Dubai Financial Market (DFM): Interim Consolidated Financial Statements - 31 March 2022

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1. Dubai Financial Market (DFM) P.J.S.C. Condensed interim consolidated financial information for the three month period ended 31 March 2022
2. Dubai Financial Market (DFM) P.J.S.C. Review report and condensed interim consolidated financial information for the three month period ended 31 March 2022 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 three month period ended 31 March Note Three month period ended 31 March 2022 2021 AED’000 AED’000 Income Trading commission fees Brokerage fees Clearing settlement and depositary fees Listing and market data fees Other fees Operating income 43,613 3,428 6,601 2,347 593 56,582 33,616 3,568 5,874 2,462 604 46,124 Investment income Dividend income Other income Profit income Total income 14,994 6,481 205 1,169 79,431 20,020 5,002 2,921 74,067 (37,145) (14,122) (626) (51,893) (37,352) (14,122) (749) (52,223) (1,169) (53,062) 26,369 (52,223) 21,844 27,455 (1,086) 26,369 23,429 (1,585) 21,844 0.003 0.003 16 Expenses General and administrative expenses Amortisation of intangible assets Interest expense Operating expenses 16 Profit expense Total expenses Net profit for the period Attributable to: Owners of the Company Non-controlling interest 17 Basic/diluted earnings per share - AED 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 three month period ended 31 March Three month period ended 31 March 2022 2021 AED’000 AED’000 Net profit for the period 26,369 21,844 Fair value changes on financial assets measured at fair value through other comprehensive income (FVOCI) 67,564 4,399 Total comprehensive income for the period 93,933 26,243 95,019 (1,086) 93,933 27,828 (1,585) 26,243 Other comprehensive income Items that will not be re-classified to profit or loss 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 three month period ended 31 March 2022 As at 1 January 2021 Net profit for the period Fair value changes on financial assets measured at fair value through other comprehensive income (FVOCI) Total comprehensive income for the period Appropriation of non-sharia compliant income (Note 21) Realised loss on investment Zakat Other As at 31 March 2021 As at 1 January 2022 Net profit for the period Fair value changes on financial assets measured at fair value through other comprehensive income (FVOCI) Total comprehensive income for the period Dividends declared, net of appropriation of non-sharia compliant oncome (Note 20) Appropriation of non-sharia compliant income (Note 21) Zakat As at 31 March 2022 Share capital AED’000 Treasury shares AED’000 Investments revaluation reserve FVOCI AED’000 8,000,000 - (4,364) - (841,395) - 468,062 - 152,964 23,429 7,775,267 23,429 25,275 (1,585) 7,800,542 21,844 - - 4,399 - - 4,399 - 4,399 - - 4,399 - 23,429 27,828 (1,585) 26,243 8,000,000 (4,364) 4,213 (832,783) 468,062 (30,914) (4,213) (36) (239) 140,991 (30,914) (36) (239) 7,771,906 (118) 23,572 (30,914) (36) (357) 7,795,478 8,000,000 - (4,364) - (742,729) - 478,445 - 211,322 27,455 7,942,674 27,455 20,458 (1,086) 7,963,132 26,369 - - 67,564 - - 67,564 - 67,564 - - 67,564 - 27,455 95,019 (1,086) 93,933 - - - - (192,135) (192,135) - (192,135) 8,000,000 (4,364) (675,165) 478,445 (16,824) (38) 29,780 (16,824) (38) 7,828,696 19,372 (16,824) (38) 7,848,068 Statutory reserve AED’000 Retained earnings AED’000 Equity attributable to owners of the Company AED’000 Noncontrolling interest AED’000 Total AED’000 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. 5
8. Dubai Financial Market (DFM) P.J.S.C. Condensed interim consolidated statement of cash flows (Un-audited) for the three month period ended 31 March 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 Profit income Profit expense Interest expense Investment income Dividend income Operating cash flows before changes in operating assets and liabilities 26,369 6 Increase in prepaid expenses and other receivables Increase in payables and accrued expenses Increase in due to related parties Employees’ end of service benefit paid Net cash 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 measured at amortised cost Dividends received Investment deposit income received Net cash generated from investing activities Cash flows from financing activities Lease liabilities Dividends paid to shareholders Net cash used in financing activities Net 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 Three month period ended 31 March 2022 2021 AED’000 AED’000 12 5,650 523 14,122 (1,169) 1,169 626 (14,994) (6,481) 21,844 5,843 1,560 14,122 749 (20,020) (5,002) 25,815 19,096 (7,750) 764,932 1,473 784,470 (632) 783,838 (8,164) 53,854 2,123 66,909 (391) 66,518 (2,410) 369,161 (3,691) 5,818 4,726 (37,097) 6,481 10,254 351,115 104,607 13,838 120,572 (7,747) (100,000) (107,747) (6,299) (6,299) 1,027,206 258,990 1,286,196 180,791 420,675 601,466 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 three month period ended 31 March 2022 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 UAE Federal Decree Law No. 32 of 2021 (“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 funds 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 three month period ended 31 March 2022 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 Decree Law No. 32 of 2021. On 20 September 2021, the UAE Federal Decree Law No. 32 of 2021 ("Companies Law") was issued and came into effect on 2 January 2022 which repealed the UAE Federal Law No. 2 of 2015. The company has 12 months from 2 January 2022 to comply with the provisions of the UAE Federal Decree Law No 32 of 2021. 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 2021. In addition, results for the three month period ended 31 March 2022 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2022. 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 2021. 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 2022, 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. (a) New and revised IFRS adopted in the condensed interim consolidated financial Information • Narrow-scope amendments to IFRS 3, IAS 16, IAS 17 and some annual improvements on IFRS 9 and IFRS 16 - 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. 8
11. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 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) • Narrow-scope amendments to IFRS 3, IAS 16, IAS 17 and some annual improvements on IFRS 9 and IFRS 16 (continued) Annual improvements make minor amendments to IFRS 9, ‘Financial instruments’, and the Illustrative Examples accompanying IFRS 16, ‘Leases’. (b) New and revised IFRS in issue but not yet effective and not early adopted • 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. • Amendments to IAS 1, Practice statement 2 and IAS 8 (Deferred until accounting periods starting not earlier than 1 January 2024) - The IASB amended IAS 1, ‘Presentation of Financial Statements’, to require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendment also clarifies that accounting policy information is expected to be material if, without it, the users of the financial statements would be unable to understand other material information in the financial statements. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. However, if it is disclosed, it should not obscure material accounting policy information. To support this amendment, the Board also amended IFRS Practice Statement 2, ‘Making Materiality Judgements’, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The amendment to IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period. 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 Committee) interpretations that have been issued but are not effective for the first time for the Group’s financial period beginning on 1 January 2022 that would be expected to have a material impact on the condensed interim consolidated financial information of the Group. 9
12. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 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 2021. 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 31 March 2022, however the Company will continue to monitor the situation 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 2021. 10
13. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 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 2022 Charge for the period At 31 March 2022 - 847,335 14,122 861,457 At 1 January 2021 Charge for the period At 31 March 2021 - 790,846 14,122 804,968 2,878,874 2,878,874 2,878,874 1,962,998 2,019,487 1,977,120 Cost At 1 January 2021 and 2022 At 31 March 2021 and 2022 Carrying amount At 31 March 2022 At 31 March 2021 At 31 December 2021 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. 11
14. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 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) 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 297,565 308,463 274,758 880,786 257,564 275,711 279,946 813,221 7.1 Managed funds include funds of AED 291 million (31 December 2021: AED 258 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 2021: 3.375% to 5%) 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 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 802,328 78,458 880,786 734,050 79,171 813,221 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 326,700 296,071 Investments at amortised cost Investment in sukuks – Note 8.1 8.1 Investment in sukuks in the U.A.E mature in 1-9 years and carry fixed profit rates of 2.591% 5.112% (31 December 2021: 3.20% - 5.112%) per annum. 12
15. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 9 Investment deposits 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 31 March 2022 AED’000 (Un-audited) 980,000 31 December 2021 AED’000 (Audited) 371,117 1,686,122 2,666,122 2,660,000 3,031,117 218,059 2,884,181 222,225 3,253,342 9.1 Investment deposits are placed with financial institutions in the UAE and carry profit rates ranging from 1.15% to 1.60 % (31 December 2021: 1.20% to 1.65%) per annum. 9.2 Investment deposits of AED 36.73 million (31 December 2021: 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 31 March 2022 aggregate AED 1,412 million (31 December 2021: AED 1,151 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 975 million (31 December 2021: AED 1,010 million), investment at amortised cost of AED 98 million (31 December 2021: AED 100 million) and mudarabah and current accounts of AED 339 million (31 December 2021: AED 41 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 Investment deposits include AED 430 million (31 December 2021: AED 430 million) which represents funds from margin deposits which have been placed by a related party. Refer to Notes 10.1 and 15.2. 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: Three month period ended 31 March 2022 2021 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 4,529 352 6,253 2,220 221 13 8,754 330 5,002 2,253 322
16. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 10 Related party transactions and balances (continued) The remuneration of directors and other members of key management during the period were as follows: Three month period ended 31 March 2022 2021 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 3,908 214 2,019 240 198 213 2,118 198 144 2,100 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 290,738 390,513 200,866 1,125,936 473,554 257,986 352,957 208,654 155,521 584,273 Dubai World Trade Centre – lease liability Member margin deposits (Note 10.1 and 15.2) 8,075 450,348 14,316 450,000 Parent Expenses paid on behalf of the Group Subordinated loan (Note 10.2) Dividends payable 12,548 32,189 193,590 11,076 31,837 100,000 Balances (a) Fellow subsidiaries and associates Managed funds managed by a shareholder of the Parent (Note 7) Other financial assets measured at FVOCI (Note 7) Investments at amortised cost (Note 8) Cash and cash equivalents (Note 12) Investment deposits (Note 9) (b) Due to related parties 10.1 Member margin deposits comprise of investment deposits of AED 430 million (31 December 2021: AED 430 million) and mudarabah account of AED 20.35 million (31 December 2021: AED 20 million) placed by a related party (Note 15.2). 10.2 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. 14
17. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 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 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 25,990 238,004 5,988 2,723 6,794 4,471 2,131 286,101 (1,440) 284,661 19,518 92,340 5,948 1,003 2,542 1,998 2,641 125,990 (1,215) 124,775 1,215 225 1,440 738 477 1,215 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 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 162 140 63,991 21 1,067,022 1,131,196 16,258 2,165 140,422 158,985 155,000 1,286,196 100,005 258,990 12.1 The rate of return on savings accounts is 0.30% per annum (31 December 2021: 0.30% per annum). 12.2 The rate of return on mudarabah account is 0.08% per annum (31 December 2021: 0.09% per annum). 15
18. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 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 31 March 2022 aggregate AED 1,412 million (31 December 2021: AED 1,151 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 975 million (31 December 2021: AED 1,010 million), investment at amortised cost of AED 98 million (31 December 2021: AED 100 million) and mudarabah and current accounts of AED 339 million (31 December 2021: AED 41 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 31 March 2022 and 31 December 2021, the Group has assessed the recoverability of its cash and cash equivalents and 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 2021: 8,000,000,000 shares) of AED 1 each (31 December 2021: AED 1 each) 14 Reserves (a) Statutory reserve 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 8,000,000 8,000,000 In accordance with the UAE Federal Decree Law No. 32 of 2021, 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 three month period ended 31 March 2022, as this will be effected at the year-end based on the Company’s results for the year ending 31 December 2022. (b) Investment revaluation reserve - FVOCI The investment revaluation reserve represents accumulated gains and losses arising on the revaluation of financial assets at fair value through other comprehensive income. 16
19. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 15 Payables and accrued expenses Dividends payable on behalf of companies listed on the DFM (“myAccount”) (Note 15.1) iVESTOR cards (Note 15.1) Members’ margin deposits (Note 15.2) 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 Customer initial public offering (“IPO”) subscriptions (Note 15.3) Non sharia compliant income (Note 21) 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 1,034,858 377,771 499,466 19,418 238,004 17,803 21,518 15,954 1,086 1,912 7,716 820,010 330,921 460,549 22,064 92,340 4,377 21,917 315 1,048 4,271 9,945 440,656 2,676,162 30,914 1,798,671 15.1 Dividends received from and payable on behalf of companies listed on DFM held in myAccount and iVESTOR card balances as at 31 March 2022 aggregate AED 1,412 million (31 December 2021: AED 1,151 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 975 million (31 December 2021: AED 1,010 million), investment at amortised cost of AED 98 million (31 December 2021: AED 100 million) and mudarabah and current accounts of AED 339 million (31 December 2021: AED 41 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. 15.2 Clearing members are required to provide margins in respect of their clearing and settlement obligations to the Group. Margins are held in segregated accounts in the name of DFM at clearing banks. Margins provided by clearing members are used by the Group towards discharging the clearing members’ obligations to the Group in the event of default by the clearing member in connection with trade settlements. Refer to Notes 9.4 and 10.1. 15.3 Customer IPO subscriptions represent funds payable to the Government of Dubai on the IPO of its investment in DEWA and the refund of excess subscription amounts to customers on allotment of DEWA shares. 16 Profit income and profit expense The Group has incurred a profit expense of AED 1.169 million (31 March 2021: Nil) on the members’ margin deposits (Note 15) which is placed with the Group at an equivalent rate of profit. 17
20. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 17 Earnings per share Three month period ended 31 March 2022 2021 (Un-audited) (Un-audited) Net profit for the period attributable to owners of the Company (AED ‘000) Authorised, issued and paid up share capital - (AED‘000) Less: Treasury shares (‘000) Number of shares issued (‘000) Earnings per share – AED 18 27,455 8,000,000 (4,237) 7,995,763 0.003 23,429 8,000,000 (4,237) 7,995,763 0.003 Commitments Commitments for the purchase of property and equipment 31 March 2022 AED’000 (Un-audited) 31 December 2021 AED’000 (Audited) 712 1,179 In 2010, the Company entered into an agreement with Borse Dubai Limited to acquire remaining 33% (31 December 2021: 33%) shareholding of Nasdaq Dubai Limited against a consideration of AED 148 million (31 December 2021: 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. 19 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. 20 Dividends payable The Company has declared dividends for 2021 of AED 240 million representing AED 0.03 per share including non sharia compliant income of AED 16.8 million for the year ended 31 December 2021 (31 December 2021: non sharia compliant income of AED 30.9 million for the year ended 31 December 2020). The Company did not declare any dividends for the year ended 31 December 2020. Unpaid dividends to shareholders other than related parties is AED 49.4 million (31 December 2021: AED 3 million). 21 Non Sharia compliant income Non Sharia compliant income of AED 16.8 million relating to 2021 (2021: AED 30.9 million relating to 2020) as approved by the Company’s Sharia and Fatwa Supervisory Board, has been appropriated from retained earnings during the three month period ended 31 March 2022 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. 18
21. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 22 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), investments 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. 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. 19
22. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 22 Fair value of financial instruments (continued) The following table presents the Group’s assets and liabilities that are measured at fair value at 31 March 2022 and 31 December 2021 . Level 1 AED’000 Financial assets at fair value through other comprehensive income - Equities - Managed funds - Investment in sukuk Total 291,138 274,758 565,896 Level 1 AED’000 Financial assets at fair value through other comprehensive income - Equities - Managed funds - Investment in sukuk Total 251,137 279,946 531,083 31 March 2022 (Un-audited) Level 2 Level 3 AED’000 AED’000 6,427 308,463 314,890 - 31 December 2021 (Audited) Level 2 Level 3 AED’000 AED’000 6,427 275,711 282,138 - Total AED’000 297,565 308,463 274,758 880,786 Total AED’000 257,564 275,711 279,946 813,221 There are no transfers between Level 1 and Level 2 during the period. 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 sukuks as at 31 March 2022 and 31 December 2021: 31 March 2022 (Un-audited) Carrying amount Fair value AED’000 AED’000 Investments at amortised cost Investment in sukuk 326,700 332,513 31 December 2021 (Audited) Carrying amount Fair value AED’000 AED’000 Investments at amortised cost Investment in sukuk 296,071 20 304,092
23. Dubai Financial Market (DFM) P.J.S.C. Notes to the condensed interim consolidated financial information (continued) for the three month period ended 31 March 2022 23 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 three month period ended 31 March 2022. 24 Approval of the condensed interim consolidated financial information The condensed interim consolidated financial information for the three month period ended 31 March 2022 have been approved by the Board of Directors and authorized for issue on 28 April 2022. 21