Dubai Financial Market (DFM): Consolidated Interim Financial Information - 30 September 2021

Transcription

1. Dubai Financial Market (DFM) P.J.S.C. Condensed interim consolidated financial information for the nine month period ended 30 September 2021
2. Dubai Financial Market (DFM) P.J.S.C. Review report and condensed interim consolidated financial information for the nine month period ended 30 September 2021 Pages Review report on condensed interim consolidated financial information 1 Condensed interim consolidated statement of financial position 2 Condensed interim consolidated statement of income 3 Condensed interim consolidated statement of comprehensive income 4 Condensed interim consolidated statement of changes in equity 5 Condensed interim consolidated statement of cash flows 6 Notes to the condensed interim consolidated financial information 7 - 21
5. Dubai Financial Market (DFM) P.J.S.C. Condensed interim consolidated statement of income (Un-audited) for the nine month period ended 30 September Note Income Trading commission fees Brokerage fees Clearing settlement and depositary fee Listing and market data fee Other fees Operating income Investment income Dividend income Other income Total income Expenses General and administrative expenses Amortisation of intangible assets Interest expense Operating expenses Net profit/(loss) for the period Attributable to: Owners of the Company Non-controlling interest Basic/diluted earnings per share - AED 16 Three month period ended 30 September 2021 2020 AED’000 AED’000 Nine month period ended 30 September 2021 2020 AED’000 AED’000 21,419 3,747 43,639 3,896 83,638 10,959 124,966 11,666 2,045 2,318 903 30,432 16,619 39 47,090 9,028 2,485 1,585 60,633 25,033 4,747 90,413 13,379 7,374 4,811 120,161 55,610 6,857 3,099 185,727 38,716 7,537 4,912 187,797 81,482 9,999 5,326 284,604 (33,869) (14,122) (1,040) (49,031) (1,941) (35,812) (14,122) (900) (50,834) 39,579 (106,424) (42,366) (2,570) (151,360) 34,367 (113,473) (42,366) (2,588) (158,427) 126,177 (634) (1,307) (1,941) 41,115 (1,536) 39,579 38,135 (3,768) 34,367 120,068 6,109 126,177 (0.0001) 0.0051 0.0048 0.0150 The accompanying notes on pages 7 to 21 form an integral part of this condensed interim consolidated financial information. The independent auditors’ report on the review of the condensed interim consolidated financial information is set out on page 1. 3
6. Dubai Financial Market (DFM) P.J.S.C. Condensed interim consolidated statement of comprehensive income (Un-audited) for the nine month period ended 30 September Three month period ended 30 September 2021 2020 AED’000 AED’000 Net profit/(loss) for the period Nine month period ended 30 September 2021 2020 AED’000 AED’000 (1,941) 39,579 34,367 126,177 4,454 26,631 39,302 (92,486) 2,513 66,210 73,669 33,691 3,820 (1,307) 2,513 67,746 (1,536) 66,210 77,437 (3,768) 73,669 27,582 6,109 33,691 Other comprehensive income Items that will not be re-classified to profit or loss Fair value changes on financial assets measured at fair value through other comprehensive income/(loss) (FVOCI) Total comprehensive income for the period Attributable to: Owners of the Company Non-controlling interest The accompanying notes on pages 7 to 21 form an integral part of this condensed interim consolidated financial information. The independent auditors’ report on the review of the condensed interim consolidated financial information is set out on page 1. 4
7. Dubai Financial Market (DFM) P.J.S.C. Condensed interim consolidated statement of changes in equity (Un-audited) for the nine month period ended 30 September 2021 Share capital AED’000 Treasury shares AED’000 Investments revaluation reserve FVOCI AED’000 8,000,000 - (4,364) - (803,542) - 454,272 - 224,424 120,068 7,870,790 120,068 20,576 6,109 7,891,366 126,177 - - (92,486) - - (92,486) - (92,486) - - (92,486) - 120,068 27,582 6,109 33,691 - - - - (152,554) (152,554) - (152,554) 8,000,000 (4,364) 20,441 (875,587) 454,272 (22,539) (20,441) (36) 148,922 (22,539) (36) 7,723,243 26,685 (22,539) (36) 7,749,928 8,000,000 - (4,364) - (841,395) - 468,062 - 152,964 38,135 7,775,267 38,135 25,275 (3,768) 7,800,542 34,367 - - 39,302 - - 39,302 - 39,302 Total comprehensive income/(loss) for 39,302 38,135 the period Appropriation of non-sharia compliant income (Note 20) (30,914) Realised loss on investment 4,213 (4,213) Zakat (36) Other (239) As at 30 September 2021 8,000,000 (4,364) (797,880) 468,062 155,697 The accompanying notes on pages 7 to 21 form an integral part of this condensed interim consolidated financial information. The independent auditors’ report on the review of the condensed interim consolidated financial information is set out on page 1. 77,437 (3,768) 73,669 (30,914) (36) (239) 7,821,515 (118) 21,389 (30,914) (36) (357) 7,842,904 As at 1 January 2020 Net profit for the period Fair value changes on financial assets measured at fair value through other comprehensive loss (FVOCI) Total comprehensive income/(loss) for the period Dividend approved, net of appropriation of non-sharia compliant income (Note 19) Appropriation of non-sharia compliant income (Note 20) Realised loss on investment Zakat As at 30 September 2020 As at 1 January 2021 Net profit/(loss) for the period Fair value changes on financial assets measured at fair value through other comprehensive income (FVOCI) 5 Statutory reserve AED’000 Retained earnings AED’000 Equity attributable to owners of the Company AED’000 Noncontrolling interest AED’000 Total AED’000
8. Dubai Financial Market (DFM) P.J.S.C. Condensed interim consolidated statement of cash flows (Un-audited) for the nine month period ended 30 September Note Cash flows from operating activities Net profit for the period Adjustments for: Depreciation of property and equipment Provision for employees’ end of service benefit Amortisation of intangible assets Interest expense Investment income Dividend income Operating cash flows before changes in operating assets and liabilities (Increase) / decrease in prepaid expenses and other receivables (Decrease) / Increase in payables and accrued expenses Movement in due to related party 6 Employee’s end of service benefit paid Net cash (used in) / generated from operating activities Cash flows from investing activities Purchase of property and equipment Movement in investment deposits Redemption of investments measured at FVOCI and at amortised cost Investment in Sukuk Dividends received Investment deposit income received Net cash (used in) / generated from investing activities Cash flows from financing activities Lease liabilities Dividends paid to shareholders Net cash used in financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 12 Nine month period ended 30 September 2021 2020 AED’000 AED’000 34,367 126,177 17,522 2,011 42,366 2,570 (55,610) (6,857) 17,274 1,600 42,366 2,588 (81,482) (9,999) 36,369 98,524 (3,510) (56,922) 4,541 (19,522) (4,787) (24,309) 29,785 286,625 4,149 419,083 (55) 419,028 (5,833) (254,995) (30,347) (33,876) 214,958 (260,752) 6,857 62,481 (237,284) 21,793 9,999 102,425 69,994 (7,990) (7,990) (11,104) (196,806) (207,910) (269,583) 420,675 151,092 281,112 209,101 490,213 The accompanying notes on pages 7 to 21 form an integral part of this condensed interim consolidated financial information. The independent auditors’ report on the review of the condensed interim consolidated financial information is set out on page 1. 6
9. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information for the nine month period ended 30 September 2021 1 Establishment and operations Dubai Financial Market (DFM) - PJSC (the “Company”) is a public joint stock company incorporated in the Emirate of Dubai – United Arab Emirates, pursuant to decree No. 62 for the year 2007 issued by the Ministry of Economy on February 6, 2007, and is subject to the provisions of the U.A.E. Federal Law No. 2 of 2015 (“Companies law”). The Company received its registration under Federal Law No. 4 of 2000 with the Emirates Securities and Commodities Authority (‘ESCA’) on November 4, 2000. The licensed activities of the Company are trading in financial instruments, acting as commercial, industrial and agricultural holding and trust company, financial investment consultancy, and brokerage in local and foreign shares and bonds. In accordance with its Articles of Association, the Company complies in all its activities, operations and formalities with the provisions of Islamic Shari’a and shall invest its entire fund in accordance with these provisions. The Company’s shares are listed on the Dubai Financial Market (“DFM”). The Company currently operates the Dubai stock exchange, related clearing house and carries out investment activities on its own behalf. The registered address of the Company is Dubai World Trade Center, Sheikh Zayed Road, P.O. Box 9700, Dubai, United Arab Emirates. The ultimate parent and controlling party is the Government of Dubai which owns 80.66 % of DFM through Borse Dubai Limited (the “parent”), a Government of Dubai entity. The condensed interim consolidated financial information incorporates the financial information of Dubai Financial Market (DFM) - PJSC and its subsidiaries (together the “Group”). Details of the subsidiaries are as follows: Company name Activity Country of incorporation Ownership held 100% Dubai Central Clearing and Depository Holding LLC* Holding Company U.A.E Nasdaq Dubai Limited** Electronic Financial Market U.A.E 67% *** *Dubai Central Clearing and Depository Holding LLC has the following subsidiaries: Company name Dubai Clear LLC Dubai Central Securities Depository LLC Activity Country of incorporation Ownership held U.A.E 100% U.A.E 100% Country of incorporation Ownership held U.A.E 100% Securities Central Clearing Service Securities Depository Services **Nasdaq Dubai Limited has the following subsidiary: Company name Nasdaq Dubai Guardian Limited Activity Bare nominee solely on behalf of Nasdaq Dubai Limited ***The remaining 33% is held by Borse Dubai Limited (Note 17). 7
10. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 2 Summary of significant accounting policies 2.1 Basis of preparation This condensed interim consolidated financial information has been prepared in accordance with International Accounting Standard (IAS) 34: Interim Financial Reporting, and applicable provisions of the UAE Federal law No. 2 of 2015 (“UAE Companies Law of 2015”) as amended. Federal Decree Law No. 26 of 2020 which amends certain provisions of Federal Law No. 2 of 2015 on Commercial Companies was issued on 27 September 2020 and the amendments came into effect on 2 January 2021. The Group is in the process of reviewing the new provisions and will apply the requirements thereof no later than one year from the date on which the amendments came into effect. This condensed interim consolidated financial information does not include all the information required for full annual audited consolidated financial statements and should be read in conjunction with the Group’s consolidated financial statements as at and for the year ended 31 December 2020. In addition, results for the nine month period ended 30 September 2021 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2021. The accounting policies applied in this condensed interim consolidated financial information are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 31 December 2020. This condensed interim consolidated financial information has been prepared on the historical cost basis, except for the revaluation of certain financial instruments at FVOCI. The condensed interim consolidated financial information is prepared and presented in United Arab Emirates Dirham (AED) which is the Group’s functional and presentation currency and are rounded off to the nearest thousands (“000”) unless otherwise indicated. 2.2 Application of new and revised International Financial Reporting Standards (“IFRS”) (a) New and revised IFRS adopted in the condensed interim consolidated financial Information The following new and revised IFRS, which became effective for annual periods beginning on or after 1 January 2021, have been adopted in this interim financial information. The application of these revised IFRSs, except where stated, have not had any material impact on the amounts reported for the current and prior periods. • Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – interest rate benchmark (IBOR) reform - The Phase 2 amendments that were issued on 27 August 2020 address issues that arise from the implementation of the reforms, including the replacement of one benchmark with an alternative one. For instruments to which the amortised cost measurement applies, the amendments require entities, as a practical expedient, to account for a change in the basis for determining the contractual cash flows as a result of IBOR reform by updating the effective interest rate using the guidance in paragraph B5.4.5 of IFRS 9. As a result, no immediate gain or loss is recognised. This practical expedient applies only to such a change and only to the extent it is necessary as a direct consequence of IBOR reform, and the new basis is economically equivalent to the previous basis. Insurers applying the temporary exemption from IFRS 9 are also required to apply the same practical expedient. IFRS 16 was also amended to require lessees to use a similar practical expedient when accounting for lease modifications that change the basis for determining future lease payments as a result of IBOR reform (for example, where lease payments are indexed to an IBOR rate). 8
11. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 2 Summary of significant accounting policies (continued) 2.2 Application of new and revised International Financial Reporting Standards (“IFRS”) (continued) (a) New and revised IFRS adopted in the condensed interim consolidated financial Information (continued) • Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – interest rate benchmark (IBOR) reform (continued) The Group has put in place a plan to oversee the approach to LIBOR transition in coordination with international developments. The transition has implications for the Group's borrowing and its stakeholders ranging from legal, financial, technical and operational considerations. The Group expects to commence engaging relevant stakeholders at relevant points over the course of 2021. • Amendment to IFRS 16, ‘Leases’ – Covid-19 related rent concessions - As a result of the coronavirus (COVID-19) pandemic, rent concessions have been granted to lessees. Such concessions might take a variety of forms, including payment holidays and deferral of lease payments. On 28 May 2020, the IASB published an amendment to IFRS 16 that provides an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for such rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as variable lease payments in the period(s) in which the event or condition that triggers the reduced payment occurs. (b) New and revised IFRS in issue but not yet effective and not early adopted • Narrow-scope amendments to IFRS 3, IAS 16, IAS 17 and some annual improvements on IFRS 9 and IFRS 16 (Effective date 1 January 2022) - Amendments to IFRS 3, ‘Business combinations’ update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. Amendments to IAS 16, ‘Property, plant and equipment’ prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. Amendments to IAS 37, ‘Provisions, contingent liabilities and contingent assets’ specify which costs a company includes when assessing whether a contract will be loss-making. Annual improvements make minor amendments to IFRS 9, ‘Financial instruments’, and the Illustrative Examples accompanying IFRS 16, ‘Leases’. • Amendments to IAS 1, Presentation of financial statements’ on classification of liabilities (Effective date 1 January 2023) - These narrow-scope amendments to IAS 1, ‘Presentation of financial statements’, clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date (for example, the receipt of a waiver or a breach of covenant). The amendment also clarifies what IAS 1 means when it refers to the ‘settlement’ of a liability. 9
12. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 2 Summary of significant accounting policies (continued) 2.2 Application of new and revised International Financial Reporting Standards (“IFRS”) (continued) (b) New and revised IFRS in issue but not yet effective and not early adopted (continued) • Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8 (Effective date 1 January 2023) - The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The Group is currently assessing the impact of these standards, interpretations and amendments on the future financial statements and intends to adopt these, if applicable, when they become effective. There are no other applicable new standards and amendments to published standards or IFRS IC interpretations that have been issued but are not effective for the first time for the Group’s financial period beginning on 1 January 2021 that would be expected to have a material impact on the condensed interim consolidated financial information of the Group. 10
13. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 3 Basis of consolidation The condensed interim consolidated financial information incorporates the interim financial information of the Company and the entities controlled by the Group (its subsidiaries, together the “Group”). The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The results of subsidiaries incorporated during the period are included in the condensed interim consolidated statement of income from the effective date of incorporation. Where necessary, adjustments are made to the condensed interim consolidated financial statements of the subsidiaries to bring the accounting policies in line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated on consolidation. 4 Estimates The preparation of condensed interim consolidated financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this condensed interim consolidated financial information, the significant judgments made by management in applying the accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the consolidated financial statements as at and for the year ended 31 December 2020. 4.1 Impact of COVID-19 Since early January 2020, the COVID-19 outbreak has spread across the globe and is causing ongoing disruption to business and economic activity, resulting in substantial government and central bank relief actions and support measures in many countries to protect the economy. There has not been any material impact on the Group’s business performance as of 30 September 2021, however the Company will continue to monitor the situation as it evolves in order to assess any potential financial impact. 5 Financial risk management The Group’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2020. 11
14. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 6 Goodwill and other intangible assets Goodwill AED’000 License to operate as a stock exchange AED’000 2,878,874 2,878,874 2,824,455 2,824,455 Amortization At 1 January 2021 Charge for the period At 30 September 2021 - 790,846 42,366 833,212 At 1 January 2020 Charge for the period At 30 September 2020 - 734,357 42,366 776,723 2,878,874 2,878,874 2,878,874 1,991,243 2,047,732 2,033,609 Cost At 1 January 2020 and 2021 At 30 September 2020 and 2021 Carrying amount At 30 September 2021 At 30 September 2020 At 31 December 2020 Goodwill is tested for impairment annually and when there is an indicator of impairment of the cash generating unit to which goodwill is allocated. DFM as a standalone entity is considered a single cash generating unit for impairment testing purpose. Management of the Company does not believe that there is any impairment of Goodwill as at the reporting date. 12
15. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 7 Financial assets measured at fair value through other comprehensive income (FVOCI) Designated as equity instruments Investment in equity securities Managed funds – Note (7.1) Investment in sukuk – Note (7.2) 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 226,643 250,733 281,534 758,910 199,194 241,321 360,120 800,635 7.1 Managed funds include funds of AED 233 million (31 December 2020: AED 218 million) managed by a shareholder of the parent (Note 10). 7.2 The investment in sukuks are perpetual instruments, callable at the option of the issuers and measured at fair value through other comprehensive income. The sukuks carry profit rates ranging from 3.375% to 5% (31 December 2020: 4.625% to 6.75%) per annum, which is payable at the discretion of the issuers. 7.3 The Group has made an irrevocable election to designate investment in equity securities, managed funds and investment in Tier 1 Bank sukuk as FVOCI at initial recognition as per IFRS 9 and subsequent changes in fair value are presented in Other Comprehensive Income (“OCI”). These are strategic investments which are not held for trading and the group considers this classification to be more relevant. All investments have been assessed and were classified as equity instruments in the underlying entities. The entities were not subject to classification as equity merely because of the puttable exemption in IAS 32. Investments by geographic concentration are as follows: - Within U.A.E. - Outside U.A.E. 8 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 680,896 78,014 758,910 773,619 27,016 800,635 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 294,238 166,075 Investment at amortised cost Investment in sukuks – Note 8.1 8.1 Investment in sukuks in the U.A.E mature in 1-10 years and carry fixed profit rates of 3.2% - 5.112% (31 December 2020: 4.50% - 5.112%) per annum. 13
16. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 9 Investment deposits Current: Investment deposits maturing in less than 3 months Investment deposits maturing up to 1 year but more than 3 months – (Note 9.1) Non-current: Investment deposits maturing above 1 year 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 1,150,000 186,730 1,971,122 3,121,122 2,664,771 2,851,501 226,428 3,347,550 241,054 3,092,555 9.1 Investment deposits are placed with financial institutions in the UAE and carry profit rates ranging from 1.20% to 1.65 % (31 December 2020: 1.50% to 2.90%) per annum. 9.2 Investment deposits of AED 136.73 million (31 December 2020: AED 136.73 million) have been pledged as collateral against unutilised bank overdraft facilities provided to the Group. 9.3 Dividends received from and payable on behalf of companies listed on DFM held in myAccount and iVESTOR card balances as at 30 September 2021 aggregate AED 1,307 million (31 December 2020: AED 1,357 million), which is available for the Company to invest at its discretion in income earning assets such as investments in short term deposits of AED 1,185 million (31 December 2020: AED 1,050 million), investment at amortised cost of AED 101 million (31 December 2020: AED 37 million) and mudarabah and current accounts of AED 21 million (31 December 2020: AED 270 million). As such, the Group assumes an obligation to pay such amounts to the shareholders of the listed companies (refer to Note 15.1). Until this obligation is discharged, the Group recognises the profit on these investments in its statement of income. 9.4 Dividends declared and payable by the Group to the Parent Company amounting to AED 467 million (31 December 2020: AED 467 million) have been invested in investment deposits by the Company, pending distribution to the Parent Company. 10 Related party transactions and balances Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties include associates, joint ventures, holding company, ultimate parent, subsidiaries and key management personnel (KMP) or close family members. The transactions with related parties and balances arising from these transactions are as follows: Nine month period ended 30 September 2021 2020 AED’000 AED’000 (Un-audited) (Un-audited) Transactions during the period Fellow subsidiaries and associates Investment income Interest expense Dividend income Lease payments and other related expenses Interest on lease 21,568 1,034 6,706 6,467 967 14 38,568 990 8,754 6,721 1,257
17. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 10 Related party transactions and balances (continued) The remuneration of directors and other members of key management during the period were as follows: Nine month period ended 30 September 2021 2020 AED’000 AED’000 (Un-audited) (Un-audited) Compensation of key management personnel Short-term benefits General pension and social security Board of Directors - Remuneration to the Nasdaq Dubai Board - Meeting allowance for the Group - DFM Board remuneration Balances (a) 6,863 684 6,450 720 593 492 2,100 709 520 2,100 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 233,008 322,447 206,471 137,195 660,010 218,271 432,655 116,283 321,691 1,245,550 15,673 21,457 16,945 31,524 466,500 12,404 30,490 466,500 Fellow subsidiaries and associates Managed funds managed by a shareholder of the Parent (Note 7) Other financial assets measured at FVOCI (Note 7) Investment at amortised cost (Note 8) Cash and cash equivalents (Note 12) Investment deposits (Note 9) (b) Due to related parties Dubai World Trade Centre – lease liability Parent Expenses paid on behalf of the Group Subordinated loan (Note 10.1) Dividends payable 10.1 The subordinated loan has been provided by Borse Dubai Limited, to Nasdaq Dubai Limited through the Company (Note 1). The subordinated loan is unsecured, has no fixed repayment date and bears interest at market rate and is subordinated to the rights of all other creditors of the subsidiary. 10.2 Investment deposits include AED 100 million (31 December 2020: AED 100 million) placed as collateral with a related party. 15
18. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 11 Prepaid expenses and other receivables Accrued income on investment deposits Central counterparty balances – (Note 11.1) Prepaid expenses Accrued trading commission fees Other receivables Due from brokers VAT receivable on capital expenditure Less: allowance for doubtful debts 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 26,135 89,342 7,696 992 3,107 2,332 2,705 132,309 (1,195) 131,114 34,606 109,815 5,883 1,062 3,005 738 2,634 157,743 (738) 157,005 738 457 1,195 93 645 738 Net movement in allowance for doubtful debts: Opening balance Provision for the period/year Closing balance 11.1 These balances relate to Dubai Clear LLC and Nasdaq Dubai Limited which act as central counterparties for all the trades which are usually settled on a T+2 basis. The balance represents receivable from brokers against unsettled trades at reporting period end. The corresponding payable balance of the same amount has been recorded as a liability as at period end (note 15). 11.2 The Company does not hold any collateral over prepaid expenses and other receivables. 12 Cash and cash equivalents Cash on hand Bank balances: Current accounts Savings accounts (Note 12.1) Mudarabah accounts (Note 12.2) Investment deposits with original maturities not exceeding three months Cash and cash equivalents 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 158 148 11,406 17,837 111,688 141,089 209,694 10 112,823 322,675 10,003 151,092 98,000 420,675 12.1 The rate of return on savings accounts is 0.30% per annum (31 December 2020: 0.40% per annum). 12.2 The rate of return on mudarabah account is 0.07% per annum (31 December 2020: 0.35% per annum). 16
19. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 12 12.3 Cash and cash equivalents (continued) Dividends received from and payable on behalf of companies listed on DFM held in myAccount and iVESTOR card balances as at 30 September 2021 aggregate AED 1,307 million (31 December 2020: AED 1,357 million), which is available for the Company to invest at its discretion in income earning assets such as investments in short term deposits of AED 1,185 million (31 December 2020: AED 1,050 million), investment at amortised cost of AED 101 million (31 December 2020: AED 37 million) and mudarabah and current accounts of AED 21 million (31 December 2020: AED 270 million). As such, the Group assumes an obligation to pay such amounts to the shareholders of the listed companies (refer to note 15.1). Until this obligation is discharged, the Group recognises the profit on these investments in its statement of income. 12.4 At 30 September 2021, the Group has assessed the recoverability of its cash and cash equivalents and has considered the provision for expected credit loss to be immaterial. 13 Share capital Authorised, issued and paid up share capital: 8,000,000,000 shares (31 December 2020: 8,000,000,000 shares) of AED 1 each (31 December 2020: AED 1 each) 14 Reserves (a) Statutory reserve 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 8,000,000 8,000,000 In accordance with the U.A.E. Federal Commercial Companies Law No. 2 of 2015, as amended, the Group has established a statutory reserve by appropriation of 10% of the Company’s net profit for each year which will be increased until the reserve equals 50% of the share capital. This reserve is not available for distribution, except as stipulated by the Law. No allocation to the statutory reserve has been made for the nine month period ended 30 September 2021, as this will be effected at the year-end based on the Company’s results for the year ending 31 December 2021. (b) Investments revaluation reserve The investment revaluation reserve represents accumulated gains and losses arising on the revaluation of financial assets at fair value through other comprehensive income. 17
20. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 15 Payables and accrued expenses 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 947,689 360,000 11,132 15,388 89,342 6,709 21,992 5,628 1,048 804 10,310 30,914 1,500,956 1,004,189 352,374 18,572 18,650 109,815 2,567 22,573 6,071 1,012 1,268 8,470 1,545,561 Dividends payable on behalf of companies listed on the DFM (“myAccount”) (Note 15.1) iVESTOR cards (Note 15.1) Members’ margin deposits Accrued expenses and other payables Central counterparty balances (Note 11) Unearned revenue Brokers’ retention Due to U.A.E Securities and Commodities Authority Zakat VAT payable Lease liabilities Non sharia compliant income (Note 20) 15.1 Dividends received from and payable on behalf of companies listed on DFM held in myAccount and iVESTOR card balances as at 30 September 2021 aggregate AED 1,307 million (31 December 2020: AED 1,357 million), which is available for the Company to invest at its discretion in income earning assets such as investments in short term deposits of AED 1,185 million (31 December 2020: AED 1,050 million), investment at amortised cost of AED 101 million (31 December 2020: AED 37 million) and mudarabah and current accounts of AED 21 million (31 December 2020: AED 270 million). As such, the Group assumes an obligation to pay such amounts to the shareholders of the listed companies. Until this obligation is discharged, the Group recognises the profit on these investments in its statement of income. 16 Earnings per share Three month period ended 30 September 2021 2020 Net profit/(loss) for the period attributable to owners of the Company (AED ‘000) Authorised, issued and paid up share capital - (AED ‘000) Less: Treasury shares (‘000) Earnings per share – AED 17 Nine month period ended 30 September 2021 2020 (634) 41,115 38,135 120,068 8,000,000 (4,237) 7,995,763 (0.0001) 8,000,000 (4,237) 7,995,763 0.0051 8,000,000 (4,237) 7,995,763 0.0048 8,000,000 (4,237) 7,995,763 0.0150 Commitments Commitments for the purchase of property and equipment 18 30 September 2021 AED’000 (Un-audited) 31 December 2020 AED’000 (Audited) 1,536 11,848
21. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 17 Commitments (continued) In 2010, the Company entered into an agreement with Borse Dubai Limited to acquire remaining 33% (2020: 33%) shareholding of Nasdaq Dubai Limited against a consideration of AED 148 million (2020: 148 million). The exercise and completion of its acquisition is contingent upon the mutual agreement of the Company and Borse Dubai Limited and on a date to be mutually agreed between the Company and Borse Dubai Limited. 18 Segment reporting Following the management approach to IFRS 8, operating segments are reported in accordance with the internal reporting provided to the Board of Directors (the chief operating decision-maker), which is responsible for allocating resources to the reportable segments and assesses its performance. The Group is managed as one unit and therefore the Board of Directors are of the opinion that the Group is engaged in a single segment of operating stock exchanges and related clearing house. 19 Dividends payable The Company has not declared any dividends for 2020 but has appropriated non-sharia compliant income of AED 30.9 million for 2020. Dividends declared for 2019 were AED 200 million representing AED 0.025 per share, including non-sharia compliant income of AED 22.5 million for the year ended 31 December 2019 and AED 24.8 million for the year ended 31 December 2018. Unpaid dividends for shareholders other than related party is AED 3 million (2020: AED 3 million). 20 Non Sharia compliant income Non Sharia compliant income of AED 30.9 million relating to 2020 (2020: AED 22.5 million relating to 2019) as approved by the Company’s Sharia and Fatwa Supervisory Board, has been appropriated from retained earnings during the nine month period ended 30 September 2021 and will be distributed by the Group to its shareholders towards disbursement by the shareholders for charitable purposes. Based on the ruling of the Sharia and Fatwa Supervisory Board, it is the sole responsibility of the individual shareholders to donate their respective shares of this amount for charitable purposes. 21 Fair value of financial instruments The Group’s financial assets and financial liabilities comprise of cash and cash equivalents, investment deposits, financial assets measured at fair value through other comprehensive income (FVOCI), investment at amortized cost, subordinated loan, receivables and payables whose maturity is short term. Long term investment deposits carry market rates of return. Consequently, their fair value approximates the carrying value, after taking into account impairment stated in the condensed interim consolidated statement of financial position. The Group has classified fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: • • • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The fair value of financial instruments traded in active markets is based on quoted market prices at the consolidated statement of financial position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. These instruments are included in level 1. Instruments included in level 1 comprise primarily quoted equity investments and investment in sukuks classified as fair value through other comprehensive income. 19
22. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 21 Fair value of financial instruments (continued) The fair value of financial instruments that are not traded in an active market (for example, over-thecounter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. These investments comprise funds, the fair values of which are based on the net asset value provided by the fund managers. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Level 3 assets represent unquoted equity and mutual fund investments whose fair value is determined based on varying unobservable assumptions which depend on a broad range of macroeconomic factors. The carrying values of these investments are adjusted as follows: • Managed funds - based on the net asset value derived from the EBITDA/PE multiple or value per share provided by the fund managers. • Unquoted equity investments and other financial instruments - using the latest available net book value and market approach based on prevailing secondary market prices of similar instruments. There were no changes in valuation techniques during the period. The following table presents the Group’s assets and liabilities that are measured at fair value at 30 September 2021 and 31 December 2020. Level 1 AED’000 Financial assets at fair value through other comprehensive income - Equities - Managed funds - Investment in sukuk Total 220,217 281,534 501,751 Level 1 AED’000 Financial assets at fair value through other comprehensive income - Equities - Managed funds - Investment in sukuk Total 193,872 360,120 553,992 30 September 2021 (Un-audited) Level 2 Level 3 AED’000 AED’000 6,426 250,733 257,159 31 December 2020 (Audited) Level 2 Level 3 AED’000 AED’000 5,322 241,321 246,643 There are no transfers between Level 1 and Level 2 during the period. 20 - - Total AED’000 226,643 250,733 281,534 758,910 Total AED’000 199,194 241,321 360,120 800,635
23. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the nine month period ended 30 September 2021 21 Fair value of financial instruments (continued) The fair value of the following financial assets and liabilities approximate their carrying amount due to their short-term nature: cash and cash equivalents, investment deposits, accrued income on investment deposits, accrued trading commission fees, central counterparty balances, due from brokers, other receivables, brokers' retention, due to U.A.E Securities and Commodities Authority, dividends payable on behalf of companies listed on the DFM, iVESTOR cards, members' margin deposits, accrued expenses and other payables, dividends payable, due to related parties and subordinated loan. The following table summarises the amortized cost and fair value of the sukuk as at 30 September 2021 and 31 December 2020: 30 September 2021 (Un-audited) Carrying amount Fair value AED’000 AED’000 Investment at amortised cost Investment in sukuk 294,238 304,835 31 December 2020 (Audited) Carrying amount Fair value AED’000 AED’000 Investment at amortised cost Investment in sukuk 22 166,075 168,734 Subsequent events There have been no events subsequent to the statement of financial position date that would significantly affect the amounts reported in the condensed interim consolidated financial information as at and for the nine month period ended 30 September 2021. 23 Approval of the condensed interim consolidated financial information The condensed interim consolidated financial information for the nine month period ended 30 September 2021 have been approved by the Board of Directors and authorized for issue on 27 October 2021. 21