Notes to the Consolidated Financial Statements
18
Dar Al-Maal Al-Islami Trust
Annual Report 2012
1. Formation and activities
Dar Al-Maal Al-Islami Trust (DMI)
was formed by indenture under
the laws of the Commonwealth
of The Bahamas for the purpose
of conducting business affairs
in conformity with Islamic law,
principles and traditions. DMI
subsidiaries and associates offer
a wide range of Islamic financial
services including investment,
commercial and private banking,
private equity, public and private
issue of securities, mergers and
acquisitions advice, takaful,
equipment leasing real estate
development and modarabas which
are similar to investment funds. The
modarabas, being separate entities,
do not have their funds consolidated
in the annexed financial statements.
They are included in off-balance
sheet accounts as disclosed in
note 33.
2. Accounting policies
The principal accounting policies
adopted in the preparation of these
consolidated financial statements
are set out below. These policies
have been consistently applied
to all the years presented, unless
otherwise stated.
Basis of preparation
The consolidated financial statements
of DMI and its subsidiaries (the
Group) are prepared in accordance
with International Financial Reporting
Standards (IFRS) and IFRS
interpretations. The consolidated
financial statements are prepared
under the historical cost convention,
as modified by the revaluation of
available-for-sale financial assets,
trading securities, financial assets
and financial liabilities held at fair
value through profit or loss, derivative
instruments and investment property.
The preparation of financial
statements in conformity with
IFRS requires the use of certain
critical accounting estimates. It also
requires management to exercise its
judgement in the process of applying
the Group’s accounting policies. The
areas involving a higher degree of
judgement or complexity, or areas
where assumptions and estimates
are significant to the consolidated
financial statements are disclosed
in note 3.
As of 31 December 2012 DMI Trust
has a $190 million borrowing from
its controlled and fully consolidated
subsidiary Ithmaar Bank B.S.C. The
facility is repayable on 15 August
2013. As of today, DMI Trust and
Ithmaar Bank have held discussions
on how the facility could be rolled
over; however no formal agreement
has yet been reached. Management
is confident that a solution can be
reached with all parties ahead of the
repayment date.
Impact of New Accounting
Pronouncements:
International Financial
Reporting Standards
New and amended
standards adopted by the
Group
The following new standards and
amendments to standards are
mandatory for the first time for the
financial year beginning 1 January
2012.
There are no IFRS or IFRIC
interpretations that are effective for
the first time for the financial year
beginning on 1 January 2012 that
are expected to have a material
impact on the Group.
Amendment to IAS 12, ‘Income
taxes’ on deferred tax – IAS 12,
‘Income taxes’ currently requires
an entity to measure the deferred
tax relating to an asset depending
on whether the entity expects to
recover the carrying amount of
the asset through use or sale. It
can be difficult and subjective to
assess whether recovery will be
through use or through sale when
the asset is measured using the fair
value model in IAS 40, ‘Investment
property’.
This
amendment
therefore introduces an exception
to the existing principle for the
measurement of deferred tax assets
or liabilities arising on investment
property measured at fair value. As
a result of the amendments, SIC
21, ‘Income taxes – recovery of
revalued non-depreciable assets’,
will no longer apply to investment
properties carried at fair value. The
amendments also incorporate into
IAS 12 the remaining guidance
previously contained in SIC 21,
which is withdrawn. Effective date
1 January 2012.
Amendment to IFRS 7, ‘Financial
instruments: Disclosures’ on
transfer of financial assets – These
amendments are as part of the IASBs
comprehensive review of off balance
sheet activities. The amendments
promote transparency in the
reporting of transfer transactions
and improve users’ understanding
of the risk exposures relating to
transfers of financial assets and the
effect of those risks on an entity’s
financial position, particularly those
involving securitisation of financial
assets. Effective date 1 July 2011.
New and amended
standards, and
interpretations mandatory for
the first time for the financial
year beginning 1 January
2012 but not currently
relevant to the Group
(although they may affect
the accounting for future
transactions and events)
Amendment to IFRS 1, ‘Severe
hyperinflation and removal of fixed
dates for first-time adopters – The
amendment provides guidance
on how an entity should resume
presenting financial statements
in accordance with IFRSs after a
period when the entity was unable
to comply with IFRSs because its
functional currency was subject to
sever hyperinflation. Effective date
1 July 2011.
New standards,
amendments and
interpretations issued but
not effective for the financial
year beginning 1 January
2012 and not early adopted.
There are no IFRS or IFRIC
interpretations that were issued but
not effective for the financial year
beginning 1 January 2012 and
not early adopted that would be
expected to have a material impact
on the Group, unless otherwise
mentioned below.
