Masraf Al-Rayan: Invitation to the Ordinary General Assembly Meeting - 27 February 2018

Transcription

1. Invitation to the Ordinary General Assembly Meeting Greetings , The Board of Directors of Masraf Al Rayan has the honour to invite all shareholders to the annual Ordinary General Assembly Meeting that will be held at 5.30 p.m. on Tuesday, 27 February 2018 in Al Mirqab Ballroom at Four Seasons Hotel Doha. In case the required quorum is not reached in the first meeting, a second meeting will be held on Wednesday, 7 March 2018 at 4:00 pm at the same venue. Message from the Chairman & Managing Director Dear Shareholders, Greetings, On behalf of the members of the Board of Directors, I would like to welcome you all and present to you the financial report for the year ended 31 December 2017. The past year, given the circumstances, was truly challenging; however, Masraf Al Rayan managed to grow steadily - thanks to the sensible strategy set by the Board of Directors and the effort exerted by the staff and management, to deliver strong results and maintain its local leadership status among banks within Qatar and the region. Masraf Al Rayan achieved these results with the support of the Qatari economy, which grew by 2.3% in 2017 and with the prudent economic measures taken by the insightful leadership of the State of Qatar. Masraf Al Rayan announced its financial results for 2017 - achieving a growth in operational profits for the financial year 2017, realizing 12.5% growth on its total assets, 6.6% growth in financing activities, and 7.8% growth in customer deposits, over comparable periods in 2016. The total shareholders' equity before distribution reached QR 13,191 million. All these clearly disclose the constant ascending performance of the Bank. Net profit for the fiscal year 2017 amounted to QR 2,028 million, a slight decrease of 2.3% over the previous year due to non-operating and non-recurring profits realized from associates during 2016; otherwise, it would have been a positive growth of 2.3% despite recognition of impairment losses on financing assets and investments. Masraf Al Rayan maintained commendable financial indicators and credit ratings. The credit rating for the long-term issue of Masraf Al Rayan remains at A1 as per Moody's Global Investors Services. At its meeting held on 16 January 2018, the Board of Directors recommended a cash dividend of QR 2 per share, or 20% of the paid-up capital, and we hereby present this recommendation to your respected assembly for approval. The Board of Directors and the Executive Management always work hard to pursue the best interests of Masraf Al Rayan shareholders through a system of well-engaged strategies studying different low risk business opportunities with due diligence, care and attentiveness. With regard to human resources and training, the senior management at Masraf Al Rayan pays the utmost attention to the training and development of employees in general, with a particular focus on Qatari staff. The Bank's departments work in an integrated and meticulous manner to raise the competencies of its professional and administrative staff in cooperation with various local agencies and training centers. The Bank supports local universities and Qatari schools specialized in banking and business management by providing students with vocational training opportunities as part of the Bank’s social responsibility to develop a promising homegrown banking generation. Masraf Al Rayan continues to support many sporting, charitable and social activities aimed at building a better society. Masraf Al Rayan is always keen to implement the principles of good corporate governance that facilitate the adoption of sound decisions in order to deal with exceptional circumstances, and to maintain the best and utmost contemporary applications of good governance. This will, in turn, enhance control over how to achieve the objectives and protect shareholders and stakeholders and enhance market confidence. Finally, on behalf of the Board of Directors of Masraf Al Rayan, I would like to extend my sincere thanks and gratitude to His Highness Sheikh Tamim Bin Hamad Al Thani, the Emir of the State of Qatar, for his cautious, astute, and sensible vision and directions to guide the success of the economy of the State of Qatar. I would also like to thank His Excellency Sheikh Abdullah Bin Saud Al Thani, the Governor of Qatar Central Bank and His Excellency Sheikh Fahad Bin Faisal Al-Thani, Deputy Governor of Qatar Central Bank for their diligent work to provide conditions conducive for maintaining liquidity and financial stability in Qatar. I also extend my thanks and appreciation to Masraf Al Rayan shareholders and customers for their relationship and support, and to the executive management and the staff who exert outstanding efforts to continue to achieve good results and who bear the responsibility to achieve even better results in the years to come. Dr. Hussain Ali Al Abdulla Chairman & Managing Director Agenda 1. Presentation and approval of the Board of Directors’ Report on the activities of Masraf Al Rayan and its financial position for the fiscal year that ended on 31st December 2017 and the future plan of the Bank for the year 2018. 2. Presentation of the Shari’ah Supervisory Board report on compliance of Masraf Al Rayan to Shari’ah rules for the fiscal year that ended on 31st December 2017. 3. Discussion and approval of the External Auditors’ Report on the Balance Sheet and Income Statement of Masraf Al Rayan as presented by the Board of Directors for the fiscal year that ended on 31st December 2017. 4. Discussion and approval of the financial Statements for Masraf Al Rayan for the fiscal year that ended on 31st December 2017. 5. Discussion and approval of the proposals of the Board of Directors regarding appropriations and cash dividend of QR 2.00 per share, representing 20% of the paid-up capital for the fiscal year 2017. 6. Discussion and approval of the Corporate Governance Report of Masraf Al Rayan for the year 2017. 7. Discussion and approval of absolving the Chairman and Members of the Board of Directors from all responsibilities for the fiscal year that ended on 31st December 2017, fixing their remuneration for the year that ended on 31st December 2017 and approve the new guide of rules for compensation and remuneration of the Board of Directors. 8. Appointing the External Auditors of Masraf Al Rayan for the fiscal year 2018 and approve their fees. Notes 1. All shareholders are requested to be present at the meeting venue one hour before the start time of the meeting, to register their attendance and to receive the participation form. 2. If you are unable to attend the meeting for any reason, please authorize another shareholder to attend the meeting on your behalf, using the proxy form over leaf, duly signed by you. In case of the Company, the form must be signed by the authorized person(s) and company stamp must be affixed. 3. It is not permitted to grant proxy to a non-shareholder of the Bank or to a member of the Board of Directors. The number of shares held by a proxy holder must not exceed 5% of the total Bank’s share (37,500,000 shares). 4. A statement will be prepared containing details mentioned in Article No. 122 of the Commercial Companies Law No. 11 of year 2015. These details include remuneration granted to the Chairman and Members of the Board of Directors in cash and in kind as well as their bonuses and the amounts spent on advertisement and donations. This statement will be made available at the Shareholders’ Affairs Unit of Masraf Al Rayan one week prior to the General Assembly Meeting. 5. This invitation shall be considered as a legal invitation for all shareholders without the need for sending private invitations through the mail in accordance with Law No. (11) for 2015.
2. Consolidated Financial Statements For The Year Ended 31 December 2017 INDEPENDENT AUDITOR ’S REPORT To the Shareholders of Masraf Al Rayan (Q.P.S.C.) Report on the Audit of the Consolidated Financial Statements Opinion We have audited the accompanying consolidated financial statements of Masraf Al Rayan (Q.P.S.C.) (the ‘Bank’) and its subsidiaries (together the ‘Group’), which comprise the consolidated statement of financial position as at 31 December 2017, the consolidated statements of income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2017, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Financial Accounting Standards (FAS) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the applicable provisions of Qatar Central Bank regulations (‘QCB regulations’). If, based on the work we have performed on the other information that we have obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors for the Consolidated Financial Statements The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with FAS issued by AAOIFI and QCB regulations, and for such internal control as the Board of Directors determines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the Bank’s consolidated financial statements in the State of Qatar, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or override of internal control. Impairment of financing assets We focused on this area because: • Financing assets are QAR 72,097.1 million representing 70.0 percent of the Group’s total assets as at 31 December 2017, hence a material portion of the statement of financial position. The net impairment charge on financing assets during the year was QAR 107.8 million. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors. • • Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. The Group makes complex and subjective judgments over both timing of recognition of impairment and the estimation of the amount of such impairment. As part of an audit in accordance with ISA, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: How the matter was addressed in our audit Our audit procedures in this area included, among others: • Our team used their local knowledge to assess the trends in their local credit environment and considered the likely impact on the Group’s financing portfolio to focus their testing on key risk areas. • For the corporate portfolio: – we tested the key controls over the credit grading and monitoring process; – we tested the governance controls over the impairment processes, including the continuous re-assessment by the Group that impairment policies remain appropriate for the risks within the Group’s financing assets portfolio; – we performed detailed credit assessments of a sample of performing and non-performing financing assets in line with QCB regulations; – as part of our credit assessments for these selected financing assets, we critically challenged the reasonableness of the forecast of recoverable cash flows, realization of collateral and other possible sources of repayment. We tested the consistency of key assumptions and compared them to progress against business plans and our own understanding of the relevant industries and business environments. We also agreed them where possible to externally derived evidence. • • For the retail portfolio, the impairment process is based on historical payment performance of each segment within the portfolio, adjusted for current market and economic conditions. We tested the accuracy of key variables relevant for the retail financing portfolio (e.g. year-end balances, repayment history, past-due status) and we assessed the appropriateness of the impairment calculation methodology. We evaluated whether the output is consistent with historical payment performance, and we challenged the appropriateness of the Group’s adjustments to reflect current market and economic conditions. We assessed the adequacy of the Group’s disclosure in relation to impairment of financing assets by reference to the requirements of the relevant accounting standards and QCB regulations. Other Information The Board of Directors is responsible for the other information. The other information comprises the information included in the Bank’s annual report (‘Annual Report’), but does not include the Bank’s consolidated financial statements and our auditor’s report thereon. Prior to the date of this auditor’s report, we obtained the report of the Board of Directors which forms part of the Annual Report, and the remaining sections of the Annual Report are expected to be made available to us after that date. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above, and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2017 QAR ’000 2016 QAR ’000 2,799,819 3,311,900 72,097,080 23,423,469 520,287 159,951 636,466 3,126,085 5,692,239 67,634,561 14,012,110 508,560 148,194 408,986 102,948,972 LIABILITIES Due to banks Customer current accounts Other liabilities We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirements We have obtained all the information and explanations we considered necessary for the purposes of our audit. The Bank has maintained proper accounting records and its consolidated financial statements are in agreement therewith. We have read the report of the Board of Directors to be included in the Annual Report, and the financial information contained therein is in agreement with the books and records of the Bank. We are not aware of any violations of the applicable provisions of the Qatar Central Bank Law No. 13 of 2012 and of the Qatar Commercial Companies Law No. 11 of 2015 or the terms of the Articles of Association and the amendments thereto having occurred during the year which might have had a material effect on the Bank’s consolidated financial position or performance as at and for the year ended 31 December 2017. 16 January 2018 Doha State of Qatar Gopal Balasubramaniam KPMG Qatar Auditors’ Registry No. 251 Licensed by QFMA: External Auditors License No. 120153 CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2017 QAR ’000 2016 QAR ’000 Income from financing activities Income from investing activities 3,100,667 792,002 2,620,627 533,918 Total income from financing and investing activities 3,892,669 3,154,545 Fee and commission income Fee and commission expense 278,647 (4,913) 314,288 (1,765) Net fee and commission income 273,734 312,523 91,530,735 Foreign exchange gain Share of results of associates Gain on sale of investment in an associate Other income 142,527 28,203 – 9,164 133,926 52,377 93,071 8,599 25,123,319 6,620,840 1,904,529 19,059,705 10,533,627 1,573,592 TOTAL INCOME 4,346,297 3,755,041 TOTAL LIABILITIES 33,648,688 31,166,924 EQUITY OF INVESTMENT ACCOUNT HOLDERS 55,910,346 47,490,298 Staff costs Depreciation Other expenses Finance expense (327,698) (16,865) (232,621) (494,812) (284,914) (16,318) (161,465) (356,390) 7,500,000 2,065,741 1,507,567 3,074 (7,519) 113,001 2,009,007 7,500,000 1,862,926 1,345,733 1,983 (14,942) 107,146 1,902,070 TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK Non-controlling interests 13,190,871 199,067 12,704,916 168,597 TOTAL EQUITY 13,389,938 12,873,513 102,948,972 91,530,735 ASSETS Cash and balances with Qatar Central Bank Due from banks Financing assets Investment securities Investment in associates Fixed assets Other assets TOTAL ASSETS LIABILITIES, EQUITY OF INVESTMENT ACCOUNT HOLDERS AND EQUITY EQUITY Share capital Legal reserve Risk reserve Fair value reserves Foreign currency translation reserve Other reserves Retained earnings TOTAL LIABILITIES, EQUITY OF INVESTMENT ACCOUNT HOLDERS AND EQUITY These consolidated financial statements were approved by the Board of Directors on 16 January 2018 and were signed on its behalf by: Dr. Hussain Ali Al-Abdulla Chairman & Managing Director Adel Mustafawi Group Chief Executive Officer TOTAL EXPENSES (1,071,996) (819,087) Net impairment losses on financing assets Net impairment losses on investment securities (107,818) (5,621) (1,551) (1,127) PROFIT FOR THE YEAR BEFORE RETURN TO INVESTMENT ACCOUNT HOLDERS Less: Return to investment account holders 3,160,862 (1,115,406) 2,933,276 (860,916) PROFIT BEFORE TAX FOR THE YEAR Tax (expense) / credit 2,045,456 (4,719) 2,072,360 3,695 NET PROFIT FOR THE YEAR 2,040,737 2,076,055 Net profit for the year attributable to: Equity holders of the Bank Non-controlling interests 2,028,145 12,592 2,075,286 769 2,040,737 2,076,055 2.704 2.767 BASIC AND DILUTED EARNINGS PER SHARE (QAR)