Sooner — Cash Flow & Tax Architecture

Working draft — 2026-05-06. Working assumption: PM-Buyer Property Management Agreement governs Tenanted Unit residual flow (open point for Victoria (Rimon Law)). UAE-only tax structure (no UK royalty exposure). Group effective UAE Corporate Tax: 0% in loss years; ~AED 1.5–2M at Y3 run-rate (~2% effective, proportional to genuine group profit per the financial model).

1 — Structure summary

The deal in one paragraph.

Sooner finances closing fees (~AED 150K per AED 2M property) for end-buyers. Funding stack: Sooner draws an 80% advance from Amwal Capital under a 5-year Sharia Murabaha facility (15% profit rate, bullet at Y5) plus a 20% equity gap from Tech via Qard al-Hasan. The buyer's obligation to PM is structured as a Forward Ijara: AED 3,750/mo for 60 months = AED 225K total (= AED 150K amortising the closing-fee outlay PM advanced + AED 75K Forward Ijara financing margin).

The PM-buyer financing is structured as a Forward Ijara (Ijara Mawsufah Fil Dhimmah): PM advances AED 150K of closing fees as consideration for a 5-year leasehold over the buyer's property, then sub-leases back at AED 3,750/mo. The AED 150K is capitalised as Prepaid Ijara on PM's balance sheet (under AAOIFI FAS 32) and amortised straight-line over 60 months, leaving PM with AED 1,250/mo of net financing margin per active loan. PM expenses ~80% of that margin (AED 1,000/mo per active loan) to Tech (DDA Free Zone, Qualifying Free Zone Person) via three priced-separately intra-group services fees. PM retains AED 250/mo per active loan as a servicing margin, calibrated quarterly to AED 375K of taxable income (the upper limit of the 0% nil-rate band under UAE CT Article 3) via a cost-plus 5% recharge from Tech. PM also charges late payment fees (AED 1,000 per overdue installment, the only group entity allowed to charge these under UAE PM licensing).

SPV (ADGM) is a security/legal vehicle that books zero — it holds the receivables assignment + share charge over PM as Amwal's bankruptcy-remoteness comfort, but does NOT handle operating cash. PM holds the operating cash directly: receives buyer collections, pays Amwal monthly Murabaha profit directly via the loan docs' payment-direction, and recycles the principal portion into new originations.

Sooner RE + Mortgages earn one-off commissions per closing. Tech absorbs ~70% of mainland gross revenue via three fees that map to the entity-level value attribution (validated by Gabriel's functional analysis): a 40% software licence for use of Sooner's lending platform IP (the platform is the primary value driver — non-substitutable, AI-leveraged, USD 20M+ annual R&D at Tech with 50–100 engineers in DDA at Y3); a 30% marketing & lead-generation services fee (100% of customer leads come through Tech's brand and platform); plus a cost+5% recharge for shared HQ services. Mainland subs retain a routine return for their licensed brokerage activities + broker compensation, taxed at 9% above AED 375K.

UK Holding is the parent (no UK royalty exposure; brand IP sits at Holding for legal-ownership purposes only and is licensed royalty-free to mainland subs).

2 — Closing-day cash flow (per AED 2M deal)

One-time event at deal close. Shows where the AED 150K of closing fees comes from, where it goes, and what Sooner books as income. Numbers in AED, working estimates pending Gabriel confirmation.
Cash sources / external counterparties Sooner Group entities Third-party recipients
flowchart LR AMWAL["Amwal advance
~AED 83K
(80% × net cash deployed)"] TECH["Tech Qard al-Hasan
~AED 21K
(20% equity)"] BANK["Mortgage Bank
(separate from closing fees)"] SOONER(("Sooner Group
perimeter at closing")) SRE["Sooner RE
books AED 28,875 income
(1% commission AED 21K +
conveyancing AED 7,875)"] MORT["ReMatch Mortgages
books AED 16,800 income
(0.8% × AED 2M + VAT,
paid by bank)"] DLD["DLD
~AED 85K
(4% transfer fee +
trustee + admin)"] EXT_AGENT["External agent
AED 21K
(1% of property + VAT)"] BANK_FEES["Bank fees
AED 12.7K
(mortgage registration
+ processing)"] OTHER["Valuation / NOC /
insurance setup
AED 6.2K"] AMWAL -->|"funding"| SOONER TECH -->|"funding"| SOONER BANK -->|"AED 16,800 fee
(referral)"| MORT MORT -.->|"sits in group"| SOONER SOONER -->|"AED 80K + AED 5K"| DLD SOONER -->|"AED 21K"| EXT_AGENT SOONER -->|"AED 12.7K"| BANK_FEES SOONER -->|"AED 6.2K"| OTHER SOONER -.->|"internal: commission
+ conveyancing AED 28,875"| SRE classDef finance fill:#d4e4f4,stroke:#2d4a7a,stroke-width:1.5px,color:#0a1a3a classDef ops fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef ext fill:#f4d4d4,stroke:#7a2d2d,stroke-width:1.5px,color:#3a0a0a classDef central fill:#e8e8e0,stroke:#6a6a5a,stroke-width:2px,color:#3a3a2a class AMWAL,TECH,BANK finance class SRE,MORT ops class DLD,EXT_AGENT,BANK_FEES,OTHER ext class SOONER central
Per AED 2M deal closing-day flow:
  • Sooner deploys ~AED 150K of closing fees on behalf of the buyer (financed via Amwal + Tech). Of this, ~AED 121K leaves the group (DLD, external agents, bank fees, valuation/NOC/insurance) and ~AED 28,875 stays internally as Sooner RE income (commission + conveyancing).
  • Mortgage Bank pays Sooner Mortgages ~AED 16,800 as a referral fee (0.8% of property value + VAT) — separate from the closing-fee pool, comes IN to the group.
  • Net cash deployed by Sooner per deal: ~AED 104K (AED 150K outflow − AED 28,875 internal − AED 16,800 from bank). Funded 80% Amwal / 20% Tech Qard.
  • Total Sooner internal income per deal: AED 45,675 booked across SRE (AED 28,875) and Mortgages (AED 16,800). This is recurring per origination.

3 — Cash flow & income recognition by unit type

Lifecycle view: how money moves over the 5-year loan tenor, depending on whether the buyer occupies the property themselves or rents it out.
Free Zone (0% tax) Finance entity Mainland (calibrated to AED 375K) Conduit (zero profit) External
3.1 — End-User Unit: monthly cash flow per active loan
flowchart LR UK["UK Holding
(parent)
equity raises"] AMWAL["Amwal
15% Murabaha
5y bullet"] TECH["Tech (DDA Free Zone)
treasury hub
0% tax"] SPV["ADGM SPV
pass-through
zero profit"] PM["Sooner PM
lessor + financier
of record"] BUYER["Buyer
(occupies own property)"] UK -->|"equity injections"| TECH TECH -->|"20% Qard al-Hasan
~AED 20K per origination
(revolving)"| SPV AMWAL -->|"80% advance
~AED 81K per origination"| SPV SPV -->|"buys head-lease
receivable at face value"| PM BUYER -->|"AED 3,750/mo for 60 months
(under Sub-lease)"| PM PM -->|"15% × outstanding
Amwal monthly profit
(direct payment per loan docs)"| AMWAL PM -.->|"recycles principal portion
into new originations
(cash stays at PM)"| PM classDef qfzp fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef finance fill:#d4e4f4,stroke:#2d4a7a,stroke-width:1.5px,color:#0a1a3a classDef ops fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef ext fill:#f4d4d4,stroke:#7a2d2d,stroke-width:1.5px,color:#3a0a0a classDef conduit fill:#e8e8e0,stroke:#6a6a5a,stroke-width:1.5px,color:#3a3a2a class TECH qfzp class AMWAL,UK finance class PM ops class SPV conduit class BUYER ext
Reading the diagram:
  • Origination day. Amwal advances ~AED 81K + Tech provides ~AED 20K Qard al-Hasan, channelled to PM via the SPV facility chain. PM uses the AED 101K to pay closing fees on behalf of the buyer (DLD transfer fee, agent commissions, conveyancing). Under the Forward Ijara, PM books AED 150K as a Prepaid Ijara asset (the consideration paid for acquiring the 5-year leasehold). Buyer's obligation to PM under the Forward Ijara: AED 3,750/mo for 60 months = AED 225K total (AED 150K amortising the prepayment + AED 75K financing margin).
  • Lease structure. Buyer head-leases the property to PM at AED 1,000/yr fixed (5-year term). PM sub-leases back to buyer at AED 3,750/mo (matches loan installment). This creates the Sharia ijara form for the Murabaha financing.
  • Monthly. Buyer pays PM AED 3,750/mo. PM keeps the cash (operating cash sits at PM, not at SPV). PM pays Amwal monthly Murabaha profit (15% × outstanding facility) directly per a payment-direction in the Amwal loan documents. PM recycles the principal portion into new originations during the reinvestment period. SPV remains the legal/security vehicle (receivables assignment + share charge over PM) but does not handle operating cash.
  • Recurrence. The cash flow above repeats per origination batch. At Y3 run-rate, ~4,912 active loans simultaneously generate this monthly cash flow.
3.2 — Income recognition: why Sooner only books AED 1,250/mo (not AED 3,750/mo)
flowchart LR BUYER_PAY["Buyer's monthly payment
AED 3,750/mo"] PRINCIPAL["AED 2,500/mo
Principal repayment
Balance sheet only
(return of capital)"] PROFIT["AED 1,250/mo
Forward Ijara financing margin
(= AED 3,750 sub-lease income
− AED 2,500 amortisation of Prepaid Ijara)
P&L revenue"] PM_GROSS["Sooner PM
books AED 1,250/mo
as Forward Ijara net income"] TECH["Tech (DDA Free Zone)
0% tax"] PM_NET["Sooner PM net AED 250/mo
per active loan
then calibrated to ≤ AED 375K total
(within 0% nil-rate band → 0% CT)"] BUYER_PAY --> PRINCIPAL BUYER_PAY --> PROFIT PROFIT --> PM_GROSS PM_GROSS ==>|"AED 400 — credit decisioning services
(Tech credit team in DDA)"| TECH PM_GROSS ==>|"AED 400 — software licence
(lending platform IP)"| TECH PM_GROSS ==>|"AED 200 — customer support operations"| TECH PM_GROSS --> PM_NET TECH -.->|"cost+5% recharge
(quarterly calibration to AED 375K)"| PM_NET classDef qfzp fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef ops fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef ext fill:#f4d4d4,stroke:#7a2d2d,stroke-width:1.5px,color:#3a0a0a classDef bs fill:#e8e8e0,stroke:#6a6a5a,stroke-width:1.5px,color:#3a3a2a class TECH qfzp class PM_GROSS,PM_NET ops class BUYER_PAY ext class PRINCIPAL bs
Why income ≠ cash collected:
  • Of the AED 3,750/mo from buyer, only the AED 1,250 profit element is revenue. The AED 2,500 principal portion is balance-sheet — return of the AED 150K closing fees Sooner advanced. Recognising principal as income would double-count (we already deployed the AED 150K as a cost; it has to come back as principal, not profit).
  • The AED 1,250/mo is the 10% annual financing margin on the AED 150K Prepaid Ijara basis. Recognised over the 60-month tenor per AAOIFI FAS 32 (Sharia accounting standard for Ijara) and IFRS 15 / IFRS 9 (financial-instruments standards).
  • PM books the AED 1,250/mo gross. PM is the legal Forward Ijara lessor of record (PM acquired the leasehold right by paying the AED 150K consideration at closing).
  • PM expenses AED 1,000/mo to Tech via three intra-group services fees. Each fee is priced separately and supported by an EY transfer-pricing study with market comparables: AED 400 credit decisioning services, AED 400 software licence (the lending platform is a copyrighted-software IP asset Tech owns), AED 200 customer support operations. Tech books the AED 1,000/mo as Qualifying Income (UAE Free Zone 0% rate).
  • PM nets AED 250/mo per active loan as servicing margin. At Y3 (4,912 active loans), PM's residual after AED 250/mo × actives + direct opex is calibrated to ≤ AED 375K of taxable income via additional Tech cost+5% recharge. PM CT: 0% within the nil-rate band.
How PM books the Forward Ijara (AAOIFI FAS 32):
  • At origination per deal: Dr Prepaid Ijara (asset — leasehold right acquired) AED 150K | Cr Cash AED 150K. The AED 150K is capitalised as a balance-sheet asset, NOT expensed at closing.
  • Each month per active loan — sub-lease income: Dr Cash AED 3,750 | Cr Sub-lease income AED 3,750 (gross P&L revenue from buyer's monthly payment).
  • Each month per active loan — amortisation: Dr Cost of Ijara expense AED 2,500 | Cr Prepaid Ijara AED 2,500. Straight-line amortisation of the Prepaid Ijara asset over 60 months. This is the line that "consumes" the AED 150K closing-fee outlay against the rental income.
  • Net effect: PM's gross sub-lease income (AED 3,750/mo) is offset by amortisation expense (AED 2,500/mo), leaving net Ijara income of AED 1,250/mo on P&L. The AED 150K closing-fee outlay is fully recovered as Cost of Ijara expense over 60 months — no income leakage. Compliant with AAOIFI FAS 32 (Sharia Ijara standard) and IFRS 9/16 (international financial-instruments + leases standards).
Key assumption (open for EY validation): The three Tech intra-group services fees (AED 400 + 400 + 200 = AED 1,000/mo per active) are arms'-length per FTA Transfer Pricing rules. Comparables: fintech credit-as-a-service (30–50% of net interest margin), proprietary lending-platform licences (25–40% of NIM), outsourced customer-support ops (cost-plus 5–10%). EY validates per-fee rates and supports with Local File / Master File documentation.
Free Zone (0% tax) Finance entity Mainland (calibrated to AED 375K) Conduit (zero profit) External
3.3 — Tenanted Unit: monthly cash flow per active loan (illustrative AED 12,500/mo market rent)
flowchart LR UK["UK Holding"] AMWAL["Amwal
15% Murabaha"] TECH["Tech (DDA Free Zone)
0% tax"] SPV["ADGM SPV
pass-through
zero profit"] PM["Sooner PM
lessor + financier
of record"] BUYER["Buyer
(property owner,
does not occupy)"] TENANT["3rd-party Tenant"] UK -->|"equity"| TECH TECH -->|"20% Qard"| SPV AMWAL -->|"80% advance"| SPV SPV -->|"buys receivable
at face value"| PM TENANT -->|"AED 12,500/mo
market rent"| PM PM -->|"AED 3,750/mo loan installment
retained at PM
used to pay Amwal + recycle"| PM PM -.->|"AED 8,750/mo residual rent
via PM-Buyer Mgmt Agreement
(see open item below)"| BUYER PM -->|"15% × outstanding
monthly profit
(direct payment per loan docs)"| AMWAL classDef qfzp fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef finance fill:#d4e4f4,stroke:#2d4a7a,stroke-width:1.5px,color:#0a1a3a classDef ops fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef ext fill:#f4d4d4,stroke:#7a2d2d,stroke-width:1.5px,color:#3a0a0a classDef conduit fill:#e8e8e0,stroke:#6a6a5a,stroke-width:1.5px,color:#3a3a2a class TECH qfzp class AMWAL,UK finance class PM ops class SPV conduit class BUYER,TENANT ext
What's different from End-User Unit:
  • 3rd-party tenant pays market rent (illustrative AED 12,500/mo on a AED 2M property). PM is the legal head-lessee with sub-letting rights; signs the sub-lease with the tenant on behalf of the buyer.
  • Cash split. Of the AED 12,500/mo received from tenant: AED 3,750/mo is retained at PM as the loan installment (PM keeps it; uses to pay Amwal monthly profit + recycle into new originations); AED 8,750/mo flows to buyer as residual rental yield (the buyer is the property owner — they retain the rental yield net of the loan installment).
  • Mechanism for the residual flow (open point). Currently structured as a separate PM-Buyer Property Management Agreement in which PM acts as agent for the buyer in collecting and remitting net rental income. See "Open items" section below — this needs Rimon Law' validation. Fallback if Rimon Law rejects: variable head-rent under the head-lease (single instrument, but introduces Ejari registration complications).
  • Vacancy. If sub-lease has a vacancy period, no rental flow runs. The buyer continues to owe the AED 3,750/mo loan installment and pays it from own funds. PM's structure is unaffected.
3.4 — Income recognition: same logic as End-User Unit, plus the rental flow
flowchart LR TENANT_PAY["Tenant's monthly payment
AED 12,500/mo"] LOAN_INST["AED 3,750/mo
= AED 2,500 principal
(balance sheet)
+ AED 1,250 profit element
(P&L revenue at PM)"] RESIDUAL["AED 8,750/mo
residual rental yield
passes through PM
(agent treatment IFRS 15)"] PM_GROSS["Sooner PM
books only AED 1,250/mo
as Forward Ijara net income"] TECH["Tech (DDA Free Zone)
0% tax"] PM_NET["Sooner PM net AED 250/mo
per active loan
(within 0% nil-rate band → 0% CT)"] BUYER_INCOME["Buyer (individual)
books AED 12,500/mo gross rental
(outside UAE CT under personal
real-estate exemption)"] TENANT_PAY --> LOAN_INST TENANT_PAY --> RESIDUAL LOAN_INST --> PM_GROSS RESIDUAL --> BUYER_INCOME PM_GROSS ==>|"AED 1,000/mo total
(3 split fees)"| TECH PM_GROSS --> PM_NET TECH -.->|"cost+5% recharge
(calibration)"| PM_NET classDef qfzp fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef ops fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef ext fill:#f4d4d4,stroke:#7a2d2d,stroke-width:1.5px,color:#3a0a0a classDef bs fill:#e8e8e0,stroke:#6a6a5a,stroke-width:1.5px,color:#3a3a2a class TECH qfzp class PM_GROSS,PM_NET ops class TENANT_PAY,BUYER_INCOME ext class LOAN_INST,RESIDUAL bs
Why PM's books look the same as End-User Unit:
  • The Forward Ijara recognition is identical. AED 1,250/mo per active loan goes onto PM's P&L (= AED 3,750 sub-lease income − AED 2,500 amortisation of Prepaid Ijara); PM expenses AED 1,000/mo to Tech via 3 split fees; PM nets AED 250/mo. The fact that the property is tenanted (vs occupied) doesn't change the financing-side income recognition.
  • The AED 8,750/mo rental residual does NOT land on PM's P&L. Under IFRS 15 substance-over-form, PM is acting as an agent for the buyer (under the PM-Buyer Mgmt Agreement). PM's books reflect only the AED 250/mo management fee already inside the financing-side margin. The gross rental flow passes through PM's escrow without crossing PM's revenue line.
  • The buyer books the AED 12,500/mo gross rental income at the buyer's own level. For UAE individual buyers, this is outside UAE CT under Cabinet Decision 49/2023 (personal real-estate investment exemption). For corporate buyers (minority of customers), standard 9% CT applies at the buyer's entity.
Key assumption (open for Rimon Law/EY validation): The PM-Buyer Property Management Agreement creates a valid agency relationship under UAE law and IFRS 15 substance-over-form. PM as legal head-lessee has the right to sub-let, but operates that right under an agency mandate from the buyer (the property owner) — analogous to how typical UAE property managers sign leases on behalf of owners. PM's books reflect only the agency fee; gross rental does NOT cross PM's P&L. EY/Rimon Law validate the IFRS 15 agent treatment + FTA classification (no recharacterisation as deemed dividend or shadow loan from PM to buyer). Fallback if rejected: variable head-rent under the head-lease (formula-based, single instrument, with Ejari registration handled via a side letter).

4 — How Sooner RE & Mortgages reduce taxable income (annual view, Y3)

SRE and Mortgages each accumulate large gross income at scale (~AED 111M and ~AED 62M at Y3). Tech absorbs portions of this via cost-plus 5% recharge for shared services + a software licence fee for use of Sooner's lending platform. Residual is taxed at 9% above AED 375K. Numbers are working estimates pending EY refinement.
4.1 — Sooner RE: revenue absorption waterfall (Y3)
flowchart TB REV["Sooner RE revenue Y3 — ~AED 111M
3,860 deals × AED 28,875 (1% commission + conveyancing)"] OPEX["Less direct opex (AED 16.6M)
external agent comm 10% + payroll + brokerage licence"] SOFTWARE["Less Tech software licence — 40% of revenue (AED 44.4M)
lending platform IP (non-substitutable, USD 20M+ R&D at Tech, 50–100 engineers DDA)"] MARKETING["Less Tech marketing & lead-gen fee — 30% of revenue (AED 33.3M)
100% of leads come from Sooner brand + platform"] RECHARGE["Less Tech cost+5% recharge (~AED 11M)
SRE's share of group HQ + shared services"] TAXABLE["Taxable income — ~AED 5.7M
routine return for licensed brokerage activity (AED 375K nil-rate band)"] CT["UAE CT @ 9% — ~AED 480K/yr"] REV --> OPEX OPEX --> SOFTWARE SOFTWARE --> MARKETING MARKETING --> RECHARGE RECHARGE --> TAXABLE TAXABLE --> CT classDef start fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef deduct fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef result fill:#f4d4d4,stroke:#7a2d2d,stroke-width:1.5px,color:#3a0a0a class REV start class OPEX,SOFTWARE,MARKETING,RECHARGE deduct class TAXABLE,CT result
How SRE's CT is determined: SRE earns AED 28,875 per closing (1% commission + conveyancing). At Y3 run-rate of 3,860 new originations, gross revenue is ~AED 111M. Direct opex (external agent commissions 10%, payroll, brokerage licence) is ~AED 16.6M. Tech absorbs three fees that map to the value-attribution analysis: 40% software licence (the platform is the primary value driver — proprietary, non-substitutable, AI-leveraged); 30% marketing & lead-generation services fee (100% of leads come from Tech's brand and platform per Q11); plus cost-plus 5% recharge. Residual ~AED 5.7M reflects SRE's routine return for its licensed brokerage activity + the broker contribution. CT @ 9% on AED 5.3M residual above the AED 375K nil-rate band = ~AED 480K/yr.
4.2 — ReMatch Mortgages: revenue absorption waterfall (Y3)
flowchart TB REV["ReMatch Mortgages revenue Y3 — ~AED 62M
3,860 deals × AED 16,800 (0.8% bank referral fee)"] OPEX["Less direct opex (AED 0.2M)
MORI licence + small overhead (broker payroll in Tech recharge)"] SOFTWARE["Less Tech software licence — 40% of revenue (AED 24.8M)
lending platform IP"] MARKETING["Less Tech marketing & lead-gen fee — 30% of revenue (AED 18.6M)
100% of leads come from Sooner brand + platform"] RECHARGE["Less Tech cost+5% recharge (~AED 6M)
Mortgages' share of group HQ + shared services"] TAXABLE["Taxable income — ~AED 12.4M
routine return for bank-relationship + broker contribution"] CT["UAE CT @ 9% — ~AED 1.08M/yr"] REV --> OPEX OPEX --> SOFTWARE SOFTWARE --> MARKETING MARKETING --> RECHARGE RECHARGE --> TAXABLE TAXABLE --> CT classDef start fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef deduct fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef result fill:#f4d4d4,stroke:#7a2d2d,stroke-width:1.5px,color:#3a0a0a class REV start class OPEX,SOFTWARE,MARKETING,RECHARGE deduct class TAXABLE,CT result
How Mortgages' CT is determined: Mortgages earns AED 16,800 per closing (0.8% × property value + VAT, paid by the bank). At Y3 run-rate of 3,860 new originations, gross revenue is ~AED 62M. Tech absorbs three fees: 40% software licence (AED 24.8M) for the lending platform IP; 30% marketing & lead-gen fee (AED 18.6M) — 100% of leads come from Tech; cost+5% recharge (~AED 6M). Residual ~AED 12.4M reflects Mortgages' routine return for the bank relationships it holds + the human mortgage-broker contribution. CT @ 9% on AED 12M residual above the AED 375K nil-rate band = ~AED 1.08M/yr.
4.3 — Sooner PM: revenue absorption waterfall (Y3)
flowchart TB REV["Sooner PM revenue Y3 — ~AED 76.7M
= AED 73.7M Forward Ijara net income (4,912 actives × AED 1,250/mo × 12)
+ ~AED 3M late payment fees (only PM can charge these)"] OPEX["Less direct opex (AED 9.5M)
RERA/Ejari + ground rent + Shaybani 0.3% origination + ops payroll"] SPLITS["Less Tech 3 split fees — AED 58.9M (4,912 × AED 1,000/mo × 12)
credit decisioning AED 400 + software licence AED 400 + customer support AED 200"] RECHARGE["Less Tech cost+5% recharge (~AED 7.9M)
PM's share of group HQ + calibration to AED 375K"] TAXABLE["Taxable income — ~AED 375K
calibrated quarterly via Tech recharge"] CT["UAE CT — 0%
fully sheltered by 0% nil-rate band"] REV --> OPEX OPEX --> SPLITS SPLITS --> RECHARGE RECHARGE --> TAXABLE TAXABLE --> CT classDef start fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef deduct fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef result fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 class REV start class OPEX,SPLITS,RECHARGE deduct class TAXABLE,CT result
How PM's CT is determined: PM is the Forward Ijara lessor of record and books AED 1,250/mo per active loan as net Ijara income (= AED 3,750 sub-lease income − AED 2,500 amortisation of the AED 150K Prepaid Ijara asset over 60 months). At Y3 (4,912 actives), PM's gross net Ijara income is ~AED 73.7M, plus ~AED 3M of late payment fees (AED 1,000 per overdue installment × ~5% late rate × 58,944 monthly installments). Direct opex (~AED 9.5M) covers RERA/Ejari, ground rent, Shaybani 0.3% origination fee, and PM ops payroll. Tech absorbs AED 58.9M via three priced-separately fees + ~AED 8M cost+5% recharge to calibrate PM down to AED 375K of taxable income (the upper limit of the 0% nil-rate band under UAE CT Article 3). PM CT: 0%.
4.4 — Tech: aggregator that absorbs at 0% Free Zone rate
flowchart TB REV["Tech revenue Y3 — ~AED 204M (intra-group only)
3 PM split fees (AED 58.9M) + SRE/Mort software licence (AED 69.2M)
+ SRE/Mort marketing fee (AED 51.9M) + cost+5% recharge (~AED 24M)"] OPEX["Less direct opex (~AED 117M)
USD 20M+ R&D (50–100 engineers in DDA) + group HQ services + treasury"] TAXABLE["Taxable income — ~AED 87M
all Qualifying Income under UAE Free Zone rules"] CT["UAE CT — 0%
QFZP under Cabinet Decision 100/2023 Articles 2(9), 2(10), 2(14), Article 7"] REV --> OPEX OPEX --> TAXABLE TAXABLE --> CT classDef start fill:#fff4d4,stroke:#7a6a2d,stroke-width:1.5px,color:#3a2d0a classDef deduct fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 classDef result fill:#d4f4dd,stroke:#2d7a3e,stroke-width:1.5px,color:#0a3a14 class REV start class OPEX deduct class TAXABLE,CT result
How Tech's CT is determined: Tech earns intra-group fees from all four operating entities. Total Y3 revenue ~AED 204M: 3 PM split fees (credit decisioning + software licence + customer support ops) = AED 58.9M; software licence to SRE + Mortgages (40% of their mainland revenue) = AED 69.2M; marketing & lead-generation services fee to SRE + Mortgages (30% of mainland revenue, justified by 100% of customer leads coming through Tech's brand and platform) = AED 51.9M; cost+5% recharge for shared HQ services across all subs = ~AED 24M. Less ~AED 117M direct opex (engineering + product + group HQ + treasury, with Tech R&D growing to USD 20M+ at Y3 and headcount of 50–100 in DDA). Residual ~AED 87M is sheltered at 0% under UAE Free Zone Qualifying Income (Cabinet Decision 100/2023 — all four revenue streams fall in Articles 2(9) HQ services, 2(10) treasury, 2(14) ancillary, or Article 7 Qualifying IP).

5 — Group P&L by entity (Y3 illustrative — 4,912 active loans)

Numbers in AED, working estimates pending EY refinement. Y3 is the steady-state run-rate after 3 years of facility deployment.
Line item Sooner RE Mortgages Sooner PM ADGM SPV Tech (DDA FZ)
External revenue ~111M ~62M 76.7M (73.7M Forward Ijara net income + ~3M late fees) 0 0
Intra-group recharge income — — — — ~204M (3 PM fees + SRE/Mort software 40% + SRE/Mort marketing 30% + cost+5%)
Direct opex (16.6M) (0.2M) (9.5M) (small) (~117M)
Tech 3 split fees from PM — — (58.9M) — +58.9M
Tech software licence (40% of revenue) (44.4M) (24.8M) — — +69.2M
Tech marketing & lead-gen fee (30% of revenue) (33.3M) (18.6M) — — +51.9M
Tech cost+5% recharge (~11M) (~6M) (~4.9M) — +~24M (allocated by revenue)
Taxable income ~5.7M ~12.4M ~375K 0 ~87M
Effective CT rate 9% above 375K 9% above 375K 0% (nil-rate band) 0% (no income) 0% (Free Zone)
CT (AED) ~480K ~1.08M 0 0 0
Tech revenue (~AED 204M intra-group) = AED 58.9M PM split-fees + AED 69.2M software licence to SRE/Mortgages (40% of mainland revenue) + AED 51.9M marketing & lead-gen fee (30% of mainland revenue) + AED 24M cost+5% recharge. Less ~AED 117M direct Tech opex (engineering + group HQ). The AED 87M residual at Tech is sheltered at 0% under UAE Free Zone Qualifying Income rules (Cabinet Decision 100/2023 Articles 2(9), 2(10), 2(14), Article 7). Amwal monthly profit (15% × outstanding) is paid directly by PM per loan-doc payment-direction; net at SPV is zero. Group Y3 CT: ~AED 1.56M (SRE ~AED 480K + Mortgages ~AED 1.08M); group net income ~AED 75M; effective rate ~2%.
Year-by-year CT trajectory (per the financial model):
  • Y1: Group is loss-making (~AED 1.91M loss). Zero CT. Loss carried forward against Y2 income.
  • Y2: First profitable year (~AED 7M group net). CT ~AED 0.4–0.6M after Y1 loss offset (effective ~6–8%).
  • Y3: Run-rate (~AED 75M group net). CT ~AED 1.56M (effective ~2%).
  • Why effective > statutory 9% on the residual: SRE + Mortgages each have a routine return for their licensed brokerage activity above the AED 375K nil-rate band. The bulk of group profit shifts to Tech under the three intra-group fees and is sheltered under UAE Free Zone Qualifying Income. UAE only — no UK exposure.

6 — Open items & key validation points

Items requiring resolution before signing operative documents. Each is flagged with the responsible party.

Rimon Law (Victoria) Forward Ijara Agreement (PM ↔ buyer) — drafting

The PM-buyer financing is structured as a Forward Ijara (Ijara Mawsufah Fil Dhimmah). A single document needs to be drafted — the Forward Ijara Agreement between PM and buyer — that creates the legal foundation for everything PM books on its balance sheet. Without it, PM's AED 150K closing-fee outlay has no offsetting Prepaid Ijara asset, and the AED 3,750/mo coming back from the buyer would all be P&L income (no balance-sheet amortisation to net against). At Y3 scale this would shift ~AED 147M/yr of "principal repayment" cash onto PM's P&L as taxable revenue.

The Forward Ijara Agreement must establish:

  • Buyer's commitment to deliver the 5-year leasehold to PM at closing (the head-lease).
  • PM's obligation to advance AED 150K of closing fees as the Forward Ijara consideration.
  • The sub-lease back to buyer at AED 3,750/mo for 60 months (matching the financing amortisation schedule).
  • The base AED 1,000/yr head-rent flowing back to buyer.
  • End-of-term mechanics: head-lease expires + Forward Ijara fully repaid at year 5 — clean unwind, no residual asset transfer needed.
  • Default + late-fee provisions (AED 1,000 per overdue installment, charged by PM only).
  • Recital reference to AAOIFI FAS 32 as the accounting standard governing PM's books.

Caveats to confirm:

  • Amwal Sharia Supervisory Board sign-off on the Forward Ijara structure (Forward Ijara is well-precedented in UAE Sharia banking, but Amwal's adviser specifically needs to confirm the closing-fee-as-prepayment framing).
  • PM's auditor accounting policy memo acknowledges FAS 32 treatment + the straight-line amortisation of Prepaid Ijara over 60 months.

Rimon Law (Victoria) + EY PM-Buyer Property Management Agreement justification (Tenanted Unit)

The Tenanted Unit residual rental flow (AED 8,750/mo to buyer) is currently structured via a PM-Buyer Property Management Agreement under which PM acts as agent for the buyer in collecting net rental income. The structural concern: PM is the legal head-lessee with sub-letting rights, and the head-lease is at AED 1,000/yr fixed against a sub-lease at ~AED 150,000/yr — this can look like a 99% discount on rental rights that PM grants back via the Mgmt Agreement.

Validation needed:

  • Rimon Law confirms the dual structure (head-lease + Mgmt Agreement) is enforceable under UAE law and consistent with how typical UAE PM agency arrangements operate.
  • EY confirms the IFRS 15 agent treatment for PM (only management fee on PM's P&L; gross rental flow does not cross PM's revenue line).
  • EY confirms the FTA does not recharacterise the residual remittance as deemed dividend or shadow loan from PM to buyer.

Fallback if rejected: variable head-rent under the head-lease itself (formula-based: variable rent = max(0, sub-lease income − loan installment)). Single instrument; same economic outcome; introduces Ejari-registration complications that Rimon Law handles via a side letter.

EY Tech UAE Free Zone Qualifying Income status

The structure relies on Tech qualifying for the UAE Free Zone 0% rate on its intra-group services revenue. Validation needed:

  • Tech has adequate substance in DDA: employees physically located in DDA, IP creation in DDA, treasury operations in DDA. ✓ Working assumption.
  • Tech's revenue mix — three PM split fees (credit decisioning, software licence, customer support ops), cost+5% recharge to mainland subs, treasury services to SPV — all fall under Qualifying Activities (UAE Cabinet Decision 100/2023, Articles 2 and 7).
  • The "de minimis" test for non-qualifying revenue (lower of 5% / AED 5M) is satisfied. Tech's only revenue streams are the three PM intra-group services fees + cost+5% recharge to mainland subs + software licence fees to SRE/Mortgages — all Qualifying Activities. No external brand royalty income.
  • The credit decisioning services fee specifically requires Tech to maintain its credit team in DDA with documented decision authority. ✓ Already operating.

EY Transfer pricing on the three PM split fees

The AED 1,000/mo per-active total is split across three priced-separately fees. Each requires arms'-length validation with comparables:

  • Credit decisioning services — AED 400/mo per active. Comparable: fintech credit-as-a-service market rates, typically 30–50% of net interest margin. Tech's credit team in DDA performs underwriting + eligibility + portfolio monitoring.
  • Software licence — AED 400/mo per active. Comparable: proprietary lending-platform licence rates, typically 25–40% of NIM. Tech owns the lending platform as copyrighted-software IP (Qualifying Intellectual Property under the modified nexus approach).
  • Customer support operations — AED 200/mo per active. Comparable: outsourced ops cost-plus 5–10% margin.

EY's TP team builds the Local File / Master File documentation supporting these rates.

EY ADGM SPV: structural compliance under zero-profit pass-through

SPV is structured to book zero profit (buys receivables from PM at face value; cash in = cash out). This neutralises the SPV's ADGM Free Zone tax classification as a leakage variable. Validation needed:

  • The pass-through mechanism is FTA-defensible — no anti-avoidance recharacterisation of SPV's role.
  • SPV satisfies minimum compliance even with zero income (audited statements, registered office in ADGM).
  • Acceptable that SPV is a corporate-services-managed entity with no employees, given zero income.

EY Transfer pricing study to defend the Tech intra-group fee structure

SRE and Mortgages each pay Tech three fees that absorb ~70% of their gross revenue. EY's TP team validates each rate with comparables and documents the structure with a Master File / Local File. The rates map to the value-attribution analysis (Tech is the primary value driver: non-substitutable lending platform IP with USD 20M+ R&D and 50–100 engineers in DDA at Y3; 100% of customer leads come through Tech's brand).

  • Software licence — 40% of mainland sub revenue for use of Sooner's proprietary lending platform IP (Cabinet Decision 100/2023 Article 7 Qualifying IP, modified nexus 100% — Tech does R&D in-house). Comparable range for proprietary fintech platforms: 25–50% of NIM at upper-quartile.
  • Marketing & lead-generation services fee — 30% of mainland sub revenue for Tech-driven brand and customer acquisition (Article 2(9) Headquarter services to Related Parties + Article 2(14) ancillary). Tech runs the customer-acquisition engine; mainland subs receive leads ready to close.
  • Cost+5% recharge for shared HQ services. Standard FTA-defensible floor.

EY UAE Substantial Shareholding Exemption / dividend mechanics (UK Holding ↔ UAE subs)

UK Holding is the offshore parent. No brand royalty is charged (per group decision: no UK royalty exposure to keep tax simple and UAE-only). Validation needed:

  • UK SSE applies to dividends from each UAE sub if ever declared (≥ 10% holding test, 12-month period, trading-company test). Confirm with UK adviser if/when group plans to upstream profits.
  • UK CFC implications now that an active trading group sits below UK Holding. Confirm.

Practically: Amwal's facility blocks parent dividends out of UK Holding for the term, so this is largely deferred. Engage UK adviser closer to facility maturity / refinance.

Sharif + Sharia adviser Sharia structure approval

The lease loop (head-lease + Murabaha-form sub-lease in End-User Unit; head-lease + market sub-lease + Mgmt Agreement in Tenanted Unit) and the receivables-purchase mechanics need Amwal's Sharia Supervisory Board sign-off. Validation needed:

  • Head-lease at AED 1,000/yr is acceptable as a Sharia ijara overlay on the Murabaha financing.
  • The Forward Ijara structure between PM and buyer (Ijara Mawsufah Fil Dhimmah) satisfies AAOIFI FAS 32 for Ijara, with PM's AED 150K closing-fee outlay capitalised as Prepaid Ijara and amortised over 60 months. The Amwal-SPV facility chain remains a Murabaha (governed by AAOIFI FAS 28).
  • PM as Wakala/agent for buyer in Tenanted Unit residual-rent flow is Sharia-compliant.

Gabriel PM ownership: 51% Sooner / 49% Shaybani (agreed) — covenants required if 49% / 51% reverses

Per the MMA review with Victoria, the agreed structure is Sooner 51% / Al-Shaybani family office 49%, with Shaybani holding zero reserve matters and zero dividend rights. Shaybani compensation is exclusively the 0.3% per-origination service fee paid at origination from equity.

Contingency if ownership reverses (Sooner 49% / Shaybani 51%): a Shareholders' Agreement is required with Sooner-side reserve matters covering: any dividend declaration; any change to Tech split-fee rates (AED 400 / 400 / 200) or the cost+5% recharge formula; any change to the PM permitted-payment list; any change to the Shaybani service contract; any sale or transfer of PM equity. Without these covenants, the Sooner-minority position cannot defend the cash-flow architecture against majority-shareholder challenge. The Shaybani buy-out option (existing AED 250K provision) provides a clean exit path when Sooner can self-guarantee the AED 5M PM-licence bank guarantee.

Tax delta between the two ownership splits: < AED 50K/yr at Y3 run-rate. UK SSE applies in both because the test is ≥ 10% holding (49% qualifies).