Annual financial statement
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Abu Dhabi Future Energy Company PJSC (Masdar) REPORT OF THE BOARD OF DIRECTORS AND CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2024
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Abu Dhabi Future Energy Company PJSC (Masdar) REPORT OF THE BOARD OF DIRECTORS 31 DECEMBER 2024
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Abu Dhabi Future Energy Company PJSC (Masdar) REPORT OF THE BOARD OF DIRECTORS For the year ended 31 December 2024 The Board of Directors is pleased to present the audited consolidated financial statements of Abu Dhabi Future Energy Company PJSC (“Masdar” or the “Company”) and its subsidiaries (collectively referred to as the “Group”), for the year ended 31 December 2024. Financial highlights Revenue for the year amounted to AED 3,422 million (2023: AED 3,559 million). Profit for the year amounted to AED 412 million (2023: Loss of AED 45 million). Total assets were AED 59,790 million as at 31 December 2024 (2023: AED 18,246 million). Total liabilities were AED 30,782 million as at 31 December 2024 (2023: AED 8,441 million). Total equity attributable to the equity holders of the Group was AED 29,008 million as at 31 December 2024 (2023: AED 9,805 million). Board of Directors The Directors of the Company are: Chairman H.E. Dr Sultan Al Jaber Deputy chairman Mr. Jasim Husain Thabet Members Mr. Farid Al Awlaqi Mr. Musabbeh Al Kaabi Mr. Ahmed Saeed Al Calily Dr. Bakheet Al Katheeri Dr. Michele Fiorentino Dr Frank Possmeier (appointed 1 January 2024) H.E. Mohamed Al Suwaidi (resigned 1 January 2024) To the best of our knowledge, the financial information included in these consolidated financial statements presents fairly, in all material respects, the financial position, results of operation and cash flows of the Group as of, and for the periods presented therein. The consolidated financial statements were approved by the Board of Directors and authorised for issue on 24 March 2025. For and on behalf of the Board of Directors. _______________________________ Chairman of the Board of Directors
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Abu Dhabi Future Energy Company PJSC (Masdar) CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2024
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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF ABU DHABI FUTURE ENERGY COMPANY PJSC (MASDAR) Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Abu Dhabi Future Energy Company PJSC (the “Company”) and its subsidiaries ( together referred to as the “Group” ), which comprise the consolidated statement of financial position as at 31 December 202 4, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy 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 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB). Basis for opinion We 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’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA) together with the ethical requirements that are relevant to our audit of the 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 judgment, were of most significance in our audit of the consolidated financial statements of the current period. These 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. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our aud it opinion on the accompanying consolidated financial statements.
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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF ABU DHABI FUTURE ENERGY COMPANY PJSC (MASDAR) continued Report on the Audit of the Consolidated Financial Statements continued Key audit matters continued Revenue recognition The Group recognised revenue from its contracts with customers for renewable power generation, revenue from service concession arrangements to build, operate and transfer renewable energy projects, revenue from trading activities of equipment and development income from renewable energy development activities. A significant proportion of the Group’s revenues is derived from the construction activities under service concession arrangements during the year. Revenue from renewable power generation and trading of equipment is recognised at a point in time when the energy or the equipment are supplied. Revenue from service concession arrangements and renewable energy development activities are recognised over the period of time in which the services are provided. The Group’s revenue recognition accounting policy is included in note 3 to the consolidated financial statements. The Group recognised revenue of AED 3,422 million (note 7) for the year ended 31 December 2024. Revenue recognition is considered a key audit matter given the Group’s varied nature of revenue arrangements and the magnitude of the amounts involved. The audit procedures performed over this key audit matter include the following: • We obtained an understanding of management’s revenue recognition process and underlying controls, and performed walkthroughs to confirm our understanding. • We inspected the Group’s material contracts with customers including power purchase agreements and service concession arrangements to determine the application of appropriate accounting policies as per the requirements of the IFRSs. • We performed substantive analytical procedures over renewable power generation revenue, renewable obligation certificate (ROC) revenue and recycled ROC revenue using the price and volume data to test revenue recognition from initiation to recording. • We carried out test of details on a sample of revenue transactions recorded in relation to the trading of equipment and renewable energy project development activities during the year by tracing to invoices, contracts with customers and other supporting documents. • We tested the services concession revenue calculations and evaluated the appropriateness of assumptions used in the models including construction and operating margins and discount rates with reference to market information. • We involved internal IFRS specialists to assist in evaluating the application of service concession arrangements accounting requirements as per IFRIC 12 Service Concession Arrangements. • We assessed the adequacy of revenue disclosures in the consolidated financial statements for compliance with the requirements of the IFRSs.
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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF ABU DHABI FUTURE ENERGY COMPANY PJSC (MASDAR) continued Report on the Audit of the Consolidated Financial Statements continued Key audit matters continued Equity accounted investments in associates and joint ventures The Group carries significant investments in associates and joint ventures. As at 31 December 2024, investments in associates and joint ventures amounted to AED 20,502 million (note 19). During the year, the Group made significant investments in associates and joint ventures amounting to AED 13,242 million. Assessment of control, joint control or significant influence over the new investees involves significant judgement. Investments in associates and joint ventures are also subject to impairment assessment when indicators of impairment exist. During the year, the Group recognised a net impairment of AED 230 million with respect to its equity accounted investments, where indicators were identified. In carrying out the impairment assessments, significant judgements and assumptions are used to determine the recoverable value of the investments, in particular estimate of future cash flows and discount rates. The audit procedures performed over this key audit matter include the following: • We inspected the sale and purchase agreements and the applicable operating agreements of the material equity-accounted investees to corroborate management’s assessment of control, joint control or significant influence over these investments by the Group. • We tested the carrying value and share of results recognised during the year for material equity accounted investments and involved component teams, where applicable, to perform procedures at material investees. • We issued instructions to EY and non-EY component auditors for material equity-accounted investees detailing the scope to be covered for the purposes of our audit of the Group and obtained reporting deliverables from the component auditors to support the financial position and the results of these equity- accounted investees. In fulfilling our responsibilities as Group auditor, we directed and supervised the work performed by the component auditors, held meetings with the component teams, evaluated the key accounting judgments in the underlying investments and reviewed the working papers for key audit and accounting matters. • We performed analytical review procedures over the financial statements and management accounts for a sample of equity-accounted investees by comparing against the prior period results, held meetings with management of the respective equity-accounted investees and performed site visits as part of our audit procedures over the equity-accounted investees. • We tested the additions made during the year by inspecting the relevant agreements and evidence of funds transfer. and evaluating the appropriateness of equity method to account for the investments. • We evaluated management’s assessment of indicators of impairment for equity-accounted investments at 31 December 2024. • We tested, with involvement of internal valuation specialists, the methodologies and inputs used by the Group in estimating the recoverable amount of the equity-accounted investments subject to impairment assessment including key assumptions relating to growth rates, inflation and discount rates; • We compared the actual performance of the relevant equity -accounted investees to the assumptions applied in discounted cash flow models to assess the historical accuracy of management’s estimates; and • We assessed the adequacy of disclosure in line with the requirements of the IFRSs.
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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF ABU DHABI FUTURE ENERGY COMPANY PJSC (MASDAR) continued Report on the Audit of the Consolidated Financial Statements continued Other information Other information consists of the information included in the Report of the Board of Directors, other than the consolidated financial statements and our auditor’s report thereon. Management is responsible for the other information. Our opinion on the consolidated financial statements does not cover the other information and we do 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. If, based on the work we have performed, 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. Responsibilities of management and the Board of Directors for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and in compliance with 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 determines 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 has no realistic alternative but to do so. The Board of Directors is 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 judgment 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. • 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.
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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF ABU DHABI FUTURE ENERGY COMPANY PJSC (MASDAR) continued Report on the Audit of the Consolidated Financial Statements continued Auditor’s responsibilities for the audit of the consolidated financial statements continued • 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’s 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 auditor’s 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. • Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consolidated financial statements. We are respo nsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors 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 the Board of Directors 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, actions taken to eliminate threats, or safeguards applied. From the matters communicated with the Board of Directors , 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 auditor’s report unless law or regulation prec ludes 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 wou ld reasonably be expected to outweigh the public interest benefits of such communication.
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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF ABU DHABI FUTURE ENERGY COMPANY PJSC (MASDAR) 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 2024: i) the Company has maintained proper books of account; ii) we have obtained all the information and explanations we considered necessary for the purposes of our audit; iii) 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, and the Articles of Association of the Company; iv) the financial information included in the Directors’ report is consistent with the books of account of the Company; v) note 22 reflects the material related party transactions and the terms under which they were conducted; vi) based on the information that has been made available to us, the Company has not purchased or invested in any shares or stocks during the financial year ended 31 December 202 4, except for the investments disclosed in note 19; vii) based on the information that has been made available to us nothing has come to our attention which causes us to believe that the Company has contravened, during the financial year ended 31 December 2024, any of the applicable provisions of the UAE Federal Law No. (32) of 2021 or of its Articles of Association which would materially affect its activities or its financial position as at 31 December 2024; and viii) there were no social contributions made by the Company during the year. Further, as required by the Resolution of the Chairman of the Abu Dhabi Accountability Authority No. (88) of 2021 regarding financial statements Audit Standards for the Subject Entities, we report that, in connection with our audit of the consolidated financial statements for the year ended 31 December 2024, nothing has come to our attention that causes us to believe that the Group has not complied, in all material respects, with any of the provisions of the following laws, regulations and circulars as appl icable, which would materially affect its activities or the consolidated financial statements as at 31 December 2024: i) Its Memorandum of Association or Law of Establishment which would materially affect its activities or its consolidated financial position as at 31 December 2024; and ii) Relevant provisions of the applicable laws, resolutions and circulars organising the Group’s operations. For Ernst & Young Walid J Nakfour Registration No: 5479 8 April 2025 Abu Dhabi, United Arab Emirates
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Abu Dhabi Future Energy Company PJSC (Masdar) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2024 7 2024 2023 Notes AED ‘000 AED ‘000 Revenues 7 3,421,872 3,559,489 Direct costs 10 (1,908,297) (2,713,962) Gross profit 1,513,575 845,527 Income from government grants 8 61,602 84,571 Other income 9 57,034 165,032 General and administrative expenses 11 (704,306) (567,689) Project expenses 12 (244,380) (143,741) Share of results of equity-accounted investees, net 19 520,098 (48,256) Impairment loss on equity-accounted investees 19 (230,000) (183,444) Fair value changes of financial assets carried at fair value through profit or loss 23 (797) (2,265) Fair value changes of derivatives 33.1 13,165 5,077 Finance income 13 223,734 97,622 Finance expenses 13 (637,958) (208,061) Net foreign exchange loss (18,400) (34,950) Profit before tax 553,367 9,423 Income tax expenses 14 (140,869) (54,137) PROFIT (LOSS) FOR THE YEAR 412,498 (44,714) Attributable to: Equity holders of the parent 403,738 (43,082) Non-controlling interest 8,760 (1,632) PROFIT (LOSS) FOR THE YEAR 412,498 (44,714) Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation differences arising from foreign operations (484,626) 115,694 Changes in fair value of derivatives 35 97,256 (97,058) Share of movement in hedging reserves of equity-accounted investees 19 & 35 (27,821) (20,835) Share of other comprehensive (loss) income from equity-accounted investees 19 (28,680) 23,975 Other comprehensive (loss) income for the year, net of income tax (443,871) 21,776 TOTAL COMPREHENSIVE LOSS FOR THE YEAR (31,373) (22,938) Attributable to: Equity holders of the parent (35,299) (21,306) Non-controlling interest 3,926 (1,632) (31,373) (22,938) The accompanying notes 1 to 37 form an integral part of these consolidated financial statements.
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Abu Dhabi Future Energy Company PJSC (Masdar) CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2024 8 2024 2023 Notes AED ‘000 AED ‘000 ASSETS Non-current assets Property, plant and equipment 16 15,291,665 1,781,770 Right-of-use assets 17 475,539 265,428 Intangible assets and goodwill 18 5,936,396 226,416 Investments in associates and joint ventures 19 20,502,434 7,581,930 Operating financial assets 20 4,604,295 3,109,069 Finance lease receivables 21 47,096 47,033 Loans to related parties 22 2,306,953 573,020 Derivative financial assets 33 254,890 169,671 Other non-current financial assets 23 98,371 35,642 4 9,517,639 13,789,979 Cu rrent assets Operating financial assets 20 305,719 27,184 Finance lease receivables 21 8,053 9,821 Loans to related parties 22 508,507 350,023 Due from related parties 22 420,000 151,991 Derivative financial assets 33 79,301 70,607 Trade and other receivables 24 2,217,245 1,366,907 Cash and cash equivalents 25 6,733,595 2,479,634 10,272,420 4,456,167 T OTAL ASSETS 59,790,059 18,246,146 E QUITY AND LIABILITIES Equity Share capital 26 8,000,000 8,000,000 Additional capital contribution 27 22,414,696 4,393,038 Reserves 28 75,549 474,212 Accumulated losses (2,696,548) (3,059,912) E quity attributable to equity holders of the parent 27,793,697 9,807,338 Non-controlling interest 29 1,213,916 (2,015) T otal equity 29,007,613 9,805,323 No n-current liabilities Interest bearing loans and borrowings 30 20,814,783 5,226,403 Lease liabilities 17 507,383 282,605 Derivative financial liabilities 33 66,886 41,347 Deferred tax liabilities 14 1,803,926 177,411 Other non-current liabilities 31 1,497,995 207,951 2 4,690,973 5,935,717 Cu rrent liabilities Interest bearing loans and borrowings 30 3,155,996 1,160,272 Due to related parties 22 89,533 65,812 Derivative financial liabilities 33 26,214 4,808 Lease liabilities 17 14,142 8,608 Trade and other payables 32 2,805,588 1,265,606 6,091,473 2,505,106 T otal liabilities 30,782,446 8,440,823 T OTAL EQUITY AND LIABILITIES 59,790,059 18,246,146 Chairman of the Board of Directors Chief Executive Officer The accompanying notes 1 to 37 form an integral part of these consolidated financial statements.
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Abu Dhabi Future Energy Company PJSC (Masdar) CONSOLIDATED STATEMENT OF CHANGE IN EQUITY For the year ended 31 December 2024 9 Additional Non- Share capital Accumulated controlling Total capital contribution Reserves losses Total interest equity AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 Balance on 1 January 2023 8,000,000 1,083,683 452,436 (3,016,830) 6,519,289 (383) 6,518,906 Loss for the year - - - (43,082) (43,082) (1,632) (44,714) Other comprehensive income for the year - - 21,776 - 21,776 - 21,776 Total comprehensive income (loss) for the year - - 21,776 (43,082) (21,306) (1,632) (22,938) Contribution from shareholders (note 27) - 3,309,355 - - 3,309,355 - 3,309,355 Balance at 31 December 2023 8,000,000 4,393,038 474,212 (3,059,912) 9,807,338 (2,015) 9,805,323 Balance on 1 January 2024 8,000,000 4,393,038 474,212 (3,059,912) 9,807,338 (2,015) 9,805,323 Profit for the year - - - 403,738 403,738 8,760 412,498 Other comprehensive loss for the year - - (439,037) - (439,037) (4,834) (443,871) Total comprehensive income (loss) for the year - - (439,037) 403,738 (35,299) 3,926 (31,373) Transfer to statutory reserve - - 40,374 (40,374) - - - Acquisition of subsidiaries (note 6) - - - - - 1,212,005 1,212,005 Contribution from shareholders (note 27) - 18,021,658 - - 18,021,658 - 18,021,658 Balance at 31 December 2024 8,000,000 22,414,696 75,549 (2,696,548) 27,793,697 1,213,916 29,007,613 The accompanying notes 1 to 37 form an integral part of these consolidated financial statements.
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Abu Dhabi Future Energy Company PJSC (Masdar) CONSOLIDATED STATEMENT OF CASH FLOWS continued For the year ended 31 December 2024 10 2024 2023 Notes AED ‘000 AED ‘000 OPERATING ACTIVITIES Profit before tax 553,367 9,423 Adjustments for: Depreciation of property, plant and equipment and right-of-use assets 16 & 17 228,223 121,791 Amortisation of intangible assets 18 14,363 4,074 Share of results of equity-accounted investees, net 19 (520,098) 48,256 Impairment loss on associates and joint ventures 19 230,000 183,444 Dividend income 9 - (98,815) Changes in fair value of financial assets carried at fair value through profit or loss 23 797 2,265 Changes in fair value of derivatives 33.1 (13,165) (5,077) Provision for expected credit losses on finance lease receivables, related parties, net and operating financial assets 11 60,202 4,986 Provision for employees’ end of service benefits 31 12,130 9,521 Revenue from operating financial assets 20 (2,029,475) (2,893,226) Finance lease income 21 (3,728) (4,057) Finance income 13 (223,734) (97,622) Finance expense 13 637,958 208,061 Operating cash flows before changes in working capital (1,053,160) (2,506,976) Working capital adjustments: Trade and other receivables 807,196 (295,359) Due from related parties (268,009) (57,755) Due to related parties 23,721 24,709 Trade and other payables (2,243,720) 334,720 Cash received from operating financial assets 20 236,986 26,949 Cash received from financial lease receivables 21 5,696 - Cash received from pre-hedge settlements 33 40,794 - (2,450,496) (2,473,712) Income tax paid (101,379) (24,805) Employees’ end of service benefit paid 31 (5,858) (316) Net cash used in operating activities (2,557,733) (2,498,833) INVESTING ACTIVITIES Purchase of property, plant and equipment (117,285) (883,503) Addition in intangibles 18 (529) (848) Acquisition of subsidiaries, net of cash acquired (8,060,623) (29,413) Acquisition of associates and joint ventures (10,652,965) (2,884,876) Investment in associates and joint ventures (2,056,686) (1,352,902) Investment in financial assets carried at fair value through profit or loss 23 (34,534) (14,088) Dividends from investments in associates and joint ventures 9 & 19 506,192 338,444 Loans provided to related parties 22 (2,184,929) (364,431) Proceeds from loan to related parties 74,306 39,335 Finance income received 201,799 30,838 Net cash used in investing activities (22,325,254) (5,121,444)
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Abu Dhabi Future Energy Company PJSC (Masdar) CONSOLIDATED STATEMENT OF CASH FLOWS continued For the year ended 31 December 2024 11 2024 2023 Notes AED ‘000 AED ‘000 FINANCING ACTIVITIES Proceeds from borrowings 30 13,487,195 5,891,868 Repayment of borrowings 30 (1,946,362) (2,055,607) Shareholder’s contribution 27 18,021,658 3,309,355 Finance expense paid (546,262) (141,530) Repayment of lease liabilities 17 (47,176) (33,487) Net cash generated from financing activities 28,969,053 6,970,599 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,086,066 (649,678) Cash and cash equivalents on 1 January 2,479,634 3,150,649 Net foreign exchange difference 167,895 (21,337) CASH AND CASH EQUIVALENTS AT 31 DECEMBER 25 6,733,595 2,479,634 Significant non-cash transactions not included in the consolidated statement of cash flows are as follows: Recognition of right of use assets and lease liabilities 17 17,952 18,852 Deferred consideration 532,483 - Decommissioning liability 31.2 74,969 - Contract liability 31.3 362,968 - Conversion of loan to joint venture into investment 22.1 187,298 - The accompanying notes 1 to 37 form an integral part of these consolidated financial statements.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 12 1 GENERAL INFORMATION Abu Dhabi Future Energy Company PJSC (Masdar) (the “Company”) is registered as a public joint stock company in the Emirate of Abu Dhabi. The Company was incorporated on 9 December 2007. The ownership structure of the Company is as follows: Name of the shareholders (the “Parent”) 2024 2023 Abu Dhabi National Energy Company PJSC (“TAQA”) 43% 43% Mamoura Diversified Global Holding PJSC (“Mubadala”) 33% 33% Abu Dhabi National Oil Company PJSC (“ADNOC”) 24% 24% These consolidated financial statements include the financial performance and position of the Company and its subsidiaries (together, the “Group”) and the Group’s interest in its equity- accounted investees (note 5). The principal activities of the Company and its subsidiaries (the “Group”) are to invest in or acquire participations in entities within UAE or abroad in the renewable energy, energy efficiency, carbon reduction, carbon capture and storage and other forms of sustainability related technologies and provision of services for the reduction of carbon emissions. The Company was formed for the purpose of implementing the Masdar initiative. The Masdar initiative has four primary objectives: • to reduce the carbon footprint of Abu Dhabi; • to enhance the Abu Dhabi brand in the new energy and sustainability markets; • to foster the development of a knowledge-based economy in Abu Dhabi; and • to be profitable. The registered office of the Company is P.O. Box 54115, Abu Dhabi, United Arab Emirates. The Government of Abu Dhabi is the Ultimate Parent of the Company. The Company has not made any social contributions during the year ended 31 December 202 4 (2023 : nil). These consolidated financial statements were approved and authorised for issue on 24 March 2025. 2 BASIS OF PREPARATION 2.1 Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with IFRS accounting standards as issued by International Accounting Standards Board (IASB), and the applicable requirements of the UAE Federal Law No. (32) of 2021. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. 2.2 Basis of measurement The consolidated financial statements have been prepared on an historical cost basis, except for investments in financial assets carried at fair value through profit or loss and derivative financial instruments which are stated fair value. 2.3 Functional and presentation currency These consolidated financial statements have been presented in United Arab Emirates Dirham (“AED”) which is the currency of the primary economic environment in which the Company operates. Each entity in the Group determines its own functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 13 2 BASIS OF PREPARATION continued 2.4 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 202 4. Control is achieved when the Group 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. Specifically, the Group controls an investee if, and only if, the Group 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 Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • The contractual arrangement(s) with the other vote holders of the investee • Rights arising from other contractual arrangements; and/or • The Group’s voting rights and potential voting rights The Group 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 Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non- controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition -by- acquisition basis. Subsequent to acquisition, the carrying amount of non- controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are m ade to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra -group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non- controlling interest, and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. The consolidated financial statements of the Group include subsidiaries identified in note 5 to the consolidated financial statements.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 14 3 MATERIAL ACCOUNTING POLICIES The principal accounting policies applied by the Group in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non- controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s iden tifiable net assets. Acquisition-related costs are expensed as incurred and included in general and administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances, and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.” Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non -controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is more than the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in consolidated statement of profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill has been allocated to a cash -generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained. A contingent liability recognized in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of the amount that would be recognized in accordance with the requirements for provisions in IAS 37 Provisions, Contingent Liabilities and Contingent Assets or the amount initially recognized less (when appropriate) cumulative amortisation recognized in accordance with the requirements for revenue recognition. Current versus non-current classification The Group presents assets and liabilities in the consolidated statement of financial position based on current/ non- current classification. An asset is classified as current when it is: - Expected to be realised or intended to be sold or consumed in the normal operating cycle; - Held primarily for the purpose of trading; - Expected to be realised within twelve months after the reporting period; or - Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 15 3 MATERIAL ACCOUNTING POLICIES continued Current versus non-current classification continued A liability is classified as current when: - It is expected to be settled in the normal operating cycle; - It is held primarily for the purpose of trading; - It is due to be settled within twelve months after the reporting period; or - There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. The Group classifies all other liabilities as non-current. Revenue recognition Revenue from contracts with customers The Group recognises revenue from contracts with customers based on a five -step model as set out in IFRS 15: Step 1 Identify 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. Step 2 Identify 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. 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 transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. Step 4 Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Group allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group expects to be entitled in exchange for satisfying each performance obligation. Step 5 Recognise revenue when (or as) the Group satisfies a performance obligation. The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met: a) The Group’s performance does not create an asset with an alternate use to the Group and the Group has as an enforceable right to payment for performance completed to date. b) The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. c) The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs. For performance obligations where none of the above conditions are met, revenue is recognised at the point in time at which the performance obligation is satisfied. Special projects Special projects include management consulting fees and suppl y of solar panels, The Group acts as a project management consultant for some projects which are completed for other parties. Revenue from special projects is recognised at point in time.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 16 3 MATERIAL ACCOUNTING POLICIES continued Revenue recognition continued Development fee Revenue from development fee is recognised at point in time, when the right to receive payment has been established. Renewable power generation Revenue is recognised, net of Value Added Tax (VAT), based on net electricity supplied during the period based on meter readings and market prices as specified under contract terms. Revenue is recognised at a single point in time when electricity is supplied, and the performance obligation is met. Revenue is recognised when the quantity and rates can reasonably be determined, and control has been transferred to a third party. Income from sales of Renewable Obligation Certificates (ROCs), Levy Exemption Certificates and Recycled Buyouts is recognised based on market rates unless specified otherwise under contract terms, net of Value Added Tax. Finance lease income The Group’s policy for recognition of revenue from finance leases is described in leases accounting policy. Trading revenue Revenue from sale of equipment is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the equipment at the customer’s location. The Group does not have control of the equipment before it is being transferred to the customer. The Group is acting as an agent and recognises revenue at the net amount that is retained for these arrangements. Service concession revenues Revenue related with construction or upgrade services under a service concession arrangement is recognized over time. Operation or service revenue is recognized in the period in which the services are provided by the Group. Interest income on such financial assets is recognized using the effective interest method, which applies a discount rate that accurately distributes estimated future cash receipts over the asset’s expected life, ensuring alignment with its net carrying amount. Under the term of IFRIC12 “Service Concession Arrangements”, a concession operator has a twofold activity. • A construction activity in respect of its obligation to design, construct, finance and own the plant and, prior to the Commercial Operations Date (“COD”), the interconnection facilities; and • An operating and maintenance activity in respect of the concession asset after the COD. Revenue is recognised in accordance with IFRS15. In return for its activities, the operator i.e. the Company receives remuneration from the grantor; the financial assets model applies. The Company determines the stand- alone selling price of construction and operating services underlying each performance obligation to allocate the transaction price to each performance obligation. As the stand- alone selling price of construction service is not directly observable, the Company estimates the price by using expected costs plus margin method. The Company applies a margin on project cost to determine construction revenue. The Company generates revenue from operating and maintenance (O&M) services using the O&M contractors to generate electric power and dispatch it to the national grid. Operation services entail the Company to generate and to deliver electric power to the na tional grid, which simultaneously receives and consumes the entire electric power output. The Company transfers the benefit of the service to the national grid as it performs, and therefore satisfies its performance obligation over time. The Company’s sell ing price of operation services is allocated over time of the project operations. During the operation services phase, the Company allocates the actual cash receipts between revenue for providing operation services in the reporting period and the remaining part to settle concession asset for the construction services.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 17 3 MATERIAL ACCOUNTING POLICIES continued Revenue recognition continued Service concession revenues continued In reference to operating services, the Company estimated the price of operating services on contract and benchmarked to industry practise which is reflective of standalone selling price . The Company allocated the actual cash receipts received in the period between operati ng services revenue and the remaining part to settle concession asset for the construction services. The Group recognises a financial asset arising from a service concession arrangement when it has an unconditional contractual right to receive cash from or at the direction of the grantor for the construction or upgrade services provided, and the right to receive cash depends only on the passage of time. Such financial assets are measured at fair value on initial recognition and classified as financial assets measured at amortised cost. If the Group is paid for the construction services , partly by a financial asset and partly by an intangible asset, then each component of the consideration is accounted for separately and is initially recognised at the fair value of the consideration. The right to receive cash from the grantor is conditional on the company’s future performance and depends on the factual power generation during the contractual period. Thus, the G roup presents a contract asset in the statement of financial position. Other income Other income is recognised when the performance obligation is satisfied and the right to receive payment has been established. Finance income Finance income comprises interest income on fixed deposits and related party loans recognized using the effective interest method. Project expenses Project expenses comprise expenses incurred on screening, feasibility studies and pre-development phases of various projects undertaken by the Group. Such expenditure is charged to consolidated profit or loss as incurred, other than expenditure on project related property, plant and equipment, which is carried as an asset in the consolidated statement of financial position when there is reasonable certainty that the project will be developed, and future economic benefits will flow to the Group. In the absence of such certainty, these expenses are charged to consolidated profit or loss, cost related to feasibility studies is expensed out even if the development criteria are met. Foreign currencies The Group’s consolidated financial statements are presented in AED, which is also the Parent company’s functional currency. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions and balances Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non -monetary assets and liabilities that are measured at fair value in a foreign currency are translat ed into the functional currency at the exchange rate when the fair value was determined. Non- monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 18 3 MATERIAL ACCOUNTING POLICIES continued Foreign currencies continued However, foreign currency differences arising from the translation of the following items are recognised in OCI: • an investment in equity securities designated as at FVOCI (except on impairment, in which case foreign currency differences that have been recognised in OCI are reclassified to profit or loss ). • a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is and • qualifying cash flow hedges to the extent that the hedges are effective. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into AED at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into AED at the exchange rates at the dates of the transactions. Foreign currency differences are recognised in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. Foreign exchange gain/loss arising from foreign currency contracts is recognized as other operating income /other expense, and are reported on a net basis. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Income taxes Income tax expense/benefit comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity or in other comprehensive income. Current income tax Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income. Current income tax relating to items recognised directly in equity is recognised in equity and not in the consolidated statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except: • When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss • In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 19 3 MATERIAL ACCOUNTING POLICIES continued Income taxes continued Deferred tax continued Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re- assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Value added tax (VAT) Expenses and assets are recognised net of the amount of VAT, except: • When VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable • When receivables and payables are stated with the amount of VAT included The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statement of financial position. Property, plant and equipment Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long -term construction projects only if it is probable that the future economic benefits associated with the expenditure will flow to the Group . When significant parts of property, plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement only if it is probable that the future economic benefits associated with the expenditure will flow to the Group. All other repair and maintenance costs are recognised in consolidated profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Refer to significant accounting judgements, estimates and assumptions (note 4) and other non- current liabilities (note 31) for further information about the recognised decommissioning provision.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 20 3 MATERIAL ACCOUNTING POLICIES continued Property, plant and equipment continued Depreciation is calculated using the straight- line method and is recognized in profit and loss to allocate the assets’ cost to their residual values over their estimated useful lives as follows: Years Buildings 8 – 30 Plant and machinery 3 – 30 Furniture and fixtures 3-12 Freehold land is not depreciated. An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculat ed as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of profit or loss when the asset is derecognised. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. Capital work in progress Properties or assets during construction for production, supply or administrative purposes, are carried at cost, less any recognised impairment loss. Cost includes all direct costs attributable to the design and construction of the property including related staff costs, and for qua lifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. When the assets are ready for intended use, the capital work in progress is transferred to the appropriate property, plant and equipment category and is accounted in accordance with the Group’s policies. Capital work in progress is not depreciated. Leases The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short -term leases and leases of low -value assets. The Group recognises lease liabilities to make lease payments and right -of-use assets representing the right to use the underlying assets. i) Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right -of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or befor e the commencement date less any lease incentives received.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 21 3 MATERIAL ACCOUNTING POLICIES continued Leases continued Group as a lessee continued i) Right-of-use assets continued Right-of-use assets are depreciated on a straight -line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: Years Land 10-20 Building 3 - 30 Vessels 5-12 Plant and machinery 3-25 Office equipment 3-12 The right-of-use assets are also subject to impairment. Refer to the accounting policies for Impairment of non-financial assets. ii) Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in – substance fixed payments) less any lease incentives receivable, variable lease payments that depend on a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce i nventories) in the period in which the event or condition that triggers the payment occurs. Contracts may contain both lease and non -lease components. The group allocates the consideration in the contract to the lease and non-lease components based on thei r relative stand-alone prices. However, for leases for which the G roup is a lessee, it has elected not to separate lease and non -lease components and instead accounts for these as a single lease component. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date where the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. iii) Short-term leases and leases of low-value assets The Group applies the short -term lease recognition exemption to its short -term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term. Group as a lessor Leases where the Group transfers substantially all of the risks and benefits of ownership of the asset through its contractual arrangements to the customer are considered as a finance lease. The amounts due from lessees under finance leases are initially recognised as receivables at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding receivable from the lessee is included in the consolidated statement of financial position as a f inance lease receivable, or as due from a related party, where applicable, and is carried at the amount of the net investment in the lease after making provision for impairment. Finance lease income is recognised over the term of the lease using the net in vestment method (before tax) to give a constant rate of return on the net investment in the leases.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 22 3 MATERIAL ACCOUNTING POLICIES continued Leases continued Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight -line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same ba sis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the consolidated statement of profit or loss in the expense category that is consistent with the function of the intangible assets. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash -generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statement of profit or loss when the asset is derecognized. Software Acquired computer software licences are capitalised based on the costs incurred to acquire and bring to use the specific software. These costs are amortised on a straight-line basis over their estimated useful lives which is normally a period of three to five years. Licenses Acquired licenses are shown at historical cost. Licenses have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight- line method to allocate the cost of licenses over their estimated useful lives. The estimated useful lives of intangible assets are as follows: Years Software 3-5 Rights & Licenses 24-30 Licenses represent the right to own and operate renewable energy plants and farms, which are being amortised from the date of commercial operation of the windfarm.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 23 3 MATERIAL ACCOUNTING POLICIES continued Intangible assets continued Internally generated intangible assets Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an intangible asset when the Group can demonstrate: • The technical feasibility of completing the intangible asset so that the asset will be available for use or sale • Its intention to complete and its ability and intention to use or sell the asset • How the asset will generate future economic benefits • The availability of resources to complete the asset • The ability to measure reliably the expenditure during development Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete, and the asset is available for use. It is amortized over the period of expected future benefit. Amortization is recorded in cost of sales. During the period of development, the asset is tested for impairment annually. Investment in associates and joint ventures The Group has investments in equity-accounted investees including associates and joint ventures. An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. On acquisition of an associate or a joint venture, the Group undertakes a provisional purchase price allocation (PPA), identifying and valuing assets and liabilities of the associate or joint venture, as if it had acquired a business. These fair value adju stments are not recorded separately, because the investment itself is a single line item. However, the fair values identified form the basis for additional depreciation, amortisation and similar adjustments that are reflected in the investor’s share of the results in subsequent years. Adjustments in the provisional purchase price allocation include assets not recognised by the associate or joint venture (such as internally developed intangible assets and similar assets). Adjustments might also be made to recognise the fair value of assets carried by the investee at cost (such as property, plant and equipment) and to recognise liabilities at appropriate values. Where the Group acquires an associate or joint venture, it might be necessary to use provisional figures to undertake a provisional PPA to report the acquisition at the reporting date. The Group will finalise the fair values and PPA, within one-year from the date of acquisition and will report in the following reporting period. The Group’s investments in its associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost including any transaction costs. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately. The consolidated statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint venture. Appropriate adjustments to the Group’s share of the results of associate or joint venture after acquisition are made in order to account, for example, for amortisation of the intangible assets acquired based on their fair values at the acquisition date. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 24 3 MATERIAL ACCOUNTING POLICIES continued Investment in associates and joint ventures continued The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of the consolidated statement of profit or loss outside operating profit and represents profit or loss after tax and non - controlling interests in the subsidiaries of the associate or joint venture. The financial statements of the associates or joint ventures are prepared for the same reporting period. When necessary, adjustments are made to bring the accounting policies in line with those of the Group. After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognises the loss as ‘Provis ion for impairment on equity accounted investees’ in the consolidated statement of profit or loss. Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognized in consolidated profit or loss. Interests in joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. When a group entity undertakes its activities under joint operations, the Group as a joint operator recognizes in relation to its interest in a joint operation: • its assets, including its share of any assets held jointly. • its liabilities, including its share of any liabilities incurred jointly. • its revenue from the sale of its share of the output arising from the joint operation. • its share of the revenue from the sale of the output by the joint operation; and • its expenses, including its share of any expenses incurred jointly. The Group accounts for the assets, liabilities, revenues, and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the assets, liabilities, revenues and expenses. When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution of assets), the Group is conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognized in the Group’s consolidated financial statements only to the extent of other parties’ interests in the joint operation. Tax equity partnerships The Group has equity investments in certain companies in the United States of America, which also comprise investors whose investment participation in those entities, typically via a different class of shares governed through tax equity partnerships arrangements, is principally in return for a certain level of tax benefits expected during the initial years of operations of these entities in the form of Production Tax Credits and Investment Tax Credits. Once those investors have achieved the targeted returns specified in the underlying investment agreements their interest in the cash or other entitlements associated with their investment stake flips to either a nominal amount or their interests are acquired by the other equity investors in those entities. The Group considers the tax investors’ entitlements using the Hypothetical Liquidated Book Value (HLBV) models prepared by the developer of the projects.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 25 3 MATERIAL ACCOUNTING POLICIES continued Tax equity partnerships continued The Group considers the net interest attributable to tax equity investors as a liability and assess the financing obligation by adjusting accretion of interest on the investment made by tax equity investors, cash distributions and allocated tax benefits. Net interest in the equity accounted investments adjusted for financing obligation associated with tax investor determined using amortised cost models are used in accounting for the periodic results from the investments. Inventories The Group’s inventories consist of raw and auxiliary materials, spare parts, and finished or semi -finished goods and are valued at the lower of cost, determined on a weighted average basis, and net realizable value. Cost includes all expenses incurred to bring the inventory to its current location and condition, while net realizable value represents the estimated selling price in the ordinary course of business, less estimated costs to complete and sell. Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise petty cash fund, current accounts and term deposits with banks with original maturities of less than three months. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually cert ain. The expense relating to a provision presented in the consolidated statement of profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Onerous contracts Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Decommissioning liabilities The Group records a provision for decommissioning costs of a facility or an item of plant and to restore the site on which it is located. Decommissioning costs are provided for at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the relevant asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and r ecognised in the consolidated statement of profit or loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs, or in the discount rate applied, are added to or deducted from the cost of the asset. Employee benefits An accrual is made for the estimated liability for employees’ entitlement to annual leave as a result of services rendered by eligible employees up to the end of the year. Provision is also made for the full amount of end of service benefit s in accordance with the provisions of IAS 19, management carries out an exercise to assess the present value of its obligations using the projected unit credit method, in respect of employees’ end of service benefits payable under the employment law in the respective jurisdiction , for their period of service up to the end of the year. The accrual relating to annual leave is disclosed as a current liability, while the provision relating to end of service benefit is disclosed as a non- current liability. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 26 3 MATERIAL ACCOUNTING POLICIES continued Employee benefits continued Pension contributions are made in respect of UAE national employees to the UAE General Pension and Social Security Authority in accordance with the UAE Federal Law No. (2), 2000 for Pension and Social Security and also according to the local regulations of the countries the Group operates in including Greece and Spain. Such contributions are charged to the consolidated statement of profit or loss during the employees’ period of service. The cost of defined benefit pension plans and other post -employment medical benefits and the present value of the pension obligation are determined using actuarial valuations. The cost of providing benefits under defined benefit plans is determined using the projected unit credit method. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts inc luded in net interest on the net defined benefit liability), are recognised immediately in statement of financial position with a corresponding debit or credit to retained earnings through other comprehensive income/(loss) in the period in which they occur . Remeasurements are not reclassified to profit or loss in subsequent periods. Government grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants where the government is deemed by the Group to be acting in the capacity of a government, as opposed to a n ultimate shareholder, are recognised in consolidated statement of profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate; such as grants for the Group to purchase, construct or otherwise acquire non- monetary assets are recognised as deferred government grant in the consolidated statement of financial position and transferred to consolidated statement of profit or loss on a systematic and rational basis over the useful lives of the related assets . Where the government is deemed by the Group to be acting in the capacity of a n ultimate shareholder, Government grants are recognised as additional shareholder contribution in the consolidated statement of changes in equity. Government grants that are receivable as compensation for expenses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in consolidated statement of profit or loss in the period in which they become receivable. The benefit of a government loan at a below -market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on pr evailing market interest rates. Land granted by the Government of Abu Dhabi is recognised at nominal value . Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. i). Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. Except for trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value t hrough profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 27 3 MATERIAL ACCOUNTING POLICIES continued Financial instruments continued i). Financial assets continued Initial recognition and measurement continued In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. The Group provides loans to related parties, including joint ventures and associates, under various commercial terms and conditions. When loans are granted at below -market interest rates, the difference between fair value of the loan and the transaction price is recognised as an additional capital contribution in the related entity. The loan is subsequently measured at amortized cost. Purchases or sales of financial assets that require delivery of assets by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • Financial assets at fair value through profit or loss • Financial assets at amortised cost (debt instruments) • Financial assets at fair value through OCI with recycling of cumulative gains and losses upon derecognition (debt instruments) • Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments). Financial assets at amortised cost (debt instruments) The Group measures financial assets at amortised cost if both of the following conditions are met: • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and • The contractual terms of the financial asset give rise on specified dates to payments of principal and interest on the principal amount outstanding. Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognised in the interim statement of comprehensive income when the asset is derecognised, modified, or impaired. Financial assets at fair value through profit or loss Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL This category includes debt investments and equity investments which the Group had not irrevocably elected to classify at fair value through OCI. Dividends on equity investments are recognised as other income in the statement of profit or loss when the right of payment has been established.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 28 3 MATERIAL ACCOUNTING POLICIES continued Financial instruments continued i). Financial assets continued Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when: • The rights to receive cash flows from the asset have expired; or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass -through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the assets. When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass -through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor reta ined substantially all the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liabi lity. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Impairment of financial assets The Group records an allowance for ECLs for all financial instruments not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. The Group recognises loss allowances for ECLs on financial assets measured at amortised cost which comprise of finance lease receivables, loans to related parties , operating financial assets , trade receivables and due from related party balances. The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs: • debt securities that are determined to have low credit risk at the reporting date; and • the debt securities and bank balances for which credit risk (i.e., the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or ef fort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward- looking information. The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 29 3 MATERIAL ACCOUNTING POLICIES continued Financial instruments continued i). Financial assets continued Impairment of financial assets continued The Group considers a financial asset to be in default when: • the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or • the financial asset is more than 90 days past due. The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade’. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. Measurement of ECL ECLs are recognised in two stages: a) Stage 1 For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12- months (a 12-month ECL). For due from related parties and trade receivables that do not contain a significant financing component, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. For finance lease receivables, loans to related parties and receivables under payment plan, the Group measures ECL on an individual basis. The measurement of the loss allowance is based on the present value of the asset’s expected cash flows using the asse t’s original EIR, regardless of whether it is measured on an individual basis or a collective basis. b) Stage 2 and Stage 3 For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 30 3 MATERIAL ACCOUNTING POLICIES continued Financial instruments continued i). Financial assets continued Impairment of financial assets continued b) Stage 2 and Stage 3 continued The key inputs into the measurement of ECLs are the term structures of the following variables: • Probability of default (PD). • Loss given default (LGD). • Exposure at default (EAD). • Definition of default. • Significant increase in credit risk; and • Expected life. These parameters are derived from the Group’s internally developed statistical models and other historical data and are explained in detail in note 4. Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired . A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: • significant financial difficulty of the borrower or issuer. • a breach of contract such as a default or being more than 90 days past due. • the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise. • it is probable that the borrower will enter bankruptcy or another financial reorganisation; or • the disappearance of an active market for a security because of financial difficulties. Write-off Financial assets are written off (either partially or in full) when there is no realistic prospect of recovery. This is generally the case when the Group has exhausted all legal and remedial efforts to recover from the customers. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due. The group has the following financial assets that are subject to ECL: − Finance lease receivables − Loans to related parties − Trade and other receivables − Due from related parties − Cash and cash equivalents − Operating financial assets
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 31 3 MATERIAL ACCOUNTING POLICIES continued Financial instruments continued ii) Financial liabilities Initial recognition and measurement Financial liabilities are classified as measured at amortised cost or fair value through profit and loss. Financial liability is initially measured at fair value plus or minus, for an item not at FVTPL transaction costs that are directly attributable to its acquisition or issue, a ll financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables (except deferred income), bank borrowings, due to related parties (except deferred government grants), lease liabilities and derivative financial liability. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at fair value through profit or loss A Financial liability is classified as at FVTPL if it is classified as held -for-trading, it is a derivative or it is designated as such on initial recognition Financial liabilities at amortized cost This is the category most relevant to the Group. After initial recognition, interest- bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans and borrowings. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 at fair value . The difference in the respective carrying amounts is recognised in the interim consolidated statement of comprehensive income. Derivative financial instruments Initial recognition and subsequent measurement The Group uses derivative financial instruments, such as interest rate swaps, to hedge its interest rate risk. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. For the purpose of hedge accounting, hedges are classified as: • Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment; • Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment; and • Hedges of a net investment in a foreign operation. At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 32 3 MATERIAL ACCOUNTING POLICIES continued Derivative financial instruments continued Initial recognition and subsequent measurement continued The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of s ources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all the following effectiveness requirements: • There is ‘an economic relationship’ between the hedged item and the hedging instrument • The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship • The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below: Fair value hedges The change in the fair value of a hedging instrument is recognised in the consolidated statement of profit or loss as other expense. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the consolidated statement of profit or loss as other expense. For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through profit or loss over the remaining term of the hedge using the EIR method. The EIR amortisation may begin as soon as an adjustment exist s and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss. Cash flow hedges The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the consolidated statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item. The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. The ineffective portion relating to foreign currency contracts is recognised as other expense. The Group designates only the spot element of forward contracts as a hedging instrument. The forward element is recognised in OCI and accumulated in a separate component of equity under cost of hedging reserve. The amounts accumulated in OCI are accounted for, depending on the nature of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition of a non- financial item, the amount accumulated in equity is removed from the separate component of equity and included in the initial cost or other carrying amount of the hedged asset or liability. This is not a reclassification adjustment and will not be recognised in OCI for the period. This also applies where the hedged forecast transaction of a non-financial asset or non-financial liability subsequently becomes a firm commitment for which fair value hedge accounting is applied. For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or loss as a reclassification adjustment in the same period or periods during which the hedged cash flows affect profit or loss.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 33 3 MATERIAL ACCOUNTING POLICIES continued Derivative financial instruments continued Cash flow hedges continued If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of the underlying transaction as described above. Impairment of non-financial assets The Group assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an assets or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover or exceeds a period of five years. A long- term growth rate is calculated and applied to project future cash flows after the fifth year. For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the assets or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired, Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired. Fair value measurement The Group measures financial instruments such as derivatives, and non-financial assets such as investment properties, at fair value at each balance sheet date.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 34 3 MATERIAL ACCOUNTING POLICIES continued Fair value measurement continued 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 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 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 Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing 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 recognized in the consolidated financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re- assessing categorization (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 Group has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above. Fair-value related disclosures for financial instruments and non- financial assets that are measured at fair value or where fair values are disclosed, are summarized in note 33. Assets held for sale and discontinued operations The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non- current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense. The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 35 3 MATERIAL ACCOUNTING POLICIES continued Assets held for sale and discontinued operations continued Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale. Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position. A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and: • Represents a separate major line of business or geographical area of operations. • Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or • Is a subsidiary acquired exclusively with a view to resale Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss. New standards, interpretations and amendments adopted by the Group The accounting policies adopted are consistent with those of the previous financial year, except for the following new standards, interpretations and amendments effective as of 1 January 2024. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. • Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback • Amendments to IAS 1 - Classification of Liabilities as Current or Non-current • Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7 These amendments had no material impact on the consolidated financial statements of the Group. New standards, interpretations and amendments but not yet effective The Group is the process of assessing if the adoption of these new and amended standards and interpretations will have a material impact on its consolidated financial statements. • IFRS 18 Presentation and Disclosure in Financial Statements • IFRS 19 Subsidiaries without Public Accountability: Disclosures • Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements • Amendments to IAS 21: Lack of Exchangeability
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 36 4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Judgments Significant judgments 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: Government grants The Group receives land grants from the Government of Abu Dhabi and applies various judgments with respect to the accounting for such grants. The Group recognizes the land grants in the consolidated financial statements initially at nominal value i.e., AED 1. The Group exercises judgment and estimation for associated future economic benefits related to the recognised grants between the following categories: future economic benefits established; future economic benefits uncertain; or no future economic benef its, which impacts subsequent costs allocated to each grant. Costs are only assigned to the category where future economic benefits have been established. Significant judgment is also required to determine whether the Government of Abu Dhabi in granting land banks to the Group is acting in its capacity as a shareholder or in its capacity as a government. This determination involves significant judgement. Financial assets from service concession arrangements The Group recognizes financial asset s arising from its service concession arrangement s on the basis that it has unconditional contractual right to receive cash from or at the direction of the grantor for the construction services provided, and the right to receive cash depends only on the passage of time. The financial assets are measured a t fair value on initial recognition and subsequently, at amortised cost. Classification of investees as joint ventures For assessing joint control, the Group has considered the contractual agreement of sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The Group has determined that it has joint control over the investees identified as joint ventures and joint operations in note 5. Joint control is assessed on the basis that decisions about relevant activities are taken jointly with other venturers. Where the Group has more or less than 50% ownership interest, but decisions require unanimous approval of all participants then the Group considers it does not have control and investments are considered joint ventures. Most of the above investees are limited liability companies whose legal form confers separation between the parties to the joint arrangement and the companies themselves. Furthermore, there is no contractual arrangement or any other facts and circumstances that indicate that the parties to the joint arrangement have rights to the assets and obligations for the liabilities of the joint arrangement. Significant influence over investments in associates Significant influence is presumed to exist when the Group holds 20% or more of the voting power of investee. When the voting power is less than 20%, the Group considers other factors that give rise to significant influence, such as the ability to participate in the financial and operating policy decisions of the investee. The Group has determined that although it holds less than 20% of the voting power in PT Pertamina Geothermal Energy Tbk, significant influence exists due to having a representation on the Board of Directors and participation in decisions over the relevant activities of the entity. The Group has determined that it has significant influence over the investees identified as associates in note 5.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 37 4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued Judgments continued Project expenses Project expenses comprise expenses incurred on screening, feasibility studies and pre -development phases of various projects undertaken by the Group. As stated in note 3 to the consolidated financial statements, the portion of such expenditure relating to property, plant and equipment is capitalised when there is reasonable certainty that projects will be developed in the future and future economic benefits will flow to the Group. The process of estimating the degree of certainty involves significant judgments on the part of senior management. Some of these projects tend to have long gestation periods and in certain cases depend on some form of government support. Furthermore, in some instances, the project size and economics are reassessed in the light of the changing economic climate, resulting in an increase in the overall project development timeline, or a downsizing of the project or certain of its component. Management periodically assesses the likelihood of such projects proceeding and uses the results of such assessments to determine whether any provision for impairment losses are required. The estimates and underlying judgments are reviewed on an ongoing basis. Actual results may differ from these estimates and judgments. Finance leases The Group has entered into Musataha lease arrangements over a plot of land in Jebel Al Dannah. In accordance with the guidance set out in IFRS 16 Leases, the Group has determined, based on an evaluation of the terms and conditions of the arrangements, that the exercise of the lease renewal option is reasonably certain and that the present value of the minimum lease payments constitute substantially all of the fair value of the leased asset. Therefore, the Group does not retain all significant risks and rewa rds of ownership of these properties and accordingly, the Group accounts for these lease arrangements as finance leases as described in note 21 to the consolidated financial statements. Business combinations Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets and liabilities of the acquired business. For most assets and liabilities, the purchase price allocation is accomplished by recording the asset or liability at its estimated fair value. Determining the fair value of assets acquired and liabilities assumed requires judgment by management and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, the useful lives of assets and market multiples. The Group’s management uses all available information to make these fair value determinations. Uncertain tax positions Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long- term nature and complexity of existing contractual agreements, differences may arise between the actual results and adjustments to tax income and expense already recorded. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable pr ofit will be available against which the losses can be utilised. Assessing the recoverability of deferred income tax assets requires the Group to make assumptions related to expectations of future taxable income. Estimates of future taxable income are base d on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting date could be impacted. Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, 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: Allowance for expected credit losses (“ECL”) 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.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 38 4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued Key sources of estimation uncertainty continued Allowance for expected credit losses (“ECL”) continued The following information is taken into account when assessing whether credit risk has increased significantly since initial recognition: a) An actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating; b) Existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations; c) An actual or expected significant deterioration in the operating results of the debtor; d) Significant increases in credit risk on other financial instruments of the same debtor; e) An actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations. Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 90 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise. Allowance for slow moving and obsolete inventories Management assess loss (if any) on items of inventory on account of slow moving and obsolescence on a regular basis. Impairment losses on investments in equity-accounted investees After the application of the equity method of accounting, the Group determines whether it is necessary to recognise any additional impairment loss on the carrying value of the investment in equity-accounted investees by comparing its recoverable amount with the higher of value in use or fair value less costs to sell with its carrying amount. In determining the value in use of the investment, the Group estimates: • its share of the present value of the estimated future cash flows expected to be generated by the associates, including the cash flows from the operations of the associates and the proceeds on the ultimate disposal of the investment; or • the present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal. The Group recognizes the loss within ‘ share of profit of an associate and a joint venture’ in the statement of profit or loss. Impairments are reversed if conditions for impairment are no longer present. Evaluating whether an impairment should be reversed requires the selection of key assumptions about the future. Accumulated impairment losses on investment in equity accounted investees recognised on the consolidated statement of financial position as at 31 December 2024 is AED 586.6 million (2023: AED 356.6 million). Leases - estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (suc h as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 39 4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued Key sources of estimation uncertainty continued Useful lives of property, plant and equipment and intangible assets The Group’s management determines the estimated useful lives of its property, plant and equipment and intangible assets for calculating depreciation / amortisation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and the future depreciation / amortisation charge would be adjusted where management believes that the useful lives differ from previous estimates. Where management determines that the useful life or residual value of an asset requires amendment, the net book amount in excess of the residual value is depreciated / amortised over the revised remaining useful life. Impairment of property, plant and equipment, intangible assets and capital work in progress Properties classified under property, plant and equipment and capital work in progress are assessed for impairment based on the assessment of cash flows on individual cash-generating units when there is an indication that those assets have suffered an impairment loss. Cash flows are determined with reference to recent market conditions, prices existing at the end of the reporting period, contractual agreements, and estimations over the useful lives of the assets and discounted using a range of discounting rates that reflects current market assessments of the time value of money and the risks specific to the asset. The net present values are compared to the carrying amounts to assess any probable impairment. Accumulated impairment losses as at 31 December 202 4 on property, plant and equipment are nil (2023: nil) and accumulated impairment losses on intangible assets are AED 80.5 million (2023: AED 80.5 million). Fair value measurement of financial instruments When the fair values of financial assets and financial liabilities recorded in the consolidated statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are taken from obse rvable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments. Decommissioning liability The provision for decommissioning costs is based on current legal and constructive requirements, technology, price levels and expected plans for remediation. Management bases these estimates on its best knowledge and reports from independent experts. Actua l costs and cash outflows can differ from estimates because of changes in laws and regulations, public expectations, market conditions, discovery and analysis of site conditions and changes in technology. Deferred taxes The Group operates in a number of tax jurisdictions and is, therefore, required to estimate its income taxes in each of these tax jurisdictions in preparing its consolidated financial statements. In calculating income taxes, consideration is given to factors such as tax rates based on the tax legislation in force at the end of the reporting period in the different jurisdictions, non-deductible expenses, valuation allowances, changes in tax law and management’s expectations of future operating results. The Group estimates deferred income taxes based on temporary differences between the income and losses reported in its consolidated financial statements and its taxable income and losses as determined under the applicable tax laws. The tax effect of these temporary differences is recorded as deferred tax assets or liabilities in the consolidated financial statements. Deferred taxes are determined using tax rates approved or about to be approved at the end of the reporting period of each company and expected to apply when the corresponding deferred tax asset is realised, or the deferred tax liability is settled. Service concession arrangements – Standalone selling prices The Group determines the standalone selling prices (mark -up) for the construction and operating components of its service concessions arrangements based on terms specific to the contracts and applicable market factors.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 40 4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued Key sources of estimation uncertainty continued Service concession arrangements - Significant financial component The Group estimated the significant financing component associated with its service concession arrangements using the discount rates implied in the respective contracts after considering the standalone selling prices for the construction and operating components. The Group arrived at an interest rate range between 2.32% to 6.61% per annum, depending on contract inception dates, to discount the expected cashflows over the term of the service concession arrangements. Revenue from sale of equipment The Group recognises r evenue from sale of equipment at the point in time when control of the asset is transferred to the customer, generally on delivery of the equipment at the customer’s location. The Group determined that it is the agent for such transactions, as a result, revenue is recognized on a net basis. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash- inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill recognised by the Group. 5 SUBSIDIARIES, EQUITY-ACCOUNTED INVESTEES AND JOINT OPERATIONS Details of the Group’s subsidiaries, equity- accounted investees and joint operations at the end of the reporting period are as follows: Ownership interest Subsidiaries Domicile Principal activities 2024 2023 Masdar Azerbaijan LLC Azerbaijan Renewable energy 100% 100% Masdar Azerbaijan Energy LLC Azerbaijan Renewable energy 100% 100% Masdar Power Services Azerbaijan LLC (MPSA) Azerbaijan Renewable energy 100% 100% Shamol Zarafshan Enegy FE LLC Uzbekistan Renewable energy 100% 100% Masdar Power Services Uzbekistan Renewable energy 100% 100% Nur Navoi Solar LLC Uzbekistan Renewable energy 100% 100% Shamol Zarafshan LLC Uzbekistan Renewable energy 100% 100% Nur Jizzak Solar PV FE LLC Uzbekistan Renewable energy 100% 100% Nur Sherabad Solar PV FE LLC Uzbekistan Renewable energy 100% 100% Nur Samakand Solar PV FE LLC Uzbekistan Renewable energy 100% 100% Nur Kashkadarya Solar PV FE Uzbekistan Renewable energy 100% 100% Masdar Uzbekistan LLC FE Uzbekistan Renewable energy 100% 100% Masdar Power Services LLC Uzbekistan Renewable energy 100% 100% Masdar Solar &Wind Cooperatief U.A. Netherlands Investment in renewable energy 100% 100% Masdar Energy BV Netherlands Investment in renewable energy 100% 100% Masdar Finance BV Netherlands Services 100% 100% Masdar Egypt BV Netherlands Renewable energy 100% 100% Masdar CES Europe B.V. Netherlands Renewable energy 100% 100% Trading Company Limited UAE Trading 100% 100% Masdar Specialised Technial Services LLC UAE Services 100% 100% Masdar UK charging infrastructure SPV Restricted Limited UAE Investment 100% 100% Masdar Global Offshore Wind Holding RSC Limited UAE Renewable energy 100% 100% Al Dhafra Wind Energy Company UAE Renewable energy 100% 100% Technical Service LLC Abu Dhabi Branch UAE Renewable energy 100% 100% Noor One Solar Power Company LLC UAE Renewable energy 100% 100% Invest Company 1 Limited UAE Renewable energy 100% 100% Source Trading Company Limnited UAE Renewable energy 100% 100% Masdar Offshore Wind UK Limited UK Investment in renewable energy 100% 100% Masdar Offshore Wind UK II Limited UK Renewable energy 100% 100% Masdar Energy UK Limited UK Renewable energy 100% 100% Masdar Energy UK II Limited UK Renewable energy 100% 100% Masdar Offshore Wind Scotland Limited UK Renewable energy 100% 100% Masdar UK Offshore Wind Holding Limited UK Renewable energy 100% 100% Masdar Arlington Energy Storage UK Holdco Ltd UK Renewable energy 100% 100% Masdar Energy Storage Development UK Ltd UK Renewable energy 100% 100% ARL 016 Limited UK Renewable energy 95% 90% ARL Energy Development Limited UK Renewable energy 95% 90%
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 41 5 SUBSIDIARIES, EQUITY-ACCOUNTED INVESTEES AND JOINT OPERATIONS continued Ownership interest Subsidiaries Domicile Principal activities 2024 2023 AVE 002 Limited UK Renewable energy 95% 90% Arlington Group Services Ltd UK Renewable energy 95% 90% ADV 003 Limited UK Renewable energy 95% 90% ADV 004 Limited UK Renewable energy 95% 90% ADV 005 Limited UK Renewable energy 95% 90% ADV 006 Limited UK Renewable energy 95% 90% MAS 001 Limited UK Renewable energy 99% 99% MAS 002 Limited UK Renewable energy 99% 99% MAS 003 Limited UK Renewable energy 99% 99% MAS 004 Limited UK Renewable energy 99% 99% MAS 005 Limited UK Renewable energy 99% 99% MAS 007 Limited UK Renewable energy 99% 99% MAS 008 Limited UK Renewable energy 99% 99% ESL 001 Limited UK Renewable energy 95% 90% ESL 002 Limited UK Renewable energy 95% 90% Masdar UK Development Company Limited UK Renewable energy 100% 100% Masdar DBS East Limited UK Renewable energy 100% 100% Masdar DBS West Limited UK Renewable energy 100% 100% Masdar Americas LLC USA Renewable energy 100% 100% Masdar Miligan Holding LLC USA Renewable energy 100% 100% Rocksprings Wind Masdar Opco LLC USA Renewable energy 100% 100% Sterling Wind Masdar Opco LLC USA Renewable energy 100% 100% Masdar TG Merger Corporation USA Renewable energy 100% 100% Masdar APAC Pte Ltd Singapore Renewable energy 100% 100% Masdar Europe SLU Spain Renewable energy 100% 100% Almenara Power SLU Spain Renewable energy 100% 100% Masdar Renewable Power Services d.o.o. (MRPS) Serbia Renewable energy 100% 100% PT Masdar Clean Energy Indonesia LLC Indonesia Renewable energy 100% 100% Masdar Baltic Eagle Germany GmbH Germany Renewable energy 100% 100% Source Masdar PV GmbH Germany Manufacturing 100% 100% Esnad Masdar for Energy LLC Saudi Arabia Renewable energy 100% 100% Abu Dhabi Future Energy Holding Company LLC Saudi Arabia Renewable energy 100% 100% ADFEC Morocco SARLAU Morocco Renewable energy 100% 100% Yas Energy Company SAE Egypt Renewable energy 100% 100% Masdar Oman Holding Limited Oman Renewable energy 100% 100% Subsidiaries incorporated during the year Abu Dhabi Renewable Energy Complex Limited UAE Renewable energy 100% - Masdar TG Merger Corporation USA Renewable energy 100% - Masdar Hellas Single Member SA Grecce Renewable energy 100% - Masdar Espana Renewables 1, S.L. Spain Renewable energy 100% - Qazaq Wind Power LLP Kazakhstan Renewable energy 100% - Bilasuvar Solar SPV Limited Liability Company Azerbaijan Renewable energy 100% - Subsidiaries acquired during the year Terna Energy Group and its subsidiaries Greece Renewable energy 87% - Terp Spanish Holdco, S.L.U. (Saeta Yield) and its subsidiaries Spain Renewable energy 100% - Associates London Array Limited UK Renewable energy 20% 20% Baltic Eagle GmbH UK Renewable energy 49% 49% PT Pertamina Geothermal Energy Tbk Indonesia Renewable energy 15% 15% Sharjah Waste to Energy Plant Maintenance UAE Renewable energy 25% 25% Associates acquired during the year Enel Green Power España Solar 1 S.L. Spain Renewable energy 49.99% -
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 42 5 SUBSIDIARIES, EQUITY-ACCOUNTED INVESTEES AND JOINT OPERATIONS continued Ownership interest Joint ventures Domicile Principal activities 2024 2023 Dudgeon Holding Limited (Dudgeon Offshore Wind Limited) (“Dudgeon”) UK Renewable energy 35% 35% Dudgeon Extension Limited UK Renewable energy 35% 35% Hywind Scotland Limited (“Hywind”) UK Renewable energy 25% 25% Big Beau Power Purchaser LLC USA Renewable energy 50% 50% Big Beau Solar LLC USA Renewable energy 50% class B 50% class B Blue Palm Holdings* USA Renewable energy 50% class B 50% class B Blue Palm Class B Solar Hold Co* USA Renewable energy 50% class B 50% class B Sterling Wind Phase 1 Holdings LLC* USA Renewable energy 100% class A 100% class A AEM Wind LLC* USA Renewable energy 100% class B 100% class B Rocksprings Val Verde Wind LLC* USA Renewable energy 100% class B 100% class B Val Verde Wind Holdco LLC USA Renewable energy 50% 50% Verde Wind Holdco II LLC USA Renewable energy 50% 50% Shams Power Company PJSC UAE Renewable energy 51% 51% Sharjah Waste to Energy Company LLC UAE Renewable energy 50% 50% Emirates Waste to Energy Company LLC UAE Renewable energy 50% 50% Masdar Green Hydrogen LLC* UAE Renewable energy 55.8% 55.8% Emerge Limited* UAE Renewable energy 51% 51% Noor Midelt 1 Procurement Company DMCC* UAE Renewable energy 54% 54% Energize O&M Company LLC* UAE Renewable energy 60% 60% Dhafrah Solar Energy Holding Company LLC UAE Renewable energy 33.34% 33.34% Dhafrah PV2 Energy Company LLC UAE Renewable energy 20% 20% Shuaa Energy 2 PSC UAE Renewable energy 24% 24% Shuaa Energy 4 P.S.C UAE Renewable energy 40% 40% Emirates Solar Power Company LLC * UAE Renewable energy 60% 60% MW Energy Limited UAE Renewable energy 50% 50% Infinity Power Holding BV Netherlands Renewable energy 49% 49% Tesla Wind B.V. Netherlands Renewable energy 50% 50% Baynouna Solar Energy PSC* Jordan Renewable energy 70% 70% Jordan Wind Power Company PSC Jordan Renewable energy 50% 50% Dumat Al Jandal Wnd Energy Company LLC Saudi Arabia Renewable energy 34.3% 34.3% Dumat Wind Contracting Company LLC Saudi Arabia Renewable energy 34.3% 34.3% South Jeddah Noor PV Energy Company LLC Saudi Arabia Renewable energy 36% 36% Noor Jeddah Energy Service Company LLC Saudi Arabia Renewable energy 35.7% 35.70% Sana Taibah for Renewable Energy Saudi Arabia Renewable energy 40% 40% PV Energy Maintenance Company LLC Saudi Arabia Renewable energy 36% 36% Al Shorouq Sustainable Energy Company Saudi Arabia Renewable energy 50% 50% Elecion Rockingham RRF Project Co PTY Ltd Australia Renewable energy 37% 37% Masdar Tribe Australia PTY Ltd Australia Renewable energy 50% 50% Noor Midelt Solar Hybrid 1 Company Morocco Renewable energy 30% 30% Noor Midelt O&M1 Company Morocco Renewable energy 37% 37% Dimona Solar Park Ltd Israel Renewable energy 49% 49% Dimona Sun Ltd Israel Renewable energy 49% 49% PT Masdar Mitra Solar Radiance Indonesia Renewable energy 47.5% 47.5% PT Pembangkitan Jawa Bali Masdar Solar Energi Indonesia Renewable energy 49% 49% Masdar Armenia 1 CJSC* Armenia Renewable energy 85% 85% Masdar Georgia Energy LLC* Georgia Renewable energy 90% 90% Krnovo HoldCo d.o.o (“Krnovo”) Montenegro Renewable energy 49% 49% Cibuk 2 HoldCo d.o.o Beograd Serbia Renewable energy 50% 50% Cibuk 2 Wind Energy d.o.o Beograd Serbia Renewable energy 50% 50% Masdar Taaleri Generation d.o.o Serbia Renewable energy 50% 50% Wind Energy Balkan Group Beograd* Serbia Renewable energy 60% 60% Ekoenergia Solar 4 sp.z.o.o Poland Renewable energy 50% 50% Karif Investment sp z.o.o Poland Renewable energy 50% 50% Fonnes SP. z.o.o Poland Renewable energy 50% 50% P. Wind sp. z.o.o Poland Renewable energy 50% 50% Rebat sp. z.o.o Poland Renewable energy 50% 50% Szamal Investment sp. z.o.o Poland Renewable energy 50% 50% Virazon Sp. z.o.o Poland Renewable energy 50% 50% B. Wind Sp. z.o.o Poland Renewable energy 50% 50% Surazo Sp. z.o.o Poland Renewable energy 50% 50% Contino Omikron Sp. z.o.o Poland Renewable energy 50% 50% Pileus Energy SP. z.o.o Poland Renewable energy 50% 50%
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 43 5 SUBSIDIARIES, EQUITY-ACCOUNTED INVESTEES AND JOINT OPERATIONS continued Ownership interest Joint venture Domicile Principal activities 2024 2023 Joint ventures acquired during the year RWE Renewables UK Dogger Bank South (East) Ltd UK Renewable energy 49% - RWE Renewables UK Dogger Bank South (West Ltd UK Renewable energy 49% - Terra-Gen Power Holdings II LLC USA Renewable energy 50% - Joint ventures incorporated during the year Amaala Sustainable Company for Energy Saudi Arabia Renewable energy 43% - Al Ajban PV3 Energy LLC* UAE Renewable energy 60% - MNE Trading Company UAE Trading 40% - Amaala Trading Company UAE Trading 50% - Joint operations London Array Project (unincorporated) UK Renewable energy 20% 20% The Group’s partly owned subsidiaries are disclosed in note 29. The Group’s investments in associates and joint ventures are accounted for using the equity method of accounting. The summarised financial information of material equity -accounted investees is disclosed in note 1 9 to the consolidated financial statements. * The entities where the Group has equal to or more than 50% shareholding are classified as joint ventures due to absence of control and insignificant voting rights. 6 BUSINESS COMBINATIONS 6.1 Acquisition of Terna Energy On 28 November 2024, the Company completed the acquisition of 70% interest in Terna Energy (“Terna”), a Greek listed entity for a cash consideration of EUR 2 billion (AED 6.6 billion). Terna is a leading European clean energy platform with a track record of more than 25 years of delivering innovative and sustainable projects in renewable energy. The company specializes in financing, developing, constructing and operating renewable energy facilities, focused on wind, solar, hydroelectric and pumped storage projects. Following the closing of the transaction, Masdar made an all -cash mandatory tender offer (“MTO”) and acquired an additional 17% interest in Terna for a value of EUR 340 million (AED 1.3 billion) as at 31 December 2024. The acquisition was funded by shareholder contributions and EUR 600 million of bank borrowings. The Group has elected to measure the non-controlling interests in the acquiree at fair value, amounting to EUR 20 per share. The net assets recognized are based on a provisional assessment of the fair value of identifiable assets and liabilities as at the acquisition date. Additional analysis is required to determine the acquisition date fair values of the assets and liabilities acquired. Thus, the assets and liabilities may be subsequently adjusted, with a corresponding adjustment to goodwill prior to the completion of 12 months from the acquisition date.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 44 6 BUSINESS COMBINATIONS continued 6.1 Acquisition of Terna Energy continued The identifiable assets acquired, and liabilities assumed at the acquisition date are as follows: 28 November 2024 AED’000 Property plant and equipment & right of use assets 11,891,077 Intangible assets 260,426 Investment in joint ventures 1,722 Cash and cash equivalent 2,420,450 Other non-current financial assets 31,432 Inventories 41,398 Account receivables, prepayments, and other assets 1,325,075 Account payable, accruals, and other liabilities (3,934,057) Decommissioning liabilities (213,726) Deferred tax liabilities (1,305,612) Lease liabilities (134,494) Interest bearing loans and borrowings (4,300,721) Total identifiable net assets acquired 6,082,970 Goodwill arising from the acquisition has been recognized as follows: Consideration transferred 7,932,415 Non-controlling interest measured at fair value 1,212,005 Identifiable net assets acquired (6,082,970) Provisional goodwill on acquisition 3,061,450 The provisional goodwill of AED 3.1 billion comprises the value of expected synergies from the acquisition , repowering of existing projects and pipeline projects. From the date of acquisition, Terna contributed AED 105 million of revenue and AED 32 million of profit before tax from continuing operations to the Group. If the combination had taken place at the beginning of 2024, the contribution to Group’s profit before tax from continuing operations would have been AED 115 million.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 45 6 BUSINESS COMBINATIONS continued 6.2 Acquisition of Terp Spanish Holdco, S.L.U. (Saeta Yield) On 20 December 2024, the Company completed the acquisition of 100% interest in Saeta Yield (“Saeta”), an established renewables platform in the Iberian Peninsula with a portfolio of 745MW of predominantly wind assets, and a 1.6 GW development pipeline in Spain and Portugal for cash consideration amounting AED 2. 7 billion (EUR 698 million). The net assets recognized are based on a provisional assessment of the fair value of identifiable assets and liabilities as at the acquisition date. Additional analysis is required to determine the acquisition date fair values of the assets and liabilities acquired. Thus, the assets and liabilities may be subsequently adjusted, with a corresponding adjustment to goodwill prior to the completion of 12 months from the acquisition date. The identifiable assets acquired, and liabilities assumed at the acquisition date are as follows: 20 December 2024 AED’000 Property plant and equipment & right of use assets 2,449,544 Intangible assets 1,566,918 Cash and cash equivalent 106,794 Account receivables, prepayments, and other assets 324,569 Account payable, accruals, and other liabilities (299,809) Interest bearing loans and borrowings (2,034,770) Deferred tax liabilities (282,377) Lease liabilities (118,687) Total identifiable net assets acquired 1,712,182 Goodwill arising from the acquisition has been recognized as follows: Consideration transferred 2,655,452 Identifiable net assets acquired (1,712,182) Provisional goodwill on acquisition 943,270 The provisional goodwill of AED 0.9 billion comprises the value of expected synergies from the acquisition, repowering of existing projects and pipeline projects. Saeta contributed nominal revenue and profit during the year to the Group as the acquisition closed on 20 December 2024. If the combination had taken place at the beginning of 2024, the contribution to Group’s profit before tax from continuing operations would have been AED 76.3 million.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 46 7 REVENUES Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Revenue from contracts with customers 3,417,731 3,554,976 Finance lease income (note 21.1) 3,728 4,057 Others 413 456 3,421,872 3,559,489 Revenue from contracts with customers: Renewable power generation 582,888 442,976 Concession revenue (i) 2,029,475 2,893,226 Special projects 41,557 27,621 Trading income 370,691 158,634 Development fee income 393,120 32,519 3,417,731 3,554,976 Geographical markets Uzbekistan 2,030,734 3,031,476 United Arab Emirates 619,915 50,697 United Kingdom 413,094 442,957 Kingdom of Saudi Arabia 172,085 1,415 Greece 111,477 - Azerbaijan 56,463 5,205 Poland 5,858 - Spain 4,008 - Serbia 2,429 2,716 Bulgaria 1,634 - Germany 34 - Jordan - 20,510 3,417,731 3,554,976 Timing of revenue recognition: Over time 2,029,475 2,893,226 At a point in time 1,388,256 661,750 3,417,731 3,554,976 (i) Concession revenue (note 20) Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Revenue from construction 1,803,128 2,833,969 Interest income from service concession 219,824 51,015 Revenue from operation 6,523 8,242 2,029,475 2,893,226 Trade receivables and operating financial assets from contracts with customers are included in notes 2 0 & 24.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 47 8 GOVERNMENT GRANTS 8.1 Income from Government grants Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Income from Government grants 61,602 84,571 Expenses incurred in relation to Government grants (note 11) (61,602) (84,571) - - Income from Government grants mainly represents the annual budgetary grants related to income for operation of the IRENA and Zayed Sustainability Prize. Grants related to assets or activities which are yet to be undertaken are included within amounts due to related parties and amount to AED 74.7 million (2023: AED 55.4 million). 8.2 Land grants The Group has received the following parcels of land by way of Government grants, which have been classified into the ‘future economic benefits established’, ‘no future economic benefits’ and ‘future economic benefits uncertain’ categories. Where future economic benefit has been established, land is recognised as property, plant and equipment (“PPE”). Carrying Carrying value as at value as at Area 31 December 31 December Land identification Granted year in square ft 2024 2023 AED ‘000 AED ‘000 Future economic benefits established Madinat Zayed 2008 26,909,776 - - Hai Al Dawoody 2009 1,076 - - Hamran 2009 1,076 - - Future economic benefits established The part of the Madinat Zayed land that has been identified and used for the purpose of construction and operation of a solar power station has been recorded as property, plant and equipment at nominal value. The Hai Al Dawoody and Hamran land have been identified for the purpose of testing of solar radiation in relation to solar plants projects and, accordingly, have been recorded as property, plant and equipment at nominal value. The remainder of the land has been classified as ‘future economic benefits uncertain’ as discussed below. Future economic benefits uncertain The Group is of the view that the future economic benefits from the use of the remaining Madinat Zayed land of 116,202,049 square ft is uncertain as the future use of this land is unknown and the Group may not comply with the conditions attaching to them or there is a possibility that it will not be used for commercial purposes and may, possibly, revert to the Government. Accordingly, i t is uncertain that future economic benefits will flow to the Group from the ownership of the Madinat Zayed land and the respective land plot is not recognised as at 31 December 2024.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 48 9 OTHER INCOME Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Dividend income from a joint venture (i) - 98,815 Others (ii) 57,034 66,217 57,034 165,032 (i) During 2023, the Group recognized dividend income amounting to AED 98.8 million from a joint venture, being the value exceeding the carrying amount of the investment in joint venture, recognised directly though the consolidated statement of comprehensive income. (ii) During the year, others include sponsorship income of AED 20 million, sale of u rban emission reduction (UER) credits of AED 21 million and other miscellaneous income AED 16 million (2023: Others include Blue Palm indemnity income of AED 20 million, sponsorship income of AED 24 million, sale of UER credits of AED 16 million, digital technology and other miscellaneous income AED 6 million) 10 DIRECT COSTS Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Service concession cost of sale - construction 1,608,515 2,533,594 Service concession cost of sale – operation 4,645 8,079 Depreciation of property, plant and equipment (note 16) 178,296 85,328 Operation and maintenance 64,932 51,500 Depreciation of right-of-use assets (note 17) 28,963 21,359 Others 22,946 14,102 1,908,297 2,713,962 11 GENERAL AND ADMINISTRATIVE EXPENSES Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Staff cost 442,239 314,721 Advertising, publicity, and events 104,350 151,809 Expected credit losses (note (i)) 60,202 4,986 Depreciation (note 16) 14,490 10,488 Amortization of intangible assets (note 18) 14,363 4,074 Depreciation of right-of-use assets (note 17) 6,474 4,616 Research and development expenses 1,261 1,774 Others 60,927 75,221 704,306 567,689 General and administrative expenses during the year included AED 61. 6 million (2023: AED 84.6 million) charged as expenses incurred in relation to Government grants (note 8).
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 49 11 GENERAL AND ADMINISTRATIVE EXPENSES continued Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Note (i) Expected credit losses (ECL) Provision for (reversal of) ECL on loans to related parties, net (note 22.1) 41,737 (26,606) Reversal of provision for ECL on financial lease receivables (note 21) (263) (596) Provision for ECL on operating financial assets (note 20) 18,728 32,188 60,202 4,986 Included in other expenses is fees incurred by the Group towards the assurance services provided by the Group’s auditors, as follows: Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Fees to statutory auditor, UAE Fees for auditing the statutory financial statements of the Company and its subsidiaries 2,969 2,468 Fees to statutory auditor, other Fees for auditing the statutory financial statements of the subsidiaries overseas 5,941 2,682 8,910 5,150 12 PROJECT EXPENSES Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Project expense 244,380 143,741 Project expenses are related to legal, technical, financial and tax consultancies for upcoming projects. Included in the project expenses is fees incurred by the Group towards the services provided by the Group’s auditors, as follows: Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Fees to statutory auditor, UAE Fees for services required by legislation or contractual arrangements, to be provided by auditors 6,880 3,257
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 50 13 FINANCE INCOME AND EXPENSES 13.1 Finance income Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Interest income from fixed deposits 73,065 29,382 Interest income from loans to related parties (note 22.1) 150,669 68,240 223,734 97,622 13.2 Finance expenses Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Interest expense on interest bearing loans and borrowings 545,915 167,192 Bank charges 33,013 9,883 Amortization of deferred financing cost 39,796 14,776 Interest expense on lease liabilities (note 17) 15,166 13,590 Accretion expense of decommissioning liability (note 31.2) 4,068 2,620 637,958 208,061 14 TAXATION The Group’s subsidiaries in the United Arab Emirates, United Kingdom, Uzbekistan, Azerbajan, Greece and other countries are subject to taxation. Income tax for the current year is provided on the basis of estimated taxable income computed by the Group using tax rates, enacted or substantially enacted at the reporting date, applicable in the respective countries in which the subsidiaries operate and any adjustment to tax in respect of previous years. 14.1 Income tax recognised in consolidated statement of comprehensive income Major components of taxation are: Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Tax expense Income tax (114,293) (20,016) Deferred tax (26,576) (34,121) Total income tax expense recognised for the year (140,869) (54,137) The Group incurred net income tax expense of AED 140.9 million during the year (2023: AED 54.1 million). Deferred tax assets primarily relate to taxable losses, and the deferred tax liability relates to capital allowances in advance of depreciation.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 51 14 TAXATION continued 14.1 Income tax recognised in consolidated statement of comprehensive income continued The income tax expense for the year can be reconciled to the accounting profit as follows: Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Profit before income tax 553,367 9,423 Profit exempt from income tax - 299,540 Profit subject to income tax 553,367 308,963 Income tax expense on accounting profit at effective tax rate 9% (2023: 22%) (49,803) (67,317) Non-deductible expenses (72,494) 7,870 Dividend Income from joint venture’s eligible for participation exemption 13,572 - Group tax relief and utilization of tax losses 14,100 (27,816) Rate differential on foreign jurisdictions (22,453) 31,993 Other adjustments (23,791) 1,133 Income tax expense recognised in consolidated statement of profit or loss (140,869) (54,137) The tax rate used for 31 December 2024 reconciliations above is the effective corporate tax rate of 9% of United Arab Emirates. Effective tax rate for the year ended 31 December 2023 is blended average of corporate tax rates of United Kingdom and Uzbekistan since income tax was only applicable for these locations in 2023 . 14.2 Deferred tax balances The following is the analysis of deferred tax assets & liabilities presented in the consolidated statement of financial position: 2024 2023 AED ‘000 AED ‘000 Deferred tax liabilities (1,803,926) (177,411)
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Abu Dhabi Future Energy Company PJSC (Masdar) CONSOLIDATED STATEMENT OF CHANGE IN EQUITY For the year ended 31 December 2024 52 14 TAXATION continued 14.2 Deferred tax balances continued Acquisition Recognised Recognised Purchase Effect of At of in profit in other price movement in At 1 January subsidiaries and loss reserves allocation exchange rate 31 December AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 2024: Deferred tax liabilities in relation to: Property, plant and equipment (240,872) (359,989) (169,336) - - 2,958 (767,239) Others (72,899) (202,382) (9,958) 1,041 - 106 (284,092) Purchase price allocation for: Saeta - - - - (220,169) - (220,169) Terna - - - - (1,178,483) - (1,178,483) (313,771) (562,371) (179,294) 1,041 (1,398,652) 3,064 (2,449,983) Deferred tax assets in relation to: Tax losses 136,360 34,324 90,967 - - (170) 261,481 Others - 324,576 61,751 (2,463) - 712 384,576 136,360 358,900 152,718 (2,463) - 542 646,057 Deferred tax liabilities, net (177,411) (203,471) (26,576) (1,422) (1,398,652) 3,606 (1,803,926)
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 53 14 TAXATION continued 14.2 Deferred tax balances continued Recognised Recognised Effect of At 1 in profit in other movement in At January and loss reserve exchange rate 31 December AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 2023: Deferred tax liabilities in relation to: Property, plant and equipment (197,053) (32,408) - (11,411) (240,872) Others (59,022) (27,218) 16,427 (3,086) (72,899) (256,075) (59,626) 16,427 (14,497) (313,771) Deferred tax assets in relation to: Tax losses 103,599 29,815 - 2,946 136,360 Others 4,394 (4,310) - (84) - 107,993 25,505 - 2,862 136,360 Deferred tax liabilities, net (148,082) (34,121) 16,427 (11,635) (177,411) Tax losses carried forward of AED 1,586.4 million at 31 December 2024 (2023: AED 718.9 million) do not have any expiry period and are applied at an average tax rate of 25% for the tax losses in United Kingdom, 15% for the tax losses in Uzbekistan, 25% for the tax losses in Spain and 22% for the tax losses in Greece (2023: 25% for the tax losses in United Kingdom and 15% for the tax losses in Uzbekistan.), giving rise to a deferred tax asset of AED 261.48 million (2023: AED 136.4 million). 14.3 Domestic Minimum Top-up Tax under Pillar 2 Globe Rules The Organisation for Economic Co-operation and Development (“OECD”)/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar Two model (“Pillar Two”) rules designed to address the tax challenges arising from the digitalisation of the global economy. The UAE recently implemented a Domestic Minimum Top -up Tax (“DMTT”) effective from 1 January 2025. As the UAE has only recently published the relevant regulations, the Company is in the process of reviewing the impacts of this on the Group but expects this to be not material for 2024. The Group has applied the IAS 12 exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. 15 OPERATING SEGMENT INFORMATION Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the C hief Operating Decision Maker (CODM), and for which discrete financial information is available. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer of Masdar. For this purpose, the Group is currently organized as a single business unit of renewable power generation across different geographies and accordingly, the CODM reviews the results of operating activities of the G roup as a single business segment.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 54 15 OPERATING SEGMENT INFORMATION continued The following tables present revenue and certain asset information relating to the Group based on geographical location as at 31 December: United United Arab States of Emirates Europe Central Asia Indonesia America Egypt Others Total AED’000’ AED ‘000’ AED ‘000’ AED ‘000’ AED ‘000’ AED ‘000’ AED ‘000’ AED ‘000 2024 Revenues 624,056 536,105 2,087,197 - - - 174,514 3,421,872 Non-current assets 1,962,728 30,037,742 5,277,198 1,491,330 8,126,720 1,203,793 1,064,867 49,164,378 2023 Revenues 55,210 442,957 3,036,681 - - - 24,641 3,559,489 Non-current assets 775,880 3,831,018 3,794,666 1,488,336 2,082,675 1,449,618 162,473 13,584,666 Reconciliation of total non-current assets: 2024 2023 AED ‘000 AED ‘000 Non-current assets allocated to geographical locations 49,164,378 13,584,666 Derivative financial assets 254,890 169,671 Other non-current financial assets 98,371 35,642 Total non-current assets 49,517,639 13,789,979 Other information The Group has 2 major customers that contributed more than 10% towards the Group’s revenue during the year ended 31 December, as presented in the following table AED’000 2024 Customer 1 2,029,524 Customer 2 413,094 2023 Customer 1 3,031,476 Customer 2 442,957
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 55 16 PROPERTY, PLANT AND EQUIPMENT Land Plant Furniture Capital and and and work in building machinery fixtures progress Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 2024 Cost: At 1 January 2024 6,420 1,967,486 57,245 717,863 2,749,014 Additions - 63,089 3,275 125,890 192,254 Transfers - 693,802 - (693,802) - Acquisition of subsidiaries (note 6) 1,073,018 11,859,251 11,434 1,161,179 14,104,882 Exchange adjustment (79,123) (468,099) (2) (64,021) (611,245) At 31 December 2024 1,000,315 14,115,529 71,952 1,247,109 16,434,905 Accumulated depreciation: At 1 January 2024 3,699 918,999 44,546 - 967,244 Depreciation charge for the year 4,059 177,064 11,663 - 192,786 Exchange adjustment (69) (16,719) (2) - (16,790) At 31 December 2024 7,689 1,079,344 56,207 - 1,143,240 Carrying amount: At 31 December 2024 992,626 13,036,185 15,745 1,247,109 15,291,665 2023 Cost: At 1 January 2023 6,093 1,859,907 57,652 322,115 2,245,767 Additions - 4,852 4,293 874,358 883,503 Transfers - - - (478,674) (478,674) Disposal - - (4,707) - (4,707) Exchange adjustment 327 102,727 7 64 103,125 At 31 December 2023 6,420 1,967,486 57,245 717,863 2,749,014 Accumulated depreciation: At 1 January 2023 3,227 787,017 40,522 - 830,766 Depreciation charge for the year 268 86,824 8,724 - 95,816 Disposals - - (4,707) - (4,707) Exchange adjustment 204 45,158 7 - 45,369 At 31 December 2023 3,699 918,999 44,546 - 967,244 Carrying amount: At 31 December 2023 2,721 1,048,487 12,699 717,863 1,781,770 No specific property, plant and equipment has been pledged against the existing loans. The loans granted are senior secured. Refer to note 30. During the year, the Group capitalised borrowing costs of AED 2.5 million (2023: 18.2 million) with respect to Masdar Azerbajan 230 MW PV plant. Included in plant and machinery are corresponding decommissioning liabilities relating to the London Array Project, Masdar Azerbajan Energy LLC, Terna Energy Group and Terp Spanish Holdco SL amounting to AED 357.3 million as at 31 December 2024 (2023: AED 68.9 million) (note 31.2).
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 56 16 PROPERTY, PLANT AND EQUIPMENT continued Capital work in progress relates to the following projects: 2024 2023 AED ‘000 AED ‘000 Terna Energy Pump Storage Project Etoloakarnania 1,089,948 - Arlington Group Services battery energy storage 102,529 12,510 Corporate business support and digital technology assets 35,112 17,530 Lestenergía Repowering wind farm 8,321 - Masdar Azerbajan 230 MW PV plant - 681,910 Others 11,199 5,913 1,247,109 717,863 Depreciation charge has been allocated to cost of sales and general and administrative expenses as follows: Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Direct costs (note 10) 178,296 85,328 General and administrative expenses (note 11) 14,490 10,488 192,786 95,816 17 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES Set out below are the carrying amounts of the Group’s right -of-use assets and lease liabilities and the movements during the year: Right-of-use assets Plant and Office Land Building Vessels machinery equipment Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 2024 Cost: At 1 January 2024 24,313 30,114 8,090 310,253 1,616 374,386 Additions 6,821 11,115 16 - - 17,952 Acquisition of subsidiaries (note 6) 226,709 7,757 1,273 - - 235,739 Exchange adjustments (5,172) (345) (153) (5,226) (662) (11,558) At 31 December 2024 252,671 48,641 9,226 305,027 954 616,519 Accumulated depreciation: At 1 January 2024 7,717 6,983 8,090 85,874 294 108,958 Depreciation charge for the year 2,934 12,436 147 19,732 188 35,437 Exchange adjustments (1,645) (160) (143) (1,346) (121) (3,415) At 31 December 2024 9,006 19,259 8,094 104,260 361 140,980 Carrying amount At 31 December 2024 243,665 29,382 1,132 200,767 593 475,539
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 57 17 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES continued Right-of-use assets continued Plant and Office Land Building Vessels machinery equipment Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 2023 Cost: At 1 January 2023 23,075 32,128 7,677 294,454 294 357,628 Additions - 18,852 - - 1,322 20,174 Lease terminations (i) - (21,022) - - - (21,022) Exchange adjustments 1,238 156 413 15,799 - 17,606 At 31 December 2023 24,313 30,114 8,090 310,253 1,616 374,386 Accumulated depreciation: At 1 January 2023 4,752 820 6,860 65,771 294 78,497 Depreciation charge for the year 1,422 6,130 955 17,468 - 25,975 Exchange adjustments 1,543 33 275 2,635 - 4,486 At 31 December 2023 7,717 6,983 8,090 85,874 294 108,958 Carrying amount: At 31 December 2023 16,596 23,131 - 224,379 1,322 265,428 Lease liabilities 2024 2023 AED ‘000 AED ‘000 As at 1 January 291,213 299,891 Additions 17,952 18,852 Acquisition of subsidiaries (note 6) 253,181 - Lease terminations (i) - (21,022) Interest expense (note 13.2) 15,166 13,590 Payments made during the year (47,176) (33,487) Effect of movement in exchange rate (8,811) 13,389 As at 31 December 521,525 291,213 Lease liabilities are disclosed in the consolidated statement of financial position as: 2024 2023 AED ‘000 AED ‘000 Current 14,142 8,608 Non-current 507,383 282,605 521,525 291,213 (i) During 2023, the Group exited 3 office premise leases in Masdar City as part of the transfer of Masdar City related entities to the shareholder, Mamoura Diversified Global Holding PJSC. Accordingly, the Group derecognised the respective right -of-use assets and lease liabilities associated with these lease contracts. The average effective interest rate applied for calculating lease liabilities ranges between 2% to 6.4% (2023: 2% to 5%) per annum. Maturity analysis of lease liabilities is disclosed in note 35.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 58 17 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES continued The following are the amounts recognised in the consolidated statement of comprehensive income : Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Depreciation of right-of-use assets 35,437 25,975 Interest expense on lease liabilities (note 13.2) 15,166 13,590 Expense relating to short term or low value leases - 324 Total amount recognised in profit or loss 50,603 39,889 Depreciation of right of use assets in the consolidated statement of comprehensive income is as follows: Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Direct costs (note 10) 28,963 21,359 General and administrative expenses (note 11) 6,474 4,616 35,437 25,975 18 INTANGIBLE ASSETS AND GOODWILL Software License Goodwill Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 2024 Cost: At 1 January 2024 22,951 156,550 179,219 358,720 Additions 8 521 - 529 Acquisition of subsidiaries (note 6) 2,641 1,824,703 4,004,720 5,832,064 Exchange adjustments - (1,242) (107,714) (108,956) At 31 December 2024 25,600 1,980,532 4,076,225 6,082,357 Accumulated amortisation and impairment: At 1 January 2024 22,028 110,276 - 132,304 Amortization for the year 500 13,863 - 14,363 Exchange adjustments - (706) - (706) At 31 December 2024 22,528 123,433 - 145,961 Carrying amount: At 31 December 2024 3,072 1,857,099 4,076,225 5,936,396
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 59 18 INTANGIBLE ASSETS AND GOODWILL continued Software License Goodwill Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 2023 Cost: At 1 January 2023 22,103 153,231 164,132 339,466 Addition 848 - - 848 Acquisition of subsidiaries (note 6) - - 5,663 5,663 Exchange adjustments - 3,319 9,424 12,743 At 31 December 2023 22,951 156,550 179,219 358,720 Accumulated amortisation and impairment: At 1 January 2023 20,721 106,177 - 126,898 Amortization for the year 1,307 2,767 - 4,074 Exchange adjustments - 1,332 - 1,332 At 31 December 2023 22,028 110,276 - 132,304 Carrying amount: At 31 December 2023 923 46,274 179,219 226,416 Impairment of goodwill The Group performs goodwill impairment testing on an annual basis, at the reporting date, and when there are indicators of impairment. Arlington Group Services Limited For the purpose of impairment testing, goodwill acquired through business combination is allocated to Arlington Group Services Limited’s network of battery energy storage systems (BESS), which is the smallest identifiable group of assets capable of generating independent cashflows i.e. cash-generating-unit (CGU). Recoverable value of the CGU is determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering the useful life of the BESS ( 32 years). The pre -tax discount rate applied to the cash flow projections is 9.7% (2023: 9.0%). Terna Energy Group and Saeta Yield SL During the year, the Group acquired Terna Energy Group and Saeta Y ield SL (note 6) near the reporting date . The Purchase Price Allocation (PPA) exercise is in progress to determine the fair values of the acquired assets, liabilities, and goodwill. Given the complexity of valuing renewable energy assets, including power purchase agreements, regulatory considerations, and fore casted cash flows, the final allocation is expected to be completed within the 12- month measurement period. At this stage, no impairment indicators have been identified, as the acquisition was completed close to the year-end, and the carrying value of goodwill remains provisional. Sensitivity to changes in assumptions The impairment tests are particularly sensitive to commodity prices, foreign exchange rates and discount rates. Management believes that no reasonably possible adverse change in these assumptions would cause the carrying value of the cash-generating unit to materially exceed its recoverable amount.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 60 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES The Group’s investments in associates and joint ventures at 31 December are as follows: 2024 2023 Joint Joint Associates ventures Total Associates ventures Total AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 At 31 December 6,870,111 13,632,323 20,502,434 2,996,465 4,585,465 7,581,930 The movement in investments in associates and joint ventures is set out below: Associates Joint ventures Total AED ‘000 AED ‘000 AED ‘000 At 1 January 2024 2,996,465 4,585,465 7,581,930 Investments during the year (i) 4,061,325 9,180,809 13,242,134 Additions through acquisition of subsidiaries (note 6.1) - 1,722 1,722 Share of results of equity-accounted investees 49,466 470,632 520,098 Dividends received (ii) (66,449) (439,743) (506,192) Share of movement in hedging reserves - (27,821) (27,821) Share of movement in foreign exchange reserves (170,696) (67,359) (238,055) Share of other comprehensive loss - (28,680) (28,680) Reclassification (iii) - 187,298 187,298 Impairment (iv) - (230,000) (230,000) At 31 December 2024 6,870,111 13,632,323 20,502,434 At 1 January 2023 3,389 3,688,449 3,691,838 Investments during the year (i) 2,891,047 1,346,731 4,237,778 Share of results of equity-accounted investees 112,314 (160,570) (48,256) Dividends received (ii) (12,345) (228,951) (241,296) Share of movement in hedging reserves - (20,835) (20,835) Share of movement in foreign exchange reserves 182 88,808 88,990 Share of other comprehensive gain 1,878 22,097 23,975 Reclassification (iii) - 33,180 33,180 Impairment (iv) - (183,444) (183,444) At 31 December 2023 2,996,465 4,585,465 7,581,930 In 2023, the Group’s investment in Baltic Eagle of AED 1,570 million was classified as a joint venture. Following a reassessment in 2024, based on governance rights and decision- making influence, it was determined that the Group exercises significant influence rather than joint control. Accordingly, the investment has been reclassified as an associate under IAS 28. (i) During the year, the Group has made the following significant investments: Terra-Gen Power Holdings II LLC On 30 September 2024 the Company completed the purchase of a 50% interest in Terra -Gen Power Holdings II LLC (“Terra-Gen”), a joint venture, for USD 1,498.4 million (AED 5,504.5 million). Terra-Gen’s gross operating portfolio comprises 3.8GW of wind, solar and battery storage projects, including 5.1GWh of energy storage facilities across 30 renewable power sites. The acquisition was funded by additional shareholder contributions. The net assets recognized are based on a provisional assessment of the fair value of identifiable assets and liabilities as at the acquisition date. Additional analysis is required to determine the acquisition date fair values of the assets and liabilities acquired. Thus, the assets and liabilities may be subsequently adjusted, with a corresponding adjustment to goodwill prior to the completion of 12 months from the acquisition date.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 61 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Terra-Gen Power Holdings II LLC continued The fair value of Masdar’s share of identifiable assets and liabilities of Terra-Gen at the acquisition date based on the purchase price allocation was as follows: 30 September 2024 AED’000 Assets Current assets 765,491 Non-current assets 16,889,793 Liabilities Current liabilities 2,993,784 Non-current assets 5,672,005 Net assets 8,989,495 Masdar’s share of net assets 4,494,747 Goodwill arising from the acquisition has been recognized as follows: Purchase consideration 5,504,534 Share of identifiable net assets acquired (4,494,747) Provisional goodwill on acquisition 1,009,787 Enel Green Power España Solar 1 S.L. On 23 December 2024, the Group completed the purchase of 49.99% ownership interest in Enel Green Power España Solar 1 S.L. (“EGPE Solar”), an associate for EUR 852.1 million (AED 3,288.2 million) with a portfolio of approximately 2.5 GW of solar and batter y energy storage systems hybridization capacity in Spain. The acquisition was funded by additional shareholder contributions and a senior debt. The net assets recognized are based on a provisional assessment of the fair value of identifiable assets and liabilities as at the acquisition date. Additional analysis is required to determine the acquisition date fair values of the assets and liabilities acquired. Thus, the assets and liabilities may be subsequently adjusted, with a corresponding adjustment to goodwill prior to the completion of 12 months from the acquisition date. The fair value of Masdar’s share of identifiable assets and liabilities of EGPE Solar at the acquisition date based on the purchase price allocation was as follows: 31 December 2024 AED’000 Assets Current assets 590,409 Non-current assets 6,850,889 Liabilities Current liabilities 250,827 Non-current liabilities 824,215 Net assets 6,366,256 Masdar share of net assets 3,182,491 Goodwill arising from the acquisition has been recognized as follows: Purchase consideration 3,288,187 Share of identifiable net assets acquired (3,182,491) Provisional goodwill on acquisition 105,696
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 62 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Dogger Bank South East Limited and Dogger Bank South West Limited On 29 February 2024, the Group completed the a cquisition of 49% ownership interest in RWE Renewables UK Dogger Bank Southwest Limited and RWE Renewables UK Dogger Bank South East Limited (together known as “Project Falke”) (“DBS”), a joint venture, for a consideration of GBP 515.7 million (AED 2,392.7 million). This amount includes a deferred consideration of GBP 10 2.5 million (AED 475.9 million). During the year, an additional contribution of GBP 86.0 million (AED 398.4 million) was paid into the investee. The net assets recognized are based on a provisional assessment of the fair value of identifiable assets and liabilities as at the acquisition date. Additional analysis is required to determine the acquisition date fair values of the assets and liabilities acquired. Thus, the assets and liabilities may be subsequently adjusted, with a corresponding adjustment to goodwill prior to the completion of 12 months from the acquisition date. The identifiable assets acquired, and liabilities assumed at the acquisition date are as follows: 29 February 2024 AED’000 Assets Current assets 109,695 Non-current assets 4,564,723 Liabilities Current liabilities 66,905 Non-current liabilities 316,882 Net assets 4,290,631 Masdar’s share of net assets 2,102,409 Goodwill arising from the acquisition has been recognized as follows: Purchase consideration 2,392,747 Identifiable net assets acquired (2,102,409) Provisional goodwill on acquisition 290,338 During 2024, the Group has made the following significant a dditional capital contribution to its equity accounted investees. • Baltic Eagle GmbH, an associate, for a consideration of EUR 194.1 million (AED 773.1 million) • Al Dhafra PV2, a joint venture, for a consideration of AED 139.7 million. • Masdar Green Hydrogen, a joint venture, for a consideration of AED 36.9 million • Infinity Power Holdings BV, a joint venture, for a consideration of USD 9.2 million (AED 33.7 million) • Dudgeon Extension Limited, a joint venture, for a consideration of GBP 4.5 million ( AED 25.1 million) • Several other investments in project companies amounting to AED 23.5 million
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 63 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued During 2023, the Group has made the following significant investments: • Additional contribution in Infinity Power Holdings BV, a joint venture, for a consideration of USD 251.5 million (AED 924.1 million) • Additional contribution in Dudgeon Extension Limited, a joint venture, for a consideration of GBP 4.5 million, (AED 20.8 million) • 49% ownership interest in Baltic Eagle GmbH, an associate, for EUR 387.1 million (AED 1,499.3 million) • 15% ownership interest in PT Pertamina Geothermal Energy, an associate, for Indonesian Rupee 5,433 billion (AED 1,321.4 million) • 50% ownership interest in Big Beau Holdings, a joint venture, for USD 85.8 million (AED 315.0 million) • 50% ownership in Project Fluid for EUR 16.4 million (AED 64.1 million) • 55% ownership interest in Masdar Green Hydrogen LLC for USD 20.7 million (AED 75.9 million) Baltic Eagle GmbH On 2 November 2023, the Group acquired 49% of Baltic Eagle GmbH from Iberdrola for EUR 387.1 million (AED 1,499.3 million). The wind farm, scheduled to commence operations by the end of 2024, has a minimum regulated tariff of EUR 64.6/MWh for the first 15 years. The fair valuation of net identifiable assets and liabilities has been performed in year 2024 and is presented below: 20 November 2023 AED’000 Assets Current assets 241,747 Non-current assets 4,286,624 Liabilities Current liabilities 1,560,399 Non-current assets 116,458 Net assets 2,851,514 Masdar’s share of net assets 1,397,242 Goodwill arising from the acquisition has been recognized as follows: Consideration transferred 1,499,313 Identifiable net assets acquired (1,397,242) Goodwill on acquisition 102,071
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 64 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued (iii) During the year, the Group received dividends from the following investments: Year ended Year ended 31 December 31 December 2024 2023 AED’000 AED’000 Dudgeon Offshore Wind UK Limited 145,939 - Big Beau Holdco LLC 70,871 19,529 MNE Trading Ltd 67,990 - PT Pertamina Geothermal Energy TBK 66,449 12,345 Shams Power Company PJSC 57,507 49,460 Jordan Wind Power Company PJSC 26,082 20,471 Rocksprings Val Verde Wind LLC 23,051 - Blue Palm Holdings 15,497 4,001 Tesla Wind d.o.o. 30,745 45,001 Sterling Wind Phase 1 Holdings LLC 2,061 4,738 Sharjah Waste to Energy Company LLC - 50,000 Hywind Scotland Limited - 22,268 Emirates Solar Power Company LLC - 11,190 MSTS Energize O&M - 2,293 506,192 241,296 (iii) These represent amounts reclassified from loans to related parties to investments in associates and joint ventures. During the year, a majority of the movement related to a loan balance of AED 187 million outstanding from Shuaa Energy IV (2023: nil) were transferred to investments in associates and joint ventures (2023: During the year, a loan balance of AED 8.3 million outstanding from Emerge Limited and a loan balance of AED 24.8 million outstanding from Dumat al Jandal were transferred to investments in associates and joint ventures). (iv) The movement in the impairment losses on investments in associates and joint ventures is as follows: 2024 2023 AED ‘000 AED ‘000 At 1 January 356,594 169,095 Impairment losses recognised during the year, net 230,000 183,444 Reclassifications, net - 4,055 At 31 December 586,594 356,594 Net impairment losses recognised during the year are related to the following investments: Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Dumat Al Jandal Wind Energy Company LLC 160,000 33,389 Shuaa Energy 2 PJSC 70,000 - East Rockingham Holdco Pty Ltd - 147,344 Rocksprings Val Verde Wind LLC - (146,823) Masdar Blue Palm Holdings LLC - 149,534 230,000 183,444
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 65 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued 2024: The Group carried out impairment testing on its equity accounted investments in Shuaa Energy 2 and Dumat Al Jundal Wind Energy Company LLC as a result of indicators of impairment identified by management. Dumat Al Jandal Wind Energy Company LLC Dumat Al Jundal is a wind energy project in Saudi Arabia. During 2023, the Group had fully impaired this project as a result of delays, cost overruns and a reduction in production forecast due to lower overall wind levels that resulted in a lower forecast net cash generation in the joint venture. During the year, the Group further impaired AED 160 million (US$ 43.5 million) of its additional investment on payment of recourse equity bridge loan. Shuaa Energy 2 Shuaa Energy 2 is a solar PV project in the United Arab Emirates. During 2024, UAE recorded it heaviest rainfall in 75 years with high winds and heavy rains which caused floods in Dubai impacting the project’s solar plant. Due to the physical damage to the assets, a physical assessment was conducted to evaluate the condition of the affected assets. In addition, management performed an impairment assessment to determine the carrying value of the investment in the project. Based on management’s assessment of recoverability of the investment, a provision for impairment of AED 70 million was recognised during the year which is equal to the carrying value of the investment. Recoverable amounts of the investments are determined based on value in use (VIU) calculations using prospective financial information based on approved budgets, over the useful lives of the underlying assets. Pre-tax discount rate of 7.5% was used. Revenue forecast is based on average market price curves through to the end of the project's useful life, with adjustments for availability and congestion. Operational costs were forecasted based on operations and maintenance agreements. 2023: The Group carried out impairment testing on its equity accounted investments in Masdar Blue Palm Holdings LLC, East Rockingham Holdco Pty Ltd and Dumat Al Jundal Wind Energy Company LLC as a result of indicators of impairment identified by management. The Group also assessed the recoverable amount of its investment in Rocksprings Val Verde Wind LLC at 31 December 2023 based on evidence of improved performance and partially reversed previously recognised impairment losses. Recoverable amounts of the investments are determined based on value in use (VIU) calculations using prospective financial information based on approved budgets, over the useful lives of the underlying assets. Key assumptions applied in calculating the recoverable amounts under VIU method are as follows: Equity accounted investment Pre-tax discount rate Growth rate over revenue and earnings before interest, depreciation, and amortisation (EBITDA) Masdar Blue Palm Holdings LLC 6.7% Revenue forecasts are based on applicable power purchase agreements, energy hedge agreements for the wind farms and market price curves, with adjustments for availability and congestion. Restructuring measures have also been considered in forecasting revenue and EBITDA. Operational costs are forecast based on operations and maintenance agreements. Rocksprings Val Verde Wind LLC 6.7% Revenue forecast is based on average market price curves through the end of the project's useful life, with adjustments for availability and congestion. Operational costs are forecast based on operations and maintenance agreements.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 66 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Investments in East Rockingham Holdco Pty Ltd (East Rockingham) and Dumat Al J andal Wind Energy Company LLC (Dumat Al Jandal) were fully impaired during the year. East Rockingham is a waste to energy project in Australia. The project is significantly delayed in completion of development (COD). The Group is negotiating settlement agreements with the contractors and a restructuring plan for the project with its joint venture partner. Dumat Al Jandal is a wind energy project in Saudi Arabia. This project had delays, cost overruns and a reduction in production forecast due to lower overall wind levels that resulted in a lower forecast net cash generation in the joint venture. Based on management’s assessment of recoverability of the investment, a provision for impairment was recognised during the year which is equal to the carrying value of the investments. Summarised financial information in respect of the Group’s material equity -accounted investees, not adjusted for the percentage ownership held by the Group, is set out below.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 67 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued The summarised financial information below represents amounts shown in the equity- accounted investees’ financial statements prepared in accordance with the IFRSs. Current Non-current liabilities liabilities Other than other than Non- Non- Cash trade and other trade and other Current current Current current Net and cash payables and payable and Classification assets assets liabilities liabilities assets equivalents provisions provisions AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 Year ended 31 December 2024 Terra-Gen Power Holdings II LLC Joint venture 823,979 14,873,561 2,993,784 5,589,498 7,114,258 169,955 2,749,407 5,296,496 PT Pertamina Geothermal Energy TBK Associate 3,212,843 7,772,020 822,864 2,793,329 7,368,670 642,569 576,005 1,955,331 Enel Greenpower España Solar 1 S.L. Associate 581,844 6,134,071 247,188 657,901 5,810,826 - 30,525 537,997 Dogger Bank Limited Joint venture 684,257 3,493,656 62,804 364 4,114,745 141,693 92 364 Baltic Eagle Gmbh Associate 358,871 4,874,271 1,414,709 79,118 3,739,315 211,334 1,339,550 11,893 Blue Palm Holdings Private Limited Joint venture 186,218 4,352,145 165,290 1,332,554 3,040,519 85,188 51,569 1,041,044 Infinity Power Holdings BV Joint venture 740,798 8,060,661 1,799,269 5,387,254 1,614,936 425,336 1,683,620 4,990,854 Hywind Scotland Limited Joint venture 228,171 1,118,192 42,060 347,540 956,763 17,998 - 240,745 Al Dhafra PV2 Joint venture 694,313 3,957,303 927,614 3,226,880 497,122 126,601 901,913 2,897,731 Big Beau Holdco LLC Joint venture 96,439 861,602 59,184 232,236 666,621 32,751 - 129,744 Shauaa Energy 4 Joint venture 118,276 3,338,032 99,754 2,811,429 545,125 22,657 99,754 2,804,744 Shams Power Company PJSC Joint venture 177,977 1,563,202 158,207 1,170,727 412,245 76,799 156,192 1,138,922 Rocksprings Val Verde Wind LLC Joint venture 70,123 658,521 7,989 285,330 435,325 40,593 1,049 285,330 Amaala Sustainable Company for Energy Joint venture 521,506 - 168,354 - 353,152 189,523 66,739 -
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 68 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Current Non-current liabilities liabilities Other than other than Non- Non- Cash trade and other trade and other Current current Current current Net and cash payables and payable and Classification assets assets liabilities liabilities assets equivalents provisions provisions AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 Year ended 31 December 2023 PT Pertamina Geothermal Energy TBK Associate 3,171,252 7,717,520 896,716 2,750,647 7,241,409 2,489,593 610,268 2,750,647 Infinity Power Holdings BV Joint venture 872,453 8,906,559 1,059,420 5,792,621 2,926,971 531,379 938,392 5,792,621 Masdar Blue Palm Holdings LLC Joint venture 143,275 5,186,364 96,656 2,216,126 3,016,857 85,388 96,656 2,216,126 Baltic Eagle GmbH Joint venture 256,836 3,854,724 1,657,789 11,116 2,442,655 249,193 1,625,779 10,953 Hywind Scotland Limited Joint venture 131,481 985,415 8,375 199,705 908,816 61,867 5,529 199,705 Big Beau Holdco LLC Joint venture 90,883 996,832 107,811 326,292 653,612 31,473 96,980 322,478 East Rockingham Holdco Pty Ltd Joint venture 91,715 1,185,839 1,789 873,953 401,812 87,847 - 873,953 Shams Power Company PJSC Joint venture 159,271 1,592,404 142,063 1,229,724 379,888 90,380 120,263 1,129,724 Rocksprings Val Verde Wind LLC Joint venture 81,870 695,262 7,690 537,770 231,672 68,746 4,058 - Sharjah Waste to Energy Company LLC Joint venture 93,298 984,210 9,500 879,717 188,291 80,853 - 879,717 Baynouna Solar Energy PSC Joint venture 208,203 746,039 97,136 670,597 186,509 194,619 74,538 50,951 Tesla Wind Doo Joint venture 89,044 904,859 86,710 727,454 179,739 7,924 86,709 727,454 Jordan Wind Power Company PJSC Joint venture 72,878 651,451 82,148 484,448 157,733 40,948 - 484,448 Emirates Solar Power Company LLC Joint venture 37,013 45,674 39,752 - 42,935 1,616 39,746 -
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 69 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Group’s share of Other Group’s other Dividend Depreciation (Loss) comprehensive share of comprehensive received and Interest Interest tax profit for income profit / (loss) income / (loss) by the Revenue amortization expense expense the year for the year for the year for the year Group AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 31 December 2024 Terra-Gen Power Holdings II LLC 251,337 143,970 8,278 75,334 (22,365) - (11,183) - - PT Pertamina Geothermal Energy TBK 1,493,792 340,859 97,163 237,966 569,429 - 68,924 - 66,449 Enel Greenpower España Solar 1 S.L. 682,990 214 3,816 57,234 160,255 - - - - Dogger Bank Limited - - - (29) - (14) - - Baltic Eagle Gmbh 98,320 41,515 3,355 227 (43,867) - (21,495) - - Blue Palm Holdings Private Limited 238,250 227,069 12,577 - 135,636 - 27,329 - 15,497 Infinity Power Holdings BV 1,004,166 375,733 634,597 10,972 (355,349) (232,633) (174,121) (113,990) - Hywind Scotland Limited 379,772 261,885 9,554 17,446 63,256 - 14,304 - - Al Dhafrah PV2 229,158 111,554 206,199 - 18,917 (80,779) 5,298 (26,932) - Big Beau Holdco LLC 176,357 41,989 26 53,173 165,051 - 77,372 - 70,871 Shauaa Energy 4 - - - - (6,942) 72,122 (2,777) 28,849 - Shams Power Company PJSC 401,064 108,534 81,932 - 134,856 14,467 67,337 7,378 57,507 Rocksprings Val Verde Wind LLC 51,902 36,741 263 276 (30,626) - (15,313) - 23,051 Amaala Sustainable Company for Energy 521,454 - 59 - 353,102 105,050 176,551 52,525 - Other investments (i) 307,886 (4,331) 272,817 Total 520,098 (56,501) 506,192 Note (i) Included within share of results from other investment amounting to AED 4 49 million are share of profits from Dudgeon Offshore Wind of AED 212 million, MNE Trading Ltd of AED 125 million, Amaala Trading Company of AED 177 million and share of loss from Masdar Green Hydrogen AED 65 million.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 70 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Group’s share of Other Group’s other Dividend Depreciation (Loss) comprehensive share of comprehensive received and Interest Interest tax profit for income profit / (loss) income / (loss) by the Revenue amortization expense expense the year for the year for the year for the year Group AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 31 December 2023 PT Pertamina Geothermal Energy TBK 1,492,499 406,403 88,954 284,296 600,874 12,520 112,314 1,878 12,345 Infinity Power Holdings BV 833,829 264,723 573,584 (20,634) (247,953) 230,625 (56,999) 113,006 - Masdar Blue Palm Holdings LLC 128,012 227,069 726 - (174,074) 4,911 (171,131) - - Hywind Scotland Limited 165,075 28,711 5,816 16,396 49,083 - 10,385 - 22,268 Big Beau Holdco LLC 102,531 41,989 13 - 46,281 - 31,290 - - East Rockingham Holdco Pty Ltd - - - - (8,193) (2,042) - - Shams Power Company PJSC 372,853 107,496 110,733 - 134,153 (1,382) 66,302 (341) 49,460 Rocksprings Val Verde Wind LLC 59,394 36,741 - - (7,898) - (29,647) - - Sharjah Waste to Energy Company LLC 138,218 1,705 62,430 - 3,912 (10,718) 1,883 (5,359) 50,000 Baynouna Solar Energy PSC 121,476 40,629 46,959 660 18,692 (26,617) 13,085 (18,632) - Tesla Wind Doo 180,591 40,934 54,268 - 35,697 (23,368) 21,418 (14,021) 45,001 Jordan Wind Power Company PJSC 145,156 49,138 40,343 - 54,737 (21,144) 26,639 (10,572) 20,471 Emirates Solar Power Company LLC - - - - 7,612 (4,116) 4,567 (2,470) 11,190 Other investments (76,320) (60,349) 30,561 Total (48,256) 3,140 241,296
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 71 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Reconciliation of the summarised financial information to the carrying amount of the Group’s interest in equity- accounted investee recognised in the consolidated financial statements: Fair value adjustments from purchase price allocation, amortization of intangibles and Ownership Group’s share impairment Carrying interest Net assets of net assets adjustments amount AED ‘000 AED ‘000 AED ‘000 AED ‘000 31 December 2024 Terra-Gen Power Holdings II LLC 50% 7,114,258 3,557,129 2,504,525 6,061,654 PT Pertamina Geothermal Energy TBK 15% 7,368,669 1,105,300 320,442 1,425,742 Enel Greenpower España Solar 1 S.L. 50% 5,810,826 2,904,832 335,647 3,240,479 Dogger Bank Limited 49% 4,114,745 2,016,225 749,890 2,766,115 Baltic Eagle Gmbh 49% 3,739,315 1,832,264 366,006 2,198,270 Blue Palm Holdings Private Limited 50% 3,040,520 1,520,260 (60,585) 1,459,675 Infinity Power Holdings BV 49% 1,614,935 791,318 - 791,318 Hywind Scotland Limited 25% 956,764 239,191 24,432 263,623 Al Dhafrah PV2 20% 497,122 165,740 - 165,740 Big Beau Holdco LLC 50% 666,621 333,310 - 333,310 Shauaa Energy 4 40% 545,125 218,050 (70,000) 148,050 Shams Power Company PJSC 51% 412,245 210,245 21,993 232,238 Rocksprings Val Verde Wind LLC 50% 435,325 217,662 (15,054) 202,608 Amaala Trading Company Limited 50% 353,152 176,576 - 176,576 Other investments 1,037,036 Total 20,502,434 Fair value adjustments from purchase price allocation represent difference between the fair value of the net assets at acquis ition and the carrying value. The Group is in the process of completing purchase price allocation for acquisitions made during the year, where provisional amounts are recognized as at 31 December 2024.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 72 19 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES continued Fair value adjustments from purchase price allocation, amortization of intangibles and Ownership Group’s share impairment Carrying interest Net assets of net assets adjustments amount AED’000 AED’000 AED’000 AED’000 31 December 2023 PT Pertamina Geothermal Energy TBK 15% 7,241,409 1,086,211 337,056 1,423,267 Infinity Power Holdings BV 49% 2,926,971 1,078,989 - 1,078,989 Masdar Blue Palm Holdings LLC 50% 3,016,857 1,508,428 (60,585) 1,447,843 Baltic Eagle GmbH 49% 2,442,655 1,196,901 372,727 1,569,628 Hywind Scotland Limited 25% 908,816 227,204 26,774 253,978 Big Beau Holdco LLC 50% 653,612 326,806 326,806 East Rockingham Holdco Pty Ltd 37% 401,812 147,344 (147,344) - Shams Power Company PJSC 51% 379,888 193,743 21,287 215,030 Rocksprings Val Verde Wind LLC 50% 231,672 256,027 (15,054) 240,973 Sharjah Waste to Energy Company LLC 50% 188,291 94,146 - 94,146 Baynouna Solar Energy PSC 70% 186,509 130,556 - 130,556 Tesla Wind Doo 60% 179,739 107,843 - 107,843 Jordan Wind Power Company PJSC 50% 157,733 78,867 44,106 122,973 Emirates Solar Power Company LLC 60% 42,935 25,761 160,256 186,017 Other investments 383,881 Total 7,581,930 Fair value adjustments from purchase price allocation represent difference between the fair value of the net assets at acquisition and the carrying value.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 73 20 OPERATING FINANCIAL ASSETS Service concession receivable related with the Group’s operations in Uzbekistan are as follows: 2024 2023 AED ‘000 AED ‘000 As at 1 January 3,136,253 324,272 Concession revenue (note 7 (i)) 1,809,651 2,842,211 Finance income (note 7(i)) 219,824 51,015 Consideration received (236,986) (26,949) Provision for expected credit losses (“ECL”) (note 11) (18,728) (32,188) Effect of movement in exchange rates - (22,108) As at 31 December 4,910,014 3,136,253 Analysed in the consolidated statement of financial position as follows: Non-current 4,604,295 3,109,069 Current 305,719 27,184 4,910,014 3,136,253 The Group as operator is obligated to deliver the electricity to grantor JSC National Electric Grid – Uzbekistan based on specified power generation capacity of each plant and grantor is obligated to pay the agreed minimum price as per purchase price agreement. Project Technology Capacity Duration Nur Navoi Solar FE Solar Photovoltaic Plant 100 MW 25 years Shamol Zarafshan Energy FE LLC Wind Power 500 MW 25 years Nur Jizzak Solar PV FE LLC Solar Photovoltaic Plant 220 MW 25 years Nur Samarkand Solar PV FE LLC Solar Photovoltaic Plant 220 MW 25 years Nur Sherabad Solar PV FE LLC Solar Photovoltaic Plant 457 MW 30 years Nur Bukhara Solar PV FE LLC Solar Photovoltaic Plant 250 MW 25 years 2024 2023 AED ‘000 AED ‘000 Gross receivable 4,960,930 3,168,441 Provision for ECL (50,916) (32,188) 4,910,014 3,136,253 An ECL provision of AED 1 9 million (2023: AED 32 million) is recognised during the year against the operating financial asset due to a higher risk of recoverability from the offtaker and related credit rating.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 74 21 FINANCE LEASE RECEIVABLES 21.1 Leasing agreements The Group has entered Musataha lease agreements for a plot of land in Jebel Al Dannah. The underlying lease has a lease term of 50 years, as per the lease term and other terms and conditions of the agreement, this has been accounted for as finance lease. 2024 2023 AED ‘000 AED ‘000 Finance lease receivables: Gross receivables 55,978 57,946 Provision for expected credit losses (829) (1,092) 55,149 56,854 Non-current 47,096 47,033 Current 8,053 9,821 55,149 56,854 Movement in the finance lease receivables during the year was as follows: 2024 2023 AED ‘000 AED ‘000 As at 1 January 56,854 52,201 Finance lease income recognised during the year (note 7) 3,728 4,057 Consideration received during the year (5,696) - Reversal of provision for expected credit losses (note 11) 263 596 As at 31 December 55,149 56,854 The movement in the provision for expected credit losses is as follows: 2024 2023 AED ‘000 AED ‘000 As at 1 January 1,092 1,688 Reversal of expected credit losses (note 11) (263) (596) As at 31 December 829 1,092 Past due finance lease receivables as at 31 December 2024 amounted to AED 4.1 million (2023: AED 5.9 million).
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 75 21 FINANCE LEASE RECEIVABLES continued 21.2 Amounts receivable under finance leases Minimum lease payments 2024 2023 AED ‘000 AED ‘000 Less than one year 8,053 9,821 One to five years 15,712 15,712 Later than five years 143,387 147,315 Total 167,152 172,848 Less: unearned finance income (111,174) (114,902) Present value of minimum lease payments 55,978 57,946 The interest rate inherent in the leases is fixed at the contract date for the entire lease term. The average effective interest rate is 10% (2023: 10%) per annum. 22 RELATED PARTY TRANSACTIONS AND BALANCES Related parties represent the Government of Abu Dhabi and related departments and institutions, associated companies, joint ventures, shareholders, directors and key management personnel of the Group, management entities engaged by the Group, and entities controlled, jointly controlled, or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s management and mutually agreed with the related parties. Group’s major shareholders are Government -owned entities, and the Group enters into transactions with them and other related parties in the ordinary course of business at mutually agreed terms. The Group also maintains significant balances with the shareholders and other related parties which arise from commercial transactions. 22.1 Loans to related parties Loans to related parties are classified as follows: 2024 2023 AED ‘000 AED ‘000 Gross receivables 2,902,868 969,194 Less: provision for expected credit losses (87,408) (46,151) 2,815,460 923,043 Non-current 2,306,953 573,020 Current 508,507 350,023 2,815,460 923,043
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 76 21 FINANCE LEASE RECEIVABLES continued 22.1 Loans to related parties continued Movement in the loans to related parties balance was as follows: 2024 2023 AED ‘000 AED ‘000 At 1 January 969,194 603,718 Addition 2,184,929 364,431 Interest (note 13.1) 150,669 68,240 Repayments (203,040) (39,335) Conversion to investment in equity accounted investees (note 19) (187,298) (33,180) Effect of movement in exchange rates (11,586) 5,320 At 31 December 2,902,868 969,194 Movement in the provision for expected credit losses is as follows: 2024 2023 AED ‘000 AED ‘000 At 1 January 46,151 73,642 Provision for expected credit losses 61,040 12,685 Reversal of provision for expected credit losses (19,303) (39,291) Effect of movement in exchange rates (480) (885) At 31 December 87,408 46,151 Expected credit losses on loans to related parties were determined based on external credit ratings and twenty -year default rates applicable for the respective related entities.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 77 22 RELATED PARTY TRANSACTIONS AND BALANCES continued 22.1 Loans to related parties continued Summarised below are the key terms of the loans to related parties as at 31 December , net of provision: Year of 2024 2023 Parties Currency Interest rate maturity AED ‘000 AED ‘000 Shuaa Energy 4 P.S.C USD 5.50% 2030 545,069 - Amaala Sustainable Company for Energy USD SOFR+margin 2051 446,408 - Infinity Power Holdings BV USD 10% 2035 412,281 370,629 Sana Taibah for Renewable Energy Company USD SOFR+margin On demand 389,944 - Ajban PV3 USD 4.782% On demand 338,135 - Cibuk 2 Wind Energy d.o.o Beograd EUR 6.23% On demand 120,445 5,183 Emerge Limited AED 7% to 8.23% On demand 107,316 49,939 Sharjah Waste to Energy LLC AED 6.13% On demand 106,725 138,071 Krnovo Green Energy d.o.o. EUR 8.45% 2038 98,193 127,671 Shams Power Company PJSC AED - 2038 65,541 64,978 Hywind Scotland Limited GBP SONIA+margin 2027 49,997 - PT Pembangkitan Jawa Bali Masdar Solar Energi (Cirata) USD 2.50% On demand 31,903 29,700 MW Energy Limited AED - On demand 29,541 9,414 Masdar CES Europe BV (Project Fluid) EUR 9% On demand 23,117 3,456 Blue Palm Holdco LLC. USD 8% On demand 12,812 11,647 Baynouna Holdings B.V USD - On demand 10,896 91,133 Contino Omikron Sp. z.o.o EUR 4% 2030 7,115 4,358 Tesla Vetroelektrane Balkana d.o.o. EUR 4% On demand 4,558 6,852 Pileus Energy SP. z.o.o EUR 4% 2030 4,267 5,294 Sistema Eléctrico de Conexión Valcaire EUR 6.53% On demand 3,058 - Al Shorouk Sustainable Energy Limited AED 7.49% On demand 3,052 - Surazo sp. zo.o. EUR 9% On demand 2,999 - Sharjah Waste to Energy Plant Maintenance LLC AED 6.13% On demand 1,551 - Masdar Armenia 1 CJSC USD - On demand 537 522 Masdar Tribe Australia Holding AUD - On demand - 3,046 Jordan Wind Project Company PJSC USD 9% On demand - 1,060 Fonnes Sp z.o.o EUR 3% 2031 - 90 Total 2,815,460 923,043 Loans to related parties are unsecured and have been provided at mutually agreed interest rates benchmarked to prevailing market rates. 22.2 Due from related parties Due from related parties are classified as follows: 2024 2023 AED ‘000 AED ‘000 Shareholder Abu Dhabi National Oil Company (“ADNOC”) - 6,431 Other related parties MDC General Services Holding Company 807 - Department of Finance Government of Abu Dhabi 248 248 SP - Bab al Shams 1.2 MW 8 - Abu Dhabi Crown Price Court - 20,214 Masdar City Service LLC - 13,924 Abu Dhabi Fund for Development - 7,018 Abu Dhabi Ports Company - 4,125 Ministry of Foreign Affairs - 22 1,063 45,551
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 78 22 RELATED PARTY TRANSACTIONS AND BALANCES continued 22.2 Due from related parties continued 2024 2023 AED ‘000 AED ‘000 Equity-accounted investees Masdar Green Hydrogen LLC 138,829 50,246 SEC Valcaire 117,659 - MNE Trading Ltd 91,378 - Dudgeon Offshore Wind Limited 42,931 32,730 MW Energy Limited 9,667 - Noor Midelt 1 Procurement Company DMCC 154 Dumat Wind Contracting Company LLC. 3,708 3,728 Shuaa Energy 2 PSC 2,433 1,032 Emirates Solar Power Company LLC 2,374 1,987 Sana Taibah for Renewable 2,284 - Baynouna Holdings B.V. 1,700 2,304 Shams Power Company PJSC 1,595 12 Infinity Power Holding BV 1,364 2,250 Others 3,015 5,566 418,937 100,009 Total 420,000 151,991 22.3 Due to related parties 2024 2023 AED ‘000 AED ‘000 Shareholders Mamoura Diversified Global Holding PJSC 1,645 882 Other related parties Solutions Plus 12,441 2,161 MDC General Services Holding Company L.L.C. - 5,848 SEC Valcaire S.L. 738 - Emirates Telecommunications Corporation – Etisalat - 1,200 Abu Dhabi National Hotel Company - 275 Department of Finance of the Government of Abu Dhabi (note 8.1) 74,709 55,446 89,533 65,812 22.4 Other related party balances 2024 2023 AED ‘000 AED ‘000 Cash and bank balances 2,892,729 1,407,659 Project advances (note 32) 1,276,174 711,144 Deferred income - 7,046 Cash and bank balances comprise call, current, and deposit accounts and term deposits with UAE government banks .
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 79 22 RELATED PARTY TRANSACTIONS AND BALANCES continued 22.5 Transactions with related parties Significant transactions with related parties during the year were as follows: 2024 2023 AED ‘000 AED ‘000 Entities under common control Recharge of costs from MDC General Services Holding Company 5,953 1,572 Recharge of costs from Solutions Plus 1,452 6,466 Other income 8,695 9,211 Key management personnel compensation is as follows: 2024 2023 AED ‘000 AED ‘000 Salaries 29,281 22,755 Other benefits – direct allowances 20,780 16,468 Other long-term benefits – pension 2,273 3,300 Post-employment end of service benefits 3,931 3,300 56,265 45,823 Refer to note 27 for other related party transactions. UAE is a market dominated by entities directly or indirectly controlled by the Government of Abu Dhabi through its government authorities, agencies, affiliations and other organizations, collectively referred to as government -related entities. The Group, in the ordinary course of its business, carries out transactions with several government -related entities. The Company has issued guarantees for and on behalf of its related parties. These guarantees are disclosed under commitments and contingencies in note 34. For the year ended 31 December 2024, the Group has not recorded any impairment of amounts owed by related parties (2023: nil). This assessment is undertaken each financial year through examining the financial position of the related parties and the market in which the related parties operate. 23 OTHER NON - CURRENT FINANCIAL ASSETS 2024 2023 AED ‘000 AED ‘000 Financial assets carried at fair value through profit or loss (i) 82,970 35,642 Equity instruments designated at fair value through OCI (ii) 15,401 - 98,371 35,642
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 80 23 OTHER NON- CURRENT FINANCIAL ASSETS continued (i) Financial assets carried at fair value through profit or loss Unquoted equity investments 2024 2023 AED ‘000 AED ‘000 Zouk Charging Infrastructure Investment Fund LP 68,052 35,642 National Bank of Greece 14,918 - 82,970 35,642 Movement in the financial assets carried at fair value through profit or loss during the year was as follows: 2024 2023 AED ‘000 AED ‘000 As at 1 January 35,642 21,961 Additions 34,534 14,088 Addition through business combination (note 6) 16,514 - Changes in fair value through profit or loss (797) (2,265) Effect of movement in exchange rate (2,923) 1,858 As at 31 December 82,970 35,642 During the year, the Group contributed AED 34.5 million (2023: AED 14.1 million) to the Zouk Charging Infrastructure Investment Fund LP (“Zouk”). No redemptions were made by the Group during the year (2023: nil). The fund is unquoted and a change in fair value of AED 0.8 million (2023: AED 2.3 million) has been recognized in the consolidated statement of comprehensive income for the year ended 31 December 2024. The i nvestment in National Bank of Greece is acquired though the business combination of Terna Energy Group (note 6) (ii) Financial assets carried at fair value through OCI Unquoted equity investments 2024 2023 AED ‘000 AED ‘000 EOS Hellenic fund 13,111 - Fund Karamouzi 2,290 - 15,401 - The investments in unlisted securities that are carried at fair value through other comprehensive income are acquired though the acquisition of Terna Energy Group (note 6)
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 81 24 TRADE AND OTHER RECEIVABLES 2024 2023 AED ‘000 AED ‘000 Trade receivables (note 24.1) 468,286 182,648 Term deposits 674,912 210,486 Short term advances 309,033 567,888 Tax receivables 276,195 99,327 Accrued income 139,686 163,242 Prepayments 36,420 21,885 Inventory (note 24.2) 40,556 - Staff receivables 23,337 18,212 Other receivables 248,820 103,219 2,217,245 1,366,907 Other receivables mainly include development expenses which are recoverable from various project on financial close. Term deposits with an original maturity of more than ninety days from opening date are presented as term deposits and earn interest on market rates. 24.1 Trade receivables Trade receivables mainly represent amounts due from renewable power generation and e nergy services, net of provision for expected credit losses. The average credit period on sale of goods or services is 60 days. No interest is charged on trade receivables. 2024 2023 AED ‘000 AED ‘000 Ageing of trade receivables: Not past due 263,395 113,870 Past due but not impaired: Due for 61 to 120 days 69,862 52,582 Due for 121 to 360 days 110,808 15,838 Due for more than 360 days 24,221 358 204,891 68,778 468,286 182,648 The Group recognises expected credit loss (ECL) for trade receivables based on simplified approach. Management considers factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money, where appropriate.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 82 24 TRADE AND OTHER RECEIVABLES continued 24.1 Trade receivables continued Movement in the provision for ECL on trade receivables is as follows: 2024 2023 AED ‘000 AED ‘000 As at 1 January 1,182 1,182 Acquired provision for expected credit losses (i) 17,377 - As at 31 December 18,559 1,182 (i) During the year, trade and other receivables, along with its associated provision for ECL was acquired as part of the acquisition of subsidiaries (note 6) 2024 2023 AED ‘000 AED ‘000 Provision of expected credit losses on trade receivables: Not past due - - Past due but not impaired: Due for 61 to 120 days - - Due for 121 to 360 days 17,377 - Due for more than 360 days 1,182 1,182 18,559 1,182 24.2 Inventories 2024 2023 AED ‘000 AED ‘000 Raw and auxiliary materials 3,237 - Spare parts 37,759 - 40,996 - Provision for slow moving and obsolete items (440) - As at 31 December 40,556 - During the year, inventories amounting to AED 41.4 million were acquired as part of the acquisition of subsidiaries (note 6). The inventories include spare parts for machinery and raw and auxiliary materials for wind farms. Inventories are valued at a lower cost and net realizable value. The cost of raw materials, in -process and ready-made products is determined using the weighted average cost method. Appropriate provisions are made for obsolete inventories, if necessary. Write- downs of inventories to net realizable value and other losses on inventories is recognized in consolidated statements of comprehensive income in the year in which they occur.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 83 25 CASH AND CASH EQUIVALENTS 2024 2023 AED ‘000 AED ‘000 Cash at banks and on hand 5,502,819 2,479,634 Short-term deposits 1,230,776 - 6,733,595 2,479,634 Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates at market rates. Balances with banks are assessed to have a low credit risk of default since these banks are highly regulated by Central Bank of the respective countries. Accordingly, management of the Group estimates the loss allowance on balances with banks at the end of the reporting period at an amount equal to 12- month ECL. None of the balances with banks at the end of the reporting period are past due and taking into account the historical default experience and the current credit ratings of the banks, management of the Company have booked a nominal ECL provision recognised against cash and cash equivalents. 26 SHARE CAPITAL Share capital comprises 8,000,000,000 (2023: 8,000,000,000) authorised, issued and fully paid- up ordinary shares with a par value of AED 1 each. 27 ADDITIONAL CAPITAL CONTRIBUTION Additional capital contribution represents additional capital contributions received from the shareholders of the Group to fund the Group’s acquisitions . This balance is interest free and there are no contractual repayment obligations. During the year, the Company received AED 18,022 million (2023: AED 3,309 million) of additional capital contribution from shareholders for financing of investments. 28 RESERVES Investment reserve Investment reserve reflects funds received by the Group from Mubadala, the initial Shareholder and disbursed to Masdar Clean Tech Fund for investment purposes. An amount of AED 246,321 thousand (2023: AED 246,321 thousand) is held as a non-distributable capital reserve which is funded by the Government of Abu Dhabi. Statutory reserve In accordance with UAE Federal Law No. (32) of 2021 and the Company’s Articles of Association, the Company has established a statutory reserve, amounting to AED 282,699 thousand (2023: AED 242,325 thousand) by appropriation of 10% of profit for each year until the reserve equals 50% of the share capital. This reserve is not available for distribution except as stipulated by the law. Other reserves 2024 2023 AED ‘000 AED ‘000 Hedging reserve (note 35.2) 418,547 378,073 Exchange rate fluctuation reserve (867,313) (416,482) Fair value reserve 1,882 1,882 Other reserve (6,587) 22,093 (453,471) (14,434)
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 84 29 NON-CONTROLLING INTERESTS Financial information of subsidiaries that have non-controlling interests are provided below: Proportion of equity interests held by non-controlling interests Country of incorporation 2024 2023 Name of subsidiary and operation Terna Energy Group Greece 13% - Arlington Limited United Kingdom 5% 5% Year ended Year ended 31 December 31 December 2024 2023 AED ‘000 AED ‘000 Revenue 114,965 - Profit (loss) 25,769 (16,320) Profit (loss) allocated to non-controlling interest 8,760 (1,632) Cashflows from operating activities 855,445 13,489 Cashflows (used in) from investing activities (112,931) 9,113 Cashflows used in financing activities (594,855) (47,377) Net increase (decrease) in cash and cash equivalents 147,659 (24,775) Dividends paid to non-controlling interests - - 2024 2023 AED ‘000 AED ‘000 Non-current assets 11,484,498 42,646 Current assets 4,232,843 13,671 Non-current liabilities (5,649,429) - Current liabilities (3,990,773) (76,467) Total equity 6,077,139 (20,150) Equity attributable to parent 4,863,223 (18,135) Equity attributable to non-controlling interests 1,213,916 (2,015) 30 INTEREST BEARING LOANS AND BORROWINGS 2024 2023 AED ‘000 AED ‘000 Revolving credit facilities (note i) 459,063 - Green bonds (note ii) 6,363,885 2,725,419 Term loans (note iii) 17,147,831 3,661,256 23,970,779 6,386,675
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 85 30 INTEREST BEARING LOANS AND BORROWINGS continued Analysed in the consolidated statement of financial position as follows: 2024 2023 AED ‘000 AED ‘000 Current 3,155,996 1,160,272 Non-current: 20,814,783 5,226,403 23,970,779 6,386,675 During the year, there has been a technical breach related to loan covenants associated with term loans secured from a consortium of lenders. The breach of covenants is associated with a non- financial covenant requirement of signing operating and maintenance agreements and entry into the movables pledge for the underlying projects in Uzbekistan namely: Jizzakh, Samarkand, Sherabad, and Bukhara. Total loan balance associated with the respective projects amounting to AED 1,728 million has been reclassified from non-current to current at 31 December 2024. Movement in the interest bearing loans and borrowings is as follows: 2024 2023 AED ‘000 AED ‘000 As at 1 January 6,386,675 2,468,616 Acquisition of subsidiaries (note 6) 6,335,491 - Drawdowns during the year 13,487,195 5,891,868 Repayments during the year (1,946,362) (2,055,607) Amortisation of deferred finance costs 3,786 4,605 Foreign exchange fluctuations (296,006) 77,193 At 31 December 23,970,779 6,386,675 Consolidated agreed-upon principal instalment schedule, net of deferred finance costs for the above mentioned bank borrowings is as follows: 2024 2023 AED ‘000 AED ‘000 Within 1 year 2,176,291 147,991 Between 1 – 2 years 1,554,655 138,160 Between 2 – 5 years 5,041,873 706,614 More than 5 years 15,197,960 5,393,910 23,970,779 6,386,675 (i) Revolving credit facilities 2024 2023 Interest rate Security AED ‘000 AED ‘000 Current liabilities US$200 million facility SOFR + margin Unsecured 459,063 - During the year, the Company drew down AED 459 million (USD 125 million) loan against the revolving credit facility from a consortium of 13 banks with an expiration date of 9 December 2026. The loan is repayable by January 2025.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 86 30 INTEREST BEARING LOANS AND BORROWINGS ii). Green bonds Effective Repayment 2024 2023 Issue price interest rate % date AED ‘000 AED ‘000 Non-current liabilities US$750 million facility 99.500% 5.016% 25 July 2033 2,725,378 2,725,419 US$500 million facility 99.470% 5.050% 25 July 2034 1,816,533 - US$500 million facility 99.296% 5.063% 25 July 2029 1,821,974 - 6,363,885 2,725,419 The Company has issued direct, unconditional and unsecured green bonds under a Euro Medium Term Note (EMTN) programme which are listed on the London Stock Exchange’s International Securities Market (ISM), with a secondary listing on the Abu Dhabi Securities Exchange (ADX). During 2023, the Company issued a 10-year green bond of USD 750 million which carries a semi-annual coupon rate of 4.875%, repayable on 25 July 2033. During 2024, the Company issued (i) a 10- year green bond of USD 500 million which carries a semi -annual coupon rate of 5.25%, repayable on 25 July 2034, and (ii) a 5- year green bond of USD 500 million which carries a semi - annual coupon rate of 4.875%, repayable on 25 July 2029. The Group’s liability is stated net of transaction costs amounting to AED 89 million (2023: AED 30 million), which are amortised over the repayment period using the effective interest rate method. iii). Term loans 2024 2023 Entity Currency Interest rate Repayment date Security AED ‘000 AED ‘000 Masdar Energy UK Limited GBP SONIA + margin 2020-2032 Senior Secured 1,256,068 1,404,993 Nur Navoi Solar Holding RSC Limited USD SOFR + margin 2026 Unsecured 220,338 220,338 Nur Navoi Solar FE LLC USD SOFR + margin 2022-2040 Senior Secured 164,384 173,710 Shamol Zarafshan Energy FE LLC USD SOFR + margin 2026-2042 Senior Secured 1,015,954 611,206 Masdar Azerbaijan Energy LLC USD SOFR + margin 2024-2042 Senior Secured 396,030 226,655 Nur Jizzakh Solar PV FE LLC USD SOFR + margin 2026-2044 Senior Secured 315,665 281,292 Nur Samarkand Solar PV FE LLC USD SOFR + margin 2026-2044 Senior Secured 305,458 272,618 Nur Sherabad Solar PV FE LLC USD SOFR + margin 2026-2044 Senior Secured 567,622 470,444 Nur Bukhara Solar PV FE LLC USD SOFR + margin 2025-2045 Senior Secured 539,050 - Masdar Baltic Eagle Germany Gmbh EUR EURIBOR + margin 2026-2044 Senior Secured 1,666,646 - Masdar Hellas Single Member SA EUR EURIBOR + margin 2025-2041 Secured 2,281,738 - Terna Energy (multiple loans) EUR EUIRBOR/WIBOR + margin Multiple Secured 4,210,906 - TERP Spanish Holdco SLU (multiple loans) EUR Multiple Multiple Secured 2,007,741 - Masdar Espana Renewables 1, SLU EUR EURIBOR + margin 2025-2034 Secured 2,200,231 - 17,147,831 3,661,256 Nur Bukhara Solar PV FE LLC During the year, Nur Bukhara Solar PV FE LLC, a subsidiary of the Group in Uzbekistan, raised AED 732.1 million (USD 199.2 million) of senior secured project finance debt facilities from a consortium of banks. The aggregate amount of loans outstanding at 31 December 2024 is AED 539.1 million. The facilities are repayable in semi -annual instalments from November 2025 to May 2045. These facilities comprise floating rate loans with a rate of interest of SOFR + margin which are hedged using senior secured interest rate swaps from International Finance Corporation for their full tenure. The derivative is designated as a cashflow hedge and has been determined as effective.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 87 30 INTEREST BEARING LOANS AND BORROWINGS continued Masdar Baltic Eagle Germany Gmbh During the year, Masdar Baltic Eagle Germany Gmbh entered into senior secured project finance debt facilities with a consortium of banks totalling EUR 473 million in connection with the Group’s 49% ownership of the Baltic Eagle offshore wind farm in Germany. The aggregate amount of loans outstanding at 31 December 2024 is AED 1,666.6 million. The facilities are repayable in semi -annual instalments from October 2026 to November 2024. These facilities comprise floating rate loans with a rate of interest of EURIBOR + margin which are hedged using senior secured interest rate swaps for their full tenure. The derivatives are designated as a hedge and have been determined as effective. Masdar Hellas Single Member SA During the year, Masdar Hellas Single Member SA entered into a EUR 600 million facility with a consortium of banks for the purposes of the Group acquiring Terna Energy and associated transaction costs. The aggregate amount of loans outstanding at 31 December 2024 is AED 2,281 million. The facilities are repayable in annual instalments every September from 2025 to 2041. These facilities comprise floating rate loans with a rate of interest of EURIBOR + margin which are hedged using senior secured interest rate swaps for their full tenure. The derivatives are designated as a hedge and have been determined as effective. Terna Energy On 28 November 2024, Masdar acquired controlling interest in Te rna Energy (“Terna”) (n ote 6 ). As part of the acquisition, the Group acquired AED 4,301 million (EUR 1,107 million) of debt carried by Terna and its subsidiaries. Terna's loans are related to the financing of its activities and mainly concern the financing of the construction and operation of renewable energy sources facilities with the short term facilities used to cover liquidity needs during the wind farms construction period. The loan is se cured against underlying assets including wind turbines of the w ind farms, insurance contracts proceeds, receivables from the sale of electricity, debt securities and cash. Of the total long term loan, 16% are at a fixed interest rate, 60%, are floating‐rate loans that have been hedged with future fixed rate payments against floating rate receipts, while 2 4% are floating‐rate loans based on EURIBOR or WIBOR. The aggregate amount of loans outstanding at 31 December 2024 is AED 4,211 million. TERP Spanish Holdco SLU On 20 December 2024, Masdar acquired 100% interest in TERP Spanish Holdco SLU (“Saeta”) (note 6). As part of the acquisition, the Group acquired AED 2,034 million (EUR 529 million) of debt carried by Saeta and its subsidiaries. The debt carried by Saeta or its subsidiaries is used for project financing with no recourse to the shareholder in relation to payment obligations arising from the financing agreement s. The aggregate amount of loans outstanding at 31 December 2024 is AED 2,008 million. Masdar Espana Renewables 1, SL During the year, Masdar Espana Renewables entered into a EUR 590 million facility with a consortium of banks for the purposes of acquiring a partial stake in Enel Green Power España Solar 1, S.L.U. and associated transaction costs. The aggregate amount of loans outstanding at 31 December 2024 is AED 2,200 million. The facilities are repayable in quarterly instalments from March 2025 to September 2034. These facilities comprise floating rate loans with a rate of interest of EURIBOR + margin which are hedged using senior secured interest rate swaps for their full tenure. The derivatives are designated as a hedge and have been determined as effective.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 88 31 OTHER NON-CURRENT LIABILITIES 2024 2023 AED ‘000 AED ‘000 Deferred consideration (note 31.1) 727,425 94,932 Decommissioning liability (note 31.2) 357,250 68,939 Contract liability (note 31.3) 362,968 - Provision for employees’ end of service benefits (note 31.4) 50,352 44,080 1,497,995 207,951 31.1 Deferred consideration Deferred consideration represents future payments contingent on certain performance criteria being met. The fair value of the deferred consideration was determined using a discounted cash flow model, incorporating relevant market data and assumptions about the probability of achieving the performance criteria . Deferred consideration is recognized as part of the cost of investment in accordance with IFRS 3. The fair value of the deferred consideration is classified as Level 3 within the fair value hierarchy, as it incorporates significant unobservable inputs. These inputs primarily relate to the assessment of future cash flows and the probability of meeting performance targets. Masdar Arlington Energy Storage UK Holdco As part of the acquisition of Arlington Group Services in 2022, a deferred consideration of GBP 30 million is expected to be paid by 2030 settled to the sellers based on achievement of project milestones . As of 31 December 2024, the present value (PV) of this deferred consideration is estimated at AED 105 million ( GBP 23 million) (2023: AED 95 million (GBP 21 million)). Masdar Europe Holding RSC Limited During the year, an amount of EUR 15 million (AED 61 million) was recognized as deferred consideration relating to the acquisition of Project Fluid representing future payments based on project milestones across various solar and wind projects expected to be settled by 2029. RWE Dogger Bank Southeast Limited and RWE Dogger Bank Southwest Limited During the year, as part of the purchase price of RWE Renewables UK Dogger Bank Limited, a deferred consideration with the fair value of AED 497 million (GBP 108 million ) payable in December 2027 was recognized to be settled upon reaching the Commercial Operation Date (COD). Terna Energy Following the acquisition of Terna Energy (“Terna”), an amount of AED 64 million has been recognized as deferred consideration related to Terna’s subsidiaries. This amount represents future payments associated with the acquisition of Terna's subsidiaries and is expected to be settled in 2026. 31.2 Decommissioning liability 2024 2023 AED ‘000 AED ‘000 As at 1 January 68,939 62,943 Acquisition of subsidiaries (note 6) 213,726 - Additions 27,160 - Accretion of decommissioning liability (note 13.2) 4,068 2,620 Revision of estimated cash flows 47,809 - Effect of movement in exchange rates (4,452) 3,376 As at 31 December 357,250 68,939
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 89 31 OTHER NON-CURRENT LIABILITIES continued 31.2 Decommissioning liability continued The Group’s foreign subsidiaries and joint operations in UK, Azerbaijan and Europe have a legal obligation to remove the plants at the end of its’ useful lives, or earlier if the subsidiaries became unable to continue their operations to that date, and to restore the land. Decommissioning costs are provided for at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the relevant asset. This technique reflects assumptions such as costs, plant useful life, inflation and profit margin that third parties would consider to assume the settlement of the obligation. 31.3 Contract liability Following the provisional purchase price acquisition of Terna, an amount of AED 363 million has been recognized as contract liability related to fair value of power purchase agreements . This amount is expected to be amortized on a long term basis over the life of power purchase agreements. 31.4 Provision for employees’ end of service benefits Movement in the provision for employees end of service benefits is as follows: 2024 2023 AED ‘000 AED ‘000 As at 1 January 44,080 34,875 Charge for the year 12,130 9,521 Paid during the year (5,858) (316) As at 31 December 50,352 44,080 32 TRADE AND OTHER PAYABLES 2024 2023 AED ‘000 AED ‘000 Trade payables 151,380 54,722 Project advances (note i) 1,276,174 711,144 Accrued expenses, advances and other payables 1,152,902 458,024 Tax payable 225,132 34,670 Deferred income - 7,046 2,805,588 1,265,606 The average credit period on trade payables is 31 days. No interest is charged on trade payables. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. Note (i) The Group is engaged by the Crown Prince Courts ("CPC") to carry out the mandate of the Government of Abu Dhabi with respect to "Al Dhafra Wind Energy Program" which comprises the construction of 23 wind turbines and a solar plant at different locations in the UAE. In this regard, the Group acts as an agent between the CPC and the EPC contractors engaged for the development of these assets as the Group neither has control over the assets before they are transferred to CPC nor the ability to direct their use or benefit therefrom. Accordingly , the contract revenue and costs related to this arrangement have not been recorded in the consolidated financial statements of the Group. The Group does not have any profit or margin specifically linked to the EPC contracted amount .
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 90 33 FINANCIAL INSTRUMENTS 33.1 Hedging activities The Group is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are interest rate risk & commodity price risk. (i) Derivatives not designated as hedging instruments The Group has entered into various interest rate swaps associated with forecast debt (pre-hedge) denominated in USD. These are not designated as hedging instruments. During the year, the Group recognised a gain of AED 28.7 million (2023: loss of AED 2 4.4 million) on pre-hedge interest rate swaps . Additionally, during the year, the Group settled pre-hedges in cash, amounting to AED 40.8 million (2023: AED 113.8 million). Current Non-current Current Non-current 2024 2024 2023 2023 AED 000 AED 000 AED 000 AED 000 Cash flow hedges Assets Interest rate swap - - 12,143 - (ii) Derivatives designated as hedging instruments The Group has entered into various interest rate swaps in order to reduce their exposure to interest rate fluctuations on variable interest -bearing borrowings for a notional amount that matches the outstanding interest bearing loans and borrowings. The derivative financial instruments were designated as cash flow hedge. The ineffective portion of derivatives designated as hedging instruments in effective hedge contracts amounting to a loss of AED 15.5 million (2023: gain of AED 29.4 million) was recognised in the consolidated statement of comprehensive income. Current Non-current Current Non-current 2024 2024 2023 2023 AED million AED million AED million AED million Cash flow hedges Assets Interest rate swap 73,304 254,890 58,464 169,671 Price derivatives 5,997 - - - 79,301 254,890 58,464 169,671 Liabilities Interest rate swap 25,635 65,305 4,808 41,347 Price derivatives 579 1,581 - - 26,214 66,886 4,808 41,347
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 91 33 FINANCIAL INSTRUMENTS continued 33.1 Hedging activities continued ii). Derivatives designated as hedging instruments continued Interest rate swap – cash flow hedge The following table summaries certain information relating to the derivatives for each subsidiary as of 31 December 2024 and 31 December 2023: Notional amount Derivative liabilities Derivative assets Fixed leg on instrument 2024 2023 2024 2023 2024 2023 2024 2023 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 Subsidiary Masdar Azerbaijan Energy LLC 298,719 176,684 - - 16,126 2,961 3.41% 3.41% Masdar Energy UK Limited 1,278,944 1,405,929 - - 176,262 183,391 0.74% 0.74% Nur Jizzakh Solar PV FE LLC 301,847 143,947 - - 17,548 43 3.50% 3.50% Nur Samarkand Solar PV FE LLC 292,678 139,665 - - 17,134 25 3.50% 3.50% Nur Sherabad Solar PV FE LLC 548,635 459,059 - (10,780) 21,752 - 3.67% 3.67% Nur Navoi Solar Holdings RSC Limted 220,391 220,391 - - 15,574 19,247 0.76% 0.76% Nur Bukhara Solar PV LLC FE 497,890 - (751) - - - 3.16% - Shamal Zarafshan Enegy FE LLC 511,574 268,312 - (35,375) 6,984 - 4.00% 4.00% Nur Navoi Solar FE LLC 112,672 120,721 - - 23,697 22,468 1.36% 1.36% Masdar Baltic Eagle Germany Gmbh 1,344,850 - (63,445) - - - 2.66% - Masdar Espana Renewables 1, SL 1,750,363 - - - 3,232 - 2.30% - Masdar Hellas Single Member SA 2,280,000 - - - 29,885 - 2.20% - TERP Spanish Holdco SLU 814,126 - (4,253) - - - 0.4%-2.6% - Terna Energy 1,824,790 - (22,491) - - - 0.4%-2.3% - (90,940) (46,155) 328,194 228,135 Price derivatives –Cash flow hedges TERP Spanish Holdco SLU Terp Spanish Holdco SLU employs a hedging strategy utilizing future and forward contracts to manage the exposure to commodity price risk. The derivative instruments were designated as cash flow hedges. As at 31 December 2024, the derivative instrument has a negative fair value of AED 2. 2 million (2023: nil). The notional amount associated with the volumes covered by the derivative instrument is 505 GWH. Terna Energy Terna Energy employs a hedging strategy utilizing future and forward contracts to manage the exposure to commodity price risk. The derivative instruments were designated as cash flow hedges. As at 31 December 2024, the derivative instrument has a positive fair value of AED 6.0 million (2023: nil). The notional amount associated with the volumes covered by the derivative instrument is 70 MwH. 33.2 Fair values The fair values of the financial instruments of the Group are not materially different from their carrying values at the reporting date except for certain fixed interest bearing loans and borrowings. Set out below is a comparison of the carrying amounts and fair values of fixed interest bearing loans and borrowings: Fair value Carrying value 2024 2023 2024 2023 AED‘000 AED‘000 AED‘000 AED‘000 Interest bearing loans and borrowing 6,342,518 1,814,507 6,363,885 2,725,419 Interest bearing loans and borrowings relates to the Masdar green bonds. The fair value of the interest bearing loans and borrowings is based on price quotations at the reporting date.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 92 33.3 Fair value hierarchy The following analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: • Level 1 – quoted prices in active markets for assets and liabilities • Level 2 – inputs other than quoted prices included within Level 1 are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) • Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs) Fair value Fair value as at Carrying value hierarchy 2024 2023 2024 2023 AED‘000 AED‘000 AED‘000 AED‘000 Financial assets measured at fair value Derivative financial assets 334,191 240,278 334,191 240,278 Level 2 Financial assets carried at fair value through profit or loss Equity investment 82,970 35,642 82,970 35,642 Level 3 Financial assets carried at fair value through OCI Equity investment 15,401 - 15,401 - Level 3 Financial liabilities measured at fair value Derivative financial liabilities 93,100 46,155 93,100 46,155 Level 2 Deferred consideration 727,425 94,932 727,425 94,932 Level 3 Financial liabilities disclosed at fair value Interest bearing loans and borrowings 6,342,518 1,814,507 6,363,885 2,725,419 Level 1 The fair values of the financial assets and financial liabilities measured at fair value included in the Level 1 category above, have been determined by market rates at the year end date. The fair values of the financial assets and financial liabilities included in the L evel 2 category above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant observable inputs being the discount rate that reflects the credit risk of counterparties. The fair values of the financial assets and financial liabilities included in the L evel 3 category above have been determined based on net asset values whereas, the fair values of the deferred consideration have been determined based on DCF method During the year ended 31 December 2024 and 2023 there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements. The fair values of other financial instruments of the Group are not materially different from their carrying values at the reporting date.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 93 34 COMMITMENTS AND CONTINGENCIES Capital commitments Capital commitments as at 31 December are as follows: 1 year or less AED ‘000 2024 Capital commitments 3,529,352 Group’s share in the commitments of its equity-accounted investees 362,220 Commitments towards financials investments 69,574 Group’s share in the commitments of its joint operations 1,668 2023 Capital commitments 1,709,931 Group’s share in the commitments of its equity-accounted investees 78,996 Commitments towards financials investments 104,935 Group’s share in the commitments of its joint operations 2,078 Guarantees As at 31 December 2024, the Group had issued corporate guarantees which benefit lenders in respect of USD - denominated equity bridge loan facilities amounting to AED 671 million (2023: AED 825 million) for the purposes of funding its equity commitments on the Dumat Al Jandal Wind Energy Company LLC (refer to note 19(iv)), Noor Jeddah Energy and Nur Navoi Solar Holding. The Group has issued performance guarantees amounting to AED 3,025 million against various projects as at 31 December 2024 (2023: AED 4,626 million). As at 31 December 2024, the banks have issued guarantees and letters of credit for the Group under various uncommitted trade finance facilities with banks including Abu Dhabi Commercial Bank, First Abu Dhabi Bank, Societe Generale, Emirates NBD and MUFG amounting to AED 3,531 million (2023: AED 2,317 million). 35 FINANCIAL RISK MANAGEMENT 35.1 Capital management The policy of the Board of Directors is to maintain a strong capital base to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital. The Company and its subsidiaries incorporated in the UAE are subject to certain capital requirements of the UAE Federal Decree Law No. (32) of 2021, which they are compliant with. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The capital structure of the Group consists of net debt (bank borrowings offset by cash and bank balances, excluding restricted cash) and equity of the Group (comprising share capital, additional capital contribution and reserves, offset by accumulated losses).
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 94 35 FINANCIAL RISK MANAGEMENT continued 35.1 Capital management continued Gearing ratio The gearing ratio as at 31 December is as follows: 2024 2023 AED ‘000 AED ‘000 Debt (i) 24,492,304 6,677,888 Cash and cash equivalents (6,733,595) (2,479,634) Net debt 17,758,709 4,198,254 Equity (ii) 29,007,613 9,805,323 Net debt to equity ratio 61.22% 42.81% (i) Debt comprises interest bearing loans and borrowings (note 30) and lease liabilities (note 17). (ii) Equity includes all capital and reserves of the Group that are managed as capital . 35.2 Financial risk management Risk management framework The Company’s board of directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitori ng the Group’s risk management policies. The committee reports regularly to the board of directors on its activities. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Group’s Audit, Risk and Compliance Committee (ARCC) oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and credit risk. Currency risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group is exposed to currency risk on its transactions, investments that are denominated in foreign currencies, primarily in Euro and GBP. There is no significant currency risk exposure on the USD transactions and balances as the UAE Dirham is pegged to the USD. The following table demonstrates the sensitivity to a reasonably possible change in the Euro and GBP exchange rates, with all other variables held constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities) and the Group’s equity (due to changes in the exchange rate fluctuation reserve). The Group’s exposure to foreign currency changes for all other currencies is not material.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 95 35 FINANCIAL RISK MANAGEMENT continued 35.2 Financial risk management continued Currency risk continued Increase/decrease in EURO and GBP Effect on profit before tax Effect on net equity AED ‘000 AED ‘000 2024 +2% 9,545 (194,203) -2% (9,545) 194,203 2023 +2% 4,363 (13,970) -2% (4,363) 13,970 Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s variable rate borrowings. The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Group’s borrowings at fixed rate of interest amounted to AED 6,363.9 million (2023: 2,725.4 million) which is 27% of total borrowings at 31 December 2024 (2023: 43%). The Group enters into interest rate swaps with respect to its variable rate borrowings , in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated b y reference to an agreed -upon notional principal amount. At 31 December 2024 and 2023, the Group’s borrowings are substantially hedged against interest rate risk by virtue of interest rate swaps. Interest rate sensitivity The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings and deposits, after the impact of hedge accounting. With all other variables held constant, the Group’s profit before tax and equity is affected as follows Profit or loss Equity, net of tax Effects in AED ‘000 +15 bp -15 bp +15 bp -15 bp Increase Decrease Increase Decrease 31 December 2024 (10,757) 10,757 (13,101) 13,007 31 December 2023 (1,091) 1,091 (3,805) 3,805 The following table provides a reconciliation by risk category of components of equity and analysis of hedging reserve, net of tax, resulting from cash flow hedge accounting: 2024 2023 AED ‘000 AED ‘000 As at 1 January 378,073 485,584 Change in fair value – interest rate swaps 96,292 (112,871) Share of movement in equity accounted investees (27,821) (20,835) Deferred tax movement 964 15,813 Effect of movement in exchange rates (28,961) 10,382 As at 31 December 418,547 378,073
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 96 35 FINANCIAL INSTRUMENTS continued 35.2 Financial risk management continued Risk management framework continued Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is exposed to credit risk from its operating activities and from its financing activities, including deposits with banks and other financial instruments. Trade and other receivables The Group has adopted a policy of only dealing with creditworthy counterparties. The Group attempts to control credit risk by monitoring credit exposures and continually assessing the creditworthiness of third parties. The Group has adopted a policy of dealing with only creditworthy counterparties. Adequate assessment is made before accepting an order from a counterparty. Of the trade receivables balance at the end of the year, AED 30 6 million (2023: AED 79 million) representing 65% (2023: 34%) of total trade receivables is due from three major customers. Management considers each of these customers to be reputable and creditworthy and is confident that this concentration of credit risk will not result in any significant loss to the Group. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. All impairment considerations for trade and other receivables are performed using the expected credit loss model. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 24. The Group does not hold collateral as security. Operating financial assets The operating financial assets relating to the Group’s international power and wind generation subsidiaries sell their products to one party, which is typically a governmental entity. These subsidiaries seek to limit their credit risk with respect to a single customer by monitoring outstanding receivables. The Group’s maximum exposure to credit risk for the components of the consolidated statement of financial position at 31 December 2024 and 2023 is the carrying amounts as illustrated in note 20. Other financial instruments and cash deposits Credit risk from balances with banks and financial institutions is managed by the Group’s treasury in accordance with the Group’s policy Balances with banks are assessed to have low credit risk of default since these banks are highly regulated by the central banks in the country of operation . Investments of surplus funds are made only with reputable banks and financial institutions. The Group’s maximum exposure to credit risk for the components of the consolidated statement of financial position at 31 December 2024 and 2023 is the carrying amounts as illustrated in note 25 except for derivative financial instruments. The Group’s maximum exposure for derivative instruments is disclosed in note 33 and in the liquidity table below, respectively. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group ensures that it has sufficient cash and liquid assets on demand to meet its expected operational expenses; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Group maintains adequate amount of its cash resources in bank and in short term deposits. The Group has significant future capital commitments (note 34) for which it relies on funding from the shareholders and borrowings from banks and issuance of green bonds.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 97 35 FINANCIAL INSTRUMENTS continued 35.2 Financial risk management continued Risk management framework continued Liquidity risk continued The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earl iest date on which the Group can be required to pay. The tables include both interest and principal cash flows and excluding the impact of netting arrangements. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Group may be required to pay. Within Between Between More than Carrying 1 year 1 - 2 years 2 - 5 years 5 years Total amount AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 2024 Interest bearing loans and borrowings 2,197,342 3,065,624 6,879,419 18,903,576 31,045,961 23,970,779 Due to related parties 89,533 - - 89,533 89,533 Trade and other payables 698,350 - - 698,350 698,350 Lease liabilities 60,938 55,292 150,763 388,208 655,201 521,525 3,046,163 3,120,916 7,030,182 19,291,784 32,489,045 25,280,187 2023 Interest bearing loans and borrowings 453,566 509,651 1,872,538 7,033,666 9,869,421 6,386,675 Due to related parties 65,812 - - - 65,812 65,812 Trade and other payables 139,356 - - - 139,356 139,356 Lease liabilities 36,616 34,077 90,520 215,382 376,595 291,213 695,350 543,728 1,963,058 7,249,048 10,451,184 6,883,056 The amount included above for variable interest rate instruments for non- derivative financial liabilities is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period. The following table details the Group’s liquidity analysis for its interest rate swaps. The table has been drawn up based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis. Between Between More Within 1 – 2 2 - 5 than 5 Carrying 1-year years years years Total amount AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 AED ‘000 Interest rate swaps 2024 59,565 55,566 105,022 72,019 292,172 237,254 2023 51,405 45,485 94,340 30,864 222,094 181,980 The Group has access to financing facilities as described in note 3 0, of which AED 1,552 million were unused at the end of the reporting period (2023: AED 3,589 million). The Group expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets. 36 EVENTS AFTER REPORTING DATE During 2025, as part of an all-cash mandatory tender offer (“MTO”), Masdar further acquired 11% of the outstanding shares of Terna for a value of EUR 272 million.
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Abu Dhabi Future Energy Company PJSC (Masdar) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2024 98 37 COMPARATIVE INFORMATION Certain comparative figures have been reclassified, wherever necessary, to confirm to the presentation adopted in the current year consolidated financial statements. Such reclassification has no impact on previously reported profit or equity of the Group. Consolidated statement of comprehensive income for the year ended 31 December 2023 Previously reported amount Reclassification Reclassified amount AED ‘000 AED ’000 AED ’000 Revenue 3,352,560 206,929 3,559,489 Direct costs (2,578,558) (135,404) (2,713,962) Other income 185,541 (20,509) 165,032 General and administrative expenses (573,720) 6,031 (567,689) Finance income 148,637 (51,015) 97,622 Finance expense (230,219) 22,158 (208,061) Net foreign exchange loss - (34,950) (34,950) Further, following items presented in the c onsolidated statement of comprehensive income for the year ended 31 December 2023 are reclassified within the financial statement captions noted above. Previously reported amount Reclassification Reclassified amount AED ‘000 AED ’000 AED ’000 Research and development expenses (1,774) 1,774 - Reversal of expected credit losses on loans to related parties, net 26,606 (26,606) - Reversal of (provision for) expected credit losses on trade and finance lease receivables 596 (596) - Provision for expected credit losses on operating financial leases (32,188) 32,188 - Consolidated statement of financial position as at 31 December 2023 Previously reported amount Reclassification Reclassified amount AED ‘000 AED ’000 AED ’000 Non-current assets Derivative financial assets 194,123 (24,452) 169,671 Current assets Derivative financial assets - 70,607 70,607 Non-current liabilities Derivative financial liabilities - (41,347) (41,347) Current liabilities Derivative financial liabilities - (4,808) (4,808)