DMIT_Annual_Report_2018_EN

N OTES TO THE C ONSOLIDATED F INANCIAL S TATEMENTS (Thousands of US dollars) Dar Al-Maal Al-Islami Trust 94 42. Trust capital The fiduciary reserve was created to cover potential risk which might arise in the Group’s capacity as fund manager. 43. Date of authorisation for issue These consolidated financial statements have been approved for issue by the Board of Supervisors on 22 June 2019 and are subject to approval at the Annual General Meeting, which will be held on 28 September 2019. 44. Principal subsidiaries in the consolidated financial statements Nature of % owned Country of Business Subsidiary DMI Incorporation Islamic Investment Company of the Gulf (Bahamas) Limited Investment Banking 100 100 Bahamas Ithmaar Holding B.S.C.* Retail Banking 49 49 Kingdom of Bahrain Faysal Bank Limited Retail Banking 67 31 Pakistan Ithmaar Development Company Limited Real Estate Investment 100 46 Cayman Islands Sakana Holistic Housing Solutions B.S.C. (C) Mortgage Finance 63 29 Kingdom of Bahrain DMI Administrative Services S.A. Management Services 100 46 Switzerland Ithmaar Bank B.S.C.(C) Banking 100 46 Kingdom of Bahrain IB Capital B.S.C.(C) Asset Management 100 46 Kingdom of Bahrain Consolidation of entities in which the Group holds less than 50% The Group considers it has de facto control of Ithmaar Holding B.S.C. even though it has less than 50% of the voting rights. The Group is the majority shareholder with a 49.56% equity interest. As the Group maintains control over Ithmaar’s Board of Directors and considering the dispersed nature of the remaining shareholders, DMI continues to consolidate Ithmaar Holding B.S.C. as a subsidiary based upon the Group’s assessment under IFRS 10. There is no history of other shareholders forming a group to exercise their votes collectively. Ithmaar Holding B.S.C. is subject to the consolidated supervision of the Central Bank of Bahrain. 45. Capital Management One of the subsidiaries of the DMI Group is subject to supervision of the Central Bank of Bahrain and is required to comply with Capital adequacy ratio requirements. The capital adequacy ratio has been calculated in accordance with CBB guidelines and CBB directives incorporating credit risk, operational risk and market risk. The minimum regulatory requirements is 12.5% under Basel III. As at 31 December 2018 and 2017 the subsidiary has complied with this requirements. Similar requirements are also applicable to a banking subsidiary in Pakistan as per the local requirements which was also complied as at 31 December 2018 and 2017. Ithmaar Bank has not complied with the requirements of the Central Bank of Bahrain’s Rulebook Volume 2 “Licensing requirements” which states that an Islamic retail bank licensee must maintain a minimum total shareholders’ equity of BHD 100 million. 46. Contingency reserve As approved by the board of directors on 3 December 2017, 40% of the management fee (Note 34) plus any other discretionary amounts, are transferred to a contingency reserve with effect from January 2018. This reserve is distributable at the discretion of the board of directors.