DMIT Annual Report 2017

Dar Al-Maal Al-Islami Trust 11 Index to the Consolidated Financial Statements Independent auditors’ report 12 Consolidated statement of financial position 15 Consolidated statement of income 16 Consolidated statement of comprehensive income 17 Consolidated statement of changes in equity 18 Consolidated statement of cash flows 19 Notes to the Consolidated Financial Statements 1. Formation and activities 21 2. Accounting policies 21 Basis of preparation 21 Impact of new accounting pronouncements and new and amended standards adopted 22 New and amended standards and interpretations 22 Consolidation 23 Foreign currency translation 24 Derivative financial instruments and hedging 25 Income from investments with Islamic institutions and investments in financings 25 Fee and commission income 25 Sale and repurchase agreements 25 Financial assets 26 Offsetting financial instruments 27 Impairment of financial assets 27 Impairment of non-financial assets 28 Intangible assets 28 Investment property 29 Property, plant and equipment and depreciation 29 Leases 29 Provisions 30 Non-current asset held for sale 30 Discontinued operations 30 Due to banks and financial institutions 30 Borrowings 30 Financial liabilities 30 Retirement benefit plans 30 Taxation 31 Deferred income taxes 31 Trust capital and treasury stock 31 Acceptances 32 Cash and cash equivalents 32 Fiduciary activities 32 3. Critical accounting estimates and judgements in applying accounting policies 32 Impairment of investments in financings 32 Fair value and impairment of available-for- sale equity investments 32 Fair value of investment properties 32 Income taxes 32 Consolidation of entities in which the Group holds less than 50% 32 Provisions 33 Impairment of associated companies 33 Estimated impairment of goodwill 33 4. Financial instruments 33 Strategy in using financial instruments 33 Capital management 34 Financial risk management 35 Credit risk 35 Market risk 40 Liquidity risk 43 5. Cash and cash equivalents 47 6. Trading securities 47 7. Investments in financings 47 8. Collateral received and re-pledged 48 9. Allowance account from credit losses 49 10. Investment securities 50 11. Fair value of financial instruments 51 12. Accounts and other financial assets 54 13. Investment property 54 14. Fair values of land and buildings 55 15. Investments in associates 62 16. Property, plant and equipment 68 17. Intangible assets 69 18. Non-current assets and liabilities held for sale and sale of subsidiaries 71 19. Accounts payable 71 20. Tax liability 71 21. Due to customers, banks and other financial institutions 72 22. Provisions 72 23. Collateralised borrowings 73 24. Net trading income 73 25. Income from investments in financings 73 26. Fee and commission income 73 27. Income from investments 73 28. Gains/(losses) from other income 74 29. Staff costs 74 30. General and administrative expenses 74 31. Proposed dividend 74 32. Taxes 74 33. Non-controlling interests 75 34. Funds under management 77 35. Retirement benefit plan 77 36. Related party transactions and balances 82 37. Contingent liabilities and commitments 83 38. Current and non-current assets and liabilities 85 39. Concentration of assets and liabilities 86 40. Maturities of assets and liabilities 88 41. Currency exposure 89 42. Trust capital 90 43. Date of authorisation for issue 90 44. Principal subsidiaries 90 45. Capital management 90 46. Restatement of consolidated financial statements 91