issue capital securities. No changes were made in the objectives, policies and processes from the previous years. Capital comprises share capital, statutory reserve, retained earnings and cumulative changes in fair values and is measured at AED 5,281,119 thousand as at 31 December 2017 (2016: AED 5,297,660 thousand).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 21 RISK MANAGEMENT continued Interest rate risk The Company is exposed to interest rate risk on its interest bearing assets (bank deposits). Interest rate risk table The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Company’s profit for the year. Effect on profit AED ‘000 2017 +100 increase in basis point 7,518 -100 decrease in basis point (7,518) 2016 +100 increase in basis point 8,292 -100 decrease in basis point (8,292) Credit risk The Company seeks to limit its credit risk with respect to customers by setting credit limits for individual customers and monitoring outstanding receivables. With respect to credit risk arising from the other financial assets of the Company, which comprise cash and cash equivalents, the Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. Liquidity risk The Company seeks to limit its liquidity risk by managing its asset with liquidity in mind, maintaining a healthy balance of cash, cash equivalents and readily marketable securities. The table below summarises the maturity profile of the Company’s financial liabilities at 31 December 2017 based on contractual undiscounted payments. Less than 3 to 12 1 to 5 3 months months years > 5 years Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 31 December 2017 Trade and other payables 31,435 - - - 31,435 Term loan - - 8,775 - 8,775 Total 31,435 - 8,775 - 40,210 31 December 2016 Trade and other payables 49,765 - - - 49,765 Total 49,765 - - - 49,765 Currency risk As at 31 December 2017 the Company had an exposure to British Pound of AED 48,811 thousand (2016: AED 49,967 thousand), arising from equity investments. A 10% fluctuation in currency rates will result in a change in equity of the Company by AED 4,881 thousand (2016: AED 4,997 thousand). There is no impact on the income statement. The Company did not have any other significant currency exposures.

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