DMIT_Annual_Report_2018_EN

Dar Al-Maal Al-Islami Trust 5 benefiting from recovery of economic growth and increased government spending on public infrastructure projects. GCC banks continued to take steps to restructure their operating models in order to cope with an increasing complex digitized and technology-driven ecosystem. This is allowing them to place greater focus on business growth and new development opportunities; building and maintain customer loyalty; and strengthen their competitiveness. The year 2018, witnessed better implementation of corporate governance practices throughout the Group, better policy harmony, cost rationalisation, unlocking potentials of our global retail banking, continued growth and higher contributions from the Group’s diversified business lines. The Group in 2018 reported a net loss attributable to Unit-holders of $ 27.5 million, compared with a loss of $14.6 million in 2017. This result is primarily attributed to an amortisation and impairment of goodwill of $55.6 million and reduction in operating income by 14% due to reduction in net income in Pakistan, in US Dollar terms as a result of weak Pakistan Rupee, while reported a 7% increase in Pakistani Rupee terms. During the year. The Group recognised a fair value adjustment on investments of $ 114 million and foreign currency translation loss of $ 22 million due to a drop in Pakistani Rupee FX rate. Accordingly, the Trust capital has decreased from $289 million at the end of 2017 to $161 million in 2018. Similarly, the value of each equity participation unit decreased from $73.06 in 2017 to $40.67 in 2018. In line with expansion plans in retail banking, the Group continued to develop opportunities for clients and their communities. Considering the economic outlook and pursuing this strategy, maintenance of resources remains critical. The Board of Supervisors has therefore resolved not to recommend a dividend in respect of the year ended 31 December 2018 at the Annual General Meeting. Due to better management and control of the situation in Islamic Investment Company of the Gulf (Bahamas) Limited, Kingdom of Saudi Arabia’s operations, the fiduciary risk reserve at 31 December 2018 amounted to $60 million (2017: $60 million). The overall situation is being kept under meticulous monitoring. Ithmaar Holding BSC (“Ithmaar”) is regulated by the Central Bank of Bahrain and its shares are listed on the Bourse of Bahrain, Kuwait Stock Exchange and Dubai Financial Market. Ithmaar is a key subsidiary in which the Group owns 46.5% interest. Ithmaar has successfully completed implementation of its strategic decision in converting Ithmaar into two major business units: Ithmaar Bank B.S.C. (c), focusing on core retail business; and IB Capital B.S.C. (c), an investment subsidiary which primarily, holds investments and real estate. The Board of Supervisors is convinced that this structure will assist in realising long term strategy for growth by providing greater insight into the strength of core retail banking operations and further facilitate the focussed management of the Group’s investments and real estate. It will also help highlight the performance of core business and assist in the planned divestment of investment and non-core assets. During 2018, IB Capital B.S.C. (c) acquired a controlling interest in Solidarity Group Holding B.S.C. (c), with a net equity of US$ 186 million, a group offering a wide range of Takaful insurance services and related products in the Middle East. The new organization of Ithmaar, will further focus its efforts, allowing the Group to take advantage of new growth opportunities. In 2018, Ithmaar reduced the loss attributed to shareholders by 72%, from $ 84.71 million in 2017 to $ 23.98 million in 2018. The loss in 2018 was arisen after recognising a gain arising on acquisition of a business of $ 50.9 million and an impairment on investments of $ 55.3 million. While Ithmaar reported a loss in 2018, Ithmaar Bank B.S.C. (c) recorded a net profit attributable to shareholders of $ 3.7 million. This reaffirms Board of Supervisors’ view of the new organisation. Ithmaar will continue yielding the strategic decision through continuous efforts to improve its products, innovation and services, while rationalising costs, enhance its customer service offerings and expand its network. Ithmaar will continue focusing on the core retail banking business. The Group owns 31.3% of the economic interest of Faysal Bank Limited, Pakistan (“FBL”) through DMI’s investment in