Abu Dhabi Islamic Bank: Interim Consolidated Financial Statements - 31 December 2017

Transcription

1. “These Audited Consolidated Financial Statements are subject to adaptation by Shareholders at the Annual General Meeting.” Abu Dhabi Islamic Bank PJSC REPORT OF THE BOARD OF DIRECTORS AND CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2017
2. Abu Dhabi Islamic Bank PJSC REPORT OF THE BOARD OF DIRECTORS AND CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2017
3. Abu Dhabi Islamic Bank PJSC CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2017 Contents Page Board of Directors ’ report 1 Independent auditors’ report 3 Consolidated income statement 8 Consolidated statement of comprehensive income 9 Consolidated statement of financial position 10 Consolidated statement of changes in equity 11 Consolidated statement of cash flows 12 Notes to the consolidated financial statements 13 – 88
4. Abu Dhabi Islamic Bank PJSC REPORT OF THE BOARD OF DIRECTORS 31 DECEMBER 2017
5. Abu Dhabi Islamic Bank PJSC BOARD OF DIRECTORS ’ REPORT Year ended 31 December 2017 The Board of Directors have pleasure in submitting their report together with the consolidated financial statements of Abu Dhabi Islamic Bank PJSC (“the Bank”) and its subsidiaries (collectively known as the “the Group”) for the year ended 31 December 2017. Incorporation and registered office The Bank was incorporated in the Emirate of Abu Dhabi, United Arab Emirates (UAE), as a public joint stock company with limited liability, in accordance with the provisions and applicable requirements of the laws of the UAE and the Amiri Decree No. 9 of 1997. Principal activity The activities of the Bank are conducted in accordance with Islamic Shari’a, which prohibits usury as determined by the Fatwa and Shari’a Supervisory Board of the Bank, and within the provisions of the Articles and Memorandum of Association of the respective entities within the Group. Basis of preparation of consolidated financial statements The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), general principles of the Shari’a as determined by the Group’s Fatwa and Shari’a Supervisory Board and applicable requirements of the laws of the UAE. Financial commentary The Group net profit reached a record AED 2,300.1 million (2016: AED 1,953.6 million) for 2017 up 17.7%. The financial highlights of the full year results are as follows:         Group net revenue (total operating income net of distribution to depositors and sukuk holders) for 2017 was AED 5,632.3 million (2016: AED 5,385.5 million) increased by 4.6%. Group operating profit (“margin”) for 2017 increased by 6.3% to reach at AED 3,123.1 million (2016: AED 2,937.6 million). Total provisions for impairment for 2017 were AED 790.4 million (2016: AED 970.0 million). Group net profit for 2017 was AED 2,300.1 million (2016: AED 1,953.6 million) up 17.7%. Group earnings per share increased to AED 0.627 compared to AED 0.520 in 2016. Total assets as of 31 December 2017 were AED 123.3 billion (2016: AED 122.3 billion). Net customer financing (murabaha, ijara and other Islamic financing) as of 31 December 2017 was AED 76.5 billion (2016: AED 78.2 billion). Customer deposits as of 31 December 2017 were AED 100.0 billion (2016: AED 98.8 billion). Dividends and proposed appropriations The Board of Directors have recommended a cash dividend of 39.76% and the following appropriations from retained earnings: AED ‘000 • • • • • Transfer to general reserves Proposed dividends to charity for the year ended 31 December 2017 Proposed cash dividend to shareholders for the year ended 31 December 2017 Profit paid on Tier 1 sukuk – Listed during the year Profit paid on Tier 1 sukuk – Government of Abu Dhabi during the year (221,726) (29,230) (914,530) (234,158) (79,419)
7. Abu Dhabi Islamic Bank PJSC CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2017
13. Abu Dhabi Islamic Bank PJSC CONSOLIDATED INCOME STATEMENT Year ended 31 December 2017 Notes 2017 AED ‘000 2016 AED ‘000 60,068 40,087 4,291,541 398,844 82,158 28,580 1,030,268 270,292 36,397 16,146 4,488,747 332,033 74,025 35,233 840,415 139,162 27,236 16,378 6,214,294 5,993,316 (1,446,329) (840,145) (167,901) (54,793) (790,360) (1,436,880) (770,393) (185,850) (54,756) (969,965) (3,299,528) (3,417,844) 2,914,766 2,575,472 OPERATING INCOME Income from murabaha, mudaraba and wakala with financial institutions Income from murabaha, mudaraba, ijara and other Islamic financing from customers Income from Islamic sukuk measured at amortised cost Income from investments measured at fair value Share of results of associates and joint ventures Fees and commission income, net Foreign exchange income Income from investment properties Other income 5 6 7 8 OPERATING EXPENSES Employees’ costs General and administrative expenses Depreciation Amortisation of intangibles Provision for impairment, net 9 10 22 & 25 26 11 PROFIT FROM OPERATIONS, BEFORE DISTRIBUTION TO DEPOSITORS AND SUKUK HOLDERS Distribution to depositors and sukuk holders 12 (581,982) 2,332,784 PROFIT FOR THE YEAR BEFORE ZAKAT AND TAX Zakat and tax (32,661) (607,793) 1,967,679 (14,121) PROFIT FOR THE YEAR AFTER ZAKAT AND TAX 2,300,123 1,953,558 Attributable to: Equity holders of the Bank Non-controlling interest 2,298,754 1,369 1,952,264 1,294 2,300,123 1,953,558 0.627 0.520 Basic and diluted earnings per share attributable to ordinary shares (AED) 13 The attached notes 1 to 44 form part of these consolidated financial statements. 8
14. Abu Dhabi Islamic Bank PJSC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2017 Notes PROFIT FOR THE YEAR AFTER ZAKAT AND TAX 2017 AED ‘000 2016 AED ‘000 2,300,123 1,953,558 Other comprehensive loss Items that will not be reclassified to consolidated income statement Net gain (loss) on valuation of investments carried at fair value through other comprehensive income Surplus on revaluation of land Directors' remuneration paid 33 33 40 1,634 (4,900) (16,783) 49,700 (4,200) (24,060) (34,008) (3,157) (571,244) 55,693 9,933 (64,491) (476,901) Items that may subsequently be reclassified to consolidated income statement Exchange differences arising on translation of foreign operations (Loss) gain on hedge of foreign operations Fair value (loss) gain on cash flow hedges 33 33 33 OTHER COMPREHENSIVE LOSS FOR THE YEAR TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,235,632 1,476,657 Attributable to: Equity holders of the Bank Non-controlling interest 2,234,263 1,369 1,475,363 1,294 2,235,632 1,476,657 The attached notes 1 to 44 form part of these consolidated financial statements. 9
16. Abu Dhabi Islamic Bank PJSC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 December 2017 Attributable to the equity and Tier 1 sukuk holders of the Bank Notes Balance at 1 January 2016 Share capital AED ‘000 Legal reserve AED ‘000 General reserve AED ‘000 Credit risk reserve AED '000 Retained earnings AED ‘000 Proposed dividend AED ‘000 Proposed dividend to charity AED ‘000 3,168,000 2,102,465 1,293,820 400,000 1,858,899 769,022 20,000 Profit for the year - - - - 1,952,264 - - Other comprehensive loss - - - - (4,200) - - Other reserves AED ‘000 (219,557) (472,701) Total AED ‘000 Noncontrolling interest AED ‘000 Total equity AED ‘000 5,672,034 15,064,683 10,548 15,075,231 - 1,952,264 1,294 1,953,558 Tier 1 sukuk AED ‘000 - (476,901) - (476,901) Loss on disposal of investments carried at fair value through other comprehensive income 33 - - - - (8,490) - - 8,490 - Profit paid on Tier 1 sukuk – Listed 34 - - - - (234,158) - - - - (234,158) - (234,158) Profit paid on Tier 1 sukuk – Government of Abu Dhabi 34 - - - - (69,533) - - - - (69,533) - (69,533) - - - - - - - - 466 - - - - - - - - (769,022) - - - - - - (20,000) - - 200,901 - (200,901) - - - - - - - - - - - (30,000) - 30,000 - - - - - - - - - (776,782) 776,782 - - - - - - 3,168,000 2,102,465 1,494,721 400,000 2,487,099 776,782 30,000 5,672,500 15,447,799 10,842 15,458,641 Profit for the year - - - - 2,298,754 - 2,298,754 1,369 2,300,123 Other comprehensive loss - - - - Movement in Tier 1 sukuk - Listed Dividends paid 32 Dividends paid to charity Transfer to reserves 31 Proposed cash dividend to charity Proposed cash dividend to shareholders 32 Balance at 1 January 2017 - (769,022) - (20,000) - - (4,900) - - (683,768) (59,591) - - 466 (64,491) - (1,000) - - - 466 (770,022) (20,000) (64,491) Loss on disposal of investments carried at fair value through other comprehensive income 33 - - - - (177) - - 177 - Profit paid on Tier 1 sukuk – Listed 34 - - - - (234,158) - - - - Profit paid on Tier 1 sukuk – Government of Abu Dhabi 34 - - - - (79,419) - - - - (79,419) Dividends paid 32 - - - - - - - - (776,782) - - - - - - - (30,000) - - 221,726 - (221,726) - - - - - - - - - - - (29,230) - 29,230 - - - - - - - - - (914,530) 914,530 - - - - - - 3,168,000 2,102,465 1,716,447 400,000 3,301,713 914,530 29,230 (743,182) 5,672,500 16,561,703 11,461 16,573,164 Dividends paid to charity Transfer to reserves 31 Proposed cash dividend to charity Proposed cash dividend to shareholders Balance at 31 December 2017 32 The attached notes 1 to 44 form part of these consolidated financial statements. 11 (776,782) - (30,000) (234,158) (750) - (234,158) (79,419) (777,532) (30,000)
17. Abu Dhabi Islamic Bank PJSC ______________________________________________________________________________________________________________________________________________________________________________________________________________ CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 December 2017 Notes OPERATING ACTIVITIES Profit for the year Adjustments for : Depreciation on investment properties Depreciation on property and equipment Amortisation of intangibles Share of results of associates and joint ventures Dividend income Realised loss (gain) on investments carried at fair value through profit or loss Unrealised (gain) loss on investments carried at fair value through profit or loss Gain on disposal of property and equipment Provision for impairment, net Gain on sale of investment properties 22 25 26 6 6 6 11 8 Operating profit before changes in operating assets and liabilities 2017 AED ‘000 2016 AED ‘000 2,300,123 1,953,558 9,345 158,556 54,793 (28,580) (3,149) 13,439 (30,144) (175) 790,360 (23,182) 3,241,386 Decrease (increase) in balances with central banks Decrease (increase) in balances and wakala deposits with Islamic banks and other financial institutions Decrease (increase) in murabaha and mudaraba with financial institutions Decrease in murabaha and other Islamic financing Increase in ijara financing Purchase of investments carried at fair value through profit or loss Proceeds from sale of investments carried at fair value through profit or loss (Increase) decrease in other assets (Decrease) increase in due to financial institutions Increase in depositors’ accounts Increase (decrease) in other liabilities Cash from operations Directors' remuneration paid 95,841 40 Net cash from operating activities INVESTING ACTIVITIES Dividend received Net movement in investments carried at fair value through other comprehensive income Net movement in investments carried at amortised cost Dividends received from an associate Additions in investment in associates and joint ventures Proceeds from sale of investment properties Purchase of property and equipment Proceeds from disposal of property and equipment 6 11,749 174,101 54,756 (35,233) (868) (23,860) 4,858 (214) 969,965 (10,497) 3,098,315 (1,719,748) 1,590,196 285,472 2,435,443 (1,520,449) (10,301,488) 10,204,176 (881,851) (65,294) 1,180,840 54,447 (1,442,747) (240,815) 1,297,212 (2,074,916) (10,507,194) 10,532,578 59,371 87,410 3,889,613 (567,752) 6,318,719 (4,900) 2,411,327 (4,200) 6,313,819 2,407,127 3,149 (13,911) (995,052) 6,667 27,846 (304,915) 483 868 33,466 (1,780,905) 6,667 (17,395) 26,382 (301,620) 267 (1,275,733) (2,032,270) (234,158) (79,419) (781,558) (234,158) (69,533) 466 (1,836,250) (774,057) (1,095,135) (2,913,532) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,942,951 (2,538,675) Cash and cash equivalents at 1 January 6,945,518 9,484,193 10,888,469 6,945,518 25 Net cash used in investing activities FINANCING ACTIVITIES Profit paid on Tier 1 sukuk – Listed Profit paid on Tier 1 sukuk to Government of Abu Dhabi Proceeds from own Tier 1 sukuk – Listed Repurchase of sukuk assets – third issue Dividends paid 34 34 Net cash used in financing activities CASH AND CASH EQUIVALENTS AT 31 DECEMBER 39 Operating cash flows from profit on balances and wakala deposits with Islamic banks and other financial institutions, murabaha and mudaraba with financial institutions, customer financing, Islamic sukuk and customer deposits are as follows: Profit received Profit paid to depositors and sukuk holders The attached notes 1 to 44 form part of these consolidated financial statements. 12 4,859,943 4,727,121 471,378 501,556
18. Abu Dhabi Islamic Bank PJSC ______________________________________________________________________________________________________________________________________________________________________________________________________________ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 1 LEGAL STATUS AND PRINCIPAL ACTIVITIES Abu Dhabi Islamic Bank PJSC (“the Bank”) was incorporated in the Emirate of Abu Dhabi, United Arab Emirates (UAE), as a public joint stock company with limited liability, in accordance with the provisions of the UAE Federal Commercial Companies Law No. (8) of 1984 (as amended) and the Amiri Decree No. 9 of 1997. The Federal Law No. 2 of 2015, concerning Commercial Companies has replaced the existing Federal Law No. 8 of 1984. The Bank and its subsidiaries (“the Group”) carry out full banking services, financing and investing activities through various Islamic instruments such as Murabaha, Istisna’a, Mudaraba, Musharaka, Ijara, Wakalah, Sukuk etc. The activities of the Bank are conducted in accordance with Islamic Shari’a, which prohibits usury as determined by the Fatwa and Shari’a Supervisory Board of the Bank, and within the provisions of the Articles and Memorandum of Association of the respective entities within the Group. In addition to its main office in Abu Dhabi, the Bank operates through its 81 branches in UAE (2016: 86 branches) and 3 overseas branches in Iraq, Qatar and Sudan and subsidiaries in the UAE and the United Kingdom. The consolidated financial statements combine the activities of the Bank’s head office, its branches and subsidiaries. The registered office of the Bank is at P O Box 313, Abu Dhabi, UAE. The consolidated financial statements of the Group were authorised for issue by the Board of Directors on 4 February 2018. 2 DEFINITIONS The following terms are used in the consolidated financial statements with the meanings specified: Murabaha A sale contract, in which the Group sells to a customer a physical asset, goods, or shares already owned and possessed (either physically or constructively) at a selling price that consists of the purchase cost plus a mark-up profit. Istisna’a A sale contract, in which the Group (Al Saanee) sells an asset to be developed using its own materials to a customer (Al Mustasnee) according to pre-agreed upon precise specification, at a specific price, installments dates and to be delivered on a specific date. This developed asset can be either developed directly by the Group or through a subcontractor and then it is handed over to the customer on the pre-agreed upon date. Ijara A lease contract whereby the Group (the Lessor) leases to a customer (the Lessee) a service or the usufruct of an owned or rented physical asset that either exists currently or to be constructed in future (forward lease) for a specific period of time at specific rental installments. The lease contract could be ended by transferring the ownership of a leased physical asset through an independent mode to the lessee. Qard Hasan A non-profit bearing loan that enables the borrower to use the borrowed amount for a specific period of time, at the end of which the same borrowed amounts would be repaid free of any charges or profits. 13
19. Abu Dhabi Islamic Bank PJSC ______________________________________________________________________________________________________________________________________________________________________________________________________________ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 2 DEFINITIONS continued Musharaka A contract between the Group and a customer to entering into a partnership in an existing project (or to be established), or in the ownership of a specific asset, either on ongoing basis or for a limited time, during which the Group enters in particular arrangements with the customer to sell to him/her its share in this partnership until he/she becomes the sole owner of it (diminishing musharaka). Profits are distributed according to the mutual agreement of the parties as stipulated in the contract; however, losses are borne according to the exact shares in the Musharaka capital on a pro-rata basis. Mudaraba A contract between the Group and a customer, whereby one party provides the funds (Rab Al Mal) and the other party (the Mudarib) invests the funds in a project or a particular activity and any generated profits are distributed between the parties according to the profit shares that were pre-agreed upon in the contract. The Mudarib is responsible of all losses caused by his misconduct, negligence or violation of the terms and conditions of the Mudaraba; otherwise, losses are borne by Rab Al Mal. Wakalah A contract between the Group and a customer whereby one party (the principal: the Muwakkil) appoints the other party (the agent: Wakil) to invest certain funds according to the terms and conditions of the Wakala for a fixed fee in addition to any profit exceeding the expected profit as an incentive for the Wakil for the good performance. Any losses as a result of the misconduct or negligence or violation of the terms and conditions of the Wakala are borne by the Wakil; otherwise, they are borne by the principal. Sukuk Certificates which are equal in value and represent common shares in the ownership of a specific physical asset (leased or to be leased either existing or to be constructed in future), or in the ownership of cash receivables of selling an existing-owned asset, or in the ownership of goods receivables, or in the ownership of the assets of Mudaraba or Partnership companies. In all these cases, the Sukuk holders shall be the owners of their common shares in the leased assets, or in the cash receivables, or the goods receivable, or in the assets of the Partnership or the Mudaraba. 3 BASIS OF PREPARATION 3.1 (a) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), general principles of the Shari’a as determined by the Group’s Fatwa and Shari’a Supervisory Board and applicable requirements of the laws of the UAE. 3.1 (b) Accounting convention The consolidated financial statements have been prepared under the historical cost convention except for investments carried at fair value through profit or loss, investments carried at fair value through other comprehensive income, Shari'a compliant alternatives of derivative financial instruments which have been measured at fair value and land, held as property and equipment, which has been carried at revalued amount. The consolidated financial statements have been presented in UAE Dirhams (AED), which is the functional currency of the Bank and all values are rounded to the nearest thousand AED except where otherwise indicated. 14
20. Abu Dhabi Islamic Bank PJSC ______________________________________________________________________________________________________________________________________________________________________________________________________________ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2017 3 BASIS OF PREPARATION continued 3 .1 (c) Basis of consolidation The consolidated financial statements comprise the financial statements of the Bank and those of its following subsidiaries: Activity Abu Dhabi Islamic Securities Company LLC Burooj Properties LLC MPM Properties LLC ADIB Invest 1 Kawader Services LLC ADIB (UK) Limited ADIB Holdings (Jersey) Ltd* ADIB Sukuk Company Ltd* ADIB Sukuk Company II Ltd* ADIB Capital Invest 1 Ltd* ADIB Capital Invest 2 Ltd* Country of incorporation Equity brokerage services Real estate investments Real estate services Equity brokerage services Manpower supply Islamic banking Special purpose vehicle Special purpose vehicle Special purpose vehicle Special purpose vehicle Special purpose vehicle United Arab Emirates United Arab Emirates United Arab Emirates BVI United Arab Emirates United Kingdom British Channel Islands Cayman Island Cayman Island Cayman Island Cayman Island Percentage of holding 2017 2016 95% 100% 100% 100% 100% 100% - 95% 100% 100% 100% 100% 100% - *The Bank does not have any direct holding in these entities and they are considered to be a subsidiary by virtue of control. These consolidated financial statements include the operations of the subsidiaries over which the Bank has control. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting year as the Bank, using consistent accounting policies. All intra-group balances, transactions, income and expenses and gains and losses resulting from intra-group transactions are eliminated in full. Non-controlling interest represent the portion of the net income or loss and net assets of the subsidiaries not held by the Group and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately shareholders’ equity of the Bank. 3.2 CHANGES IN ACCOUNTING POLICIES The accounting policies adopted are consistent with those of the previous financial year except as noted below. During the year the Group has adopted the following new standards / amendments to the standards effective for the annual period beginning on or after 1 January 2017: IAS 7: Statement of Cash Flows (Amendment) was issued in January 2016 with the intention to improve disclosers of financing activities and help users to better understand reporting entities’ liquidity positions. Under the new requirements, entities will need to disclose changes in their liabilities as a result of financing activities such as changes from cash flows and non-cash items. The amendment does not impact the consolidated financial statements of the Group. IAS 12: Income Taxes (Amendment) was issued In January 2016, through issuing amendments to IAS 12, the IASB clarified the accounting treatment of deferred tax assets of Sukuk measured at fair value for accounting, but measured at cost for tax purposes. The amendment does not impact the consolidated financial statements of the Group. 15