National Takaful Company (Watania): Condensed Interim Financial Information - 31 March 2017

Transcription

1. National Takaful Company (Watania) PJSC Condensed interim financial information For the period ended 31 March 2017 Principal business address: National Takaful Company (Watania) PJSC P 0 Box: 6457 Abu Dhabi UAE
2. National Takaful Company (Watania) PJSC Condensed interim financial information Contents Page Directors' statement Independent auditors' report on the review of condensed interim financial information 2 Condensed interim statement of financial position 4 Condensed interim statement of profit or loss and other comprehensive income 6 Condensed interim statement of changes in shareholders' equity 8 Condensed interim statement of cash flows 9 Notes to the condensed interim financial information 10
3. ,uilicJ. )(OV .U .\J'.' P.O .Box 6457. Abu Dhabi, United Arab Emirates Tel. +97126138888 Fax. • 971 2 613 8800 o.>..:UoJI C\,uJ.2)1 uljl.,,)JI E-mail. inio@watania.ae 1nfo@watania.ae y..i9i:D.il ::i..iµ +GVI ( )Ir MM Lil.JU!> 1 ~v1 1ir M·· uiDLD r www.wata nia.ac 800-WATANIA (9282642) J..0' !> ·ilJ a Li hg ~~ watania ·· DIRECTORS' STATEMENT FOR THE PERIOD ENDED MARCH 31, 2017 The Board of Directors is pleased to share its statement for the period ended March 31, 2017 together with the condensed interim Financial Information as at that date. It gives us great pleasure to report that the company has delivered positive results in QlFYl 7 on all its major KPis: • • • • • • GWP declined 1.8% y-o-y - from AED 59.0mn in QlFY16 to AED 57.9mn. The fall is due to nonrenewal of a very large loss making government account. Adjusting for this amount the business grew by 95%. Current growth trend indicates that Company is aligned with its growth objective of 55%. Net earned contribution increased 74.7% y-o-y to AED 32.4mn in QlFYl 7 from AED l 8.5mn in QlFY16. Net Takaful surplus grew to AED 5.0mn in QlFYl 7 from AED 2.6mn in Q1FY16, delivering a y-o-y growth of 96%. Management expenses declined 11.8% y-o-y to AED 6.5mn in QlFYl 7 from AED 7.4mn in Q1FY16. More significantly the operating expense ratio came down from 39.7% in Ql FY2016 to 20.1% in Ql FY2017. Investment income declined by 64.6% y-o-y to AED l.5mn in Q1FY17 from AED 4.3mn in QlFY16. The company had a one-off investment income of AED 2.9mn in QlFY16. Due to better operational performance, the company delivered net profit of AED 33k in QlFYl 7 as compared to a loss of AED 496k in QlFY16. The company continues to focus on profitable underwriting, good claims service, cost control and stable investment income. We are confident that the focused business strategy laid down by the Board in 2016 will continue to bear positive results in 2017 as well. The investment market continues to be volatile. We believe the regional equity markets will see a recovery when we witness some sustained rebound in the oil prices which will lead to increase in government spending in the regional economies. The local real estate market also continues to be under pressure due to high supply which is leading to fall in occupancy and rents. We would like to sincerely thank United Arab Emirates Government, Insurance Authority, our Clients and Business partners for their confidence in Watania. We acknowledge and thank the management team and employees for their hard work and dedication. Ali Saee Chairman /
4. KPMG Lower Gulf Limited Level 19 , Nation Tower 2 Abu Dhabi Corniche, UAE Tel. +971 (2) 401 4800, Fax +971 (2) 632 7612 Independent auditors' report on review of condensed interim financial information The Shareholders National Takaful Company (Watania) PJSC Introduction We have reviewed the accompanying 31 March 2017 condensed interim financia l information of National Takaful Company (Watania) PJSC (the "Company"), which comprises of: • the condensed interim statement of financial position as at 31 March 2017; • the condensed interim statement of profit or loss and other comprehensive income for the three month period ended 31 March 2017; • the condensed interim statement of changes in shareholders' equity for the three month period ended 31 March 2017; • the condensed interim statement of cash flows for the three month period ended 31 March 2017; and • notes to the condensed interim financial information. Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with IAS 34, 'Interim Financial Reporting' . Our responsibility is to express a conclusion on this condensed interim financial information based on our review. Scope of Review We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of condensed interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion . 2 KPMG LGwer Gulf Limited ls a mernb~1 flr:n of the KPMG net wo~k o; ind~µenden: n~ ~rnbe1 Eons sfiitiateti 'Ntth KPtv\G lnterna!ion a! Co·cperm1ve ("KPMG lnterna i.ional"). a Swiss entity. All rights rc ser.t.c:d. KP t-.'1G Lower Gulf Umirnd is registered and licensed as a lorc:ign brar~ch ~nder t h(~ !? \ VS of :tie Unite;:i Arab En-;;r.::.tes .
5. National Takaful Company (Watania) PJSC Independent auditors' report 31 March 2017 Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as at 31 March 2017 is not prepared, in all material respects, in accordance with IAS 34, 'Interim Financial Reporting' . KPMG Lower Gulf Limited Richard Ackland Registration No. 1015 Abu Dhabi, United Arab Emirates Date: 1 4 MAY 2017 3 KPMG Lower Gulf Limited is a member firm of the KPMG network of independent member firms affiliated with KPMG International Co-operative rKPMG International~). a Swiss entity. All rights reserved. KPMG Lower Gulf Limited 1s registered and licensed as a foreign branch under the laws of the United Arab Emirates.
6. National Takaful Company (Watania) PJSC Condensed interim statement of financial position as at (Unaudited) 31 March 2017 Note AED'OOO (Audited) 31 December 2016 AED'OOO 9 11,029 10,273 4,072 8,475 13 13 29,975 36,617 2,834 26,530 75,959 3,700 16,000 13,536 25, 111 35,795 2,345 22,994 76,163 6,100 12,000 22,165 226,453 215,220 1,203 20,307 8,962 8,132 24,400 6,000 2,363 8,415 20,000 10,074 1,337 19,212 9,358 24,400 6,000 1,454 8,415 16,000 21,545 Total shareholders' assets 109,856 107,721 Total assets 336,309 322,941 Assets Takaful operations' assets (attributable to participants) Investments at fair value through profit or loss Deferred policy acquisition cost Retakaful and reinsurance share of unearned contribution Retakaful and reinsurance share of claims Advances, deposits and other assets Due from shareholders Takaful and retakaful receivables Restricted bank deposits Wakala deposits Cash and cash equivalents 16 5 6 8 7 Total takaful operations' assets Shareholders' assets Property and equipment Investments - held to maturity Financial assets available for sale Investments at fair value through profit or loss Investment properties Statutory deposit Advances, deposits and other asset Restricted bank deposits Wakala deposit Cash and cash equivalents 10 11 9 12 6 8 7 Continued .... 4
7. National Takaful Company (Watania) PJSC Condensed interim statement of financial position (continued) as at (Unaudited) 31 March 2017 Note AED'OOO (Audited) 31 December 2016 AED' OOO 27,867 191,624 6,962 35,403 174,649 5,168 226,453 215,220 1,505 2,802 26,530 3,100 2,452 22,994 30,837 28,546 15 15 (121,290) 121,290 (119,600) 119,600 14 150,000 42 (189) (70,834) 150,000 39 79,019 79,175 336,309 322,941 Liabilities Takaful operations' liabilities (attributable to participants) Takaful and retakaful payables Takaful contract liabilities Other liabilities 13 Total takaful operations' liabilities Shareholders' liabilities Other liabilities End of service benefits Due to policyholders 16 Total shareholders' liabilities Participants' account Property and liability takaful fund Qard hasan - financed by shareholders Total deficit in participants' account Shareholders' equity Share capital Legal reserve Revaluation reserve Accumulated losses Total shareholders' equity Total shareholders' equity and liabilities and takaful operations' liabilities (70,864) The notes set out on pages 10 to 21 form an integral part of these condensed interim financial information. The independent auditors' report on review of the condensed interim financial information is set out on pages 2 and 3. 5
8. National Takaful Company (Watania) PJSC Condensed interim statement of profit or loss and other comprehensive income for the three months period ended 31 March (Unaudited) Note Takaful income Gross takaful contributions Contributions ceded 2017 AED'OOO 2016 AED'OOO 21 21 57,916 (16,313) 58,994 (32,162) Net takaful contributions Net transfer to unearned contributions reserve 21 41,603 (9,213) 26,832 (8,295) Net takaful contributions earned Commissions earned 21 32,390 1,069 18,537 1,279 33,459 19,816 (30,768) 9,257 (51,226) 26,593 (21,511) (24,633) Total takaful income Takaful expenses Gross claims paid Retakaful share of claims paid 21 21 Net claims paid Outstanding claims Retakaful share of outstanding claims Incurred but not reported claims - net Unearned subscriptions - net Unallocated loss adjustment expense reserve - net 21 21 21 21 21 (5,501) 1,830 502 1,197 (104) 16,317 (6,737) (169) 685 35 Net takaful claims incurred Commissions expense Other underwriting expenses 21 21 (23,587) (3,753) (1,460) (14,502) (1,922) (944) (28,800) (17,368) 4,659 2,448 Total takaful expenses Net takaful income Investments income Mudarib's share Wakala fees Other income 21 21 21 21 166 (58) (6,632) 175 (7,080) 87 Net loss from takaful operations 21 (1,690) (4,528) 17 Continued 6
9. National Takaful Company (Watania) PJSC Condensed interim statement of profit or loss and other comprehensive mcome (continued) for the three months period ended 31 March (Unaudited) Note 2017 AED'OOO 2016 AED'OOO 19 21 21 1,531 6,632 58 4,321 7,080 8,221 11,401 (6,498) (7,369) 1,723 4,032 (1,690) (4,528) Other revenues Investment income Wakala fees Mudarib's share Other expenses General and administrative expenses 20 21 Loss from takaful operations Net profit I (loss) for the period 33 (496) Other comprehensive income Items that are or may be reclassified subsequently to profit or loss: Unrealised loss on financial assets available for sale (189) Total comprehensive loss for the period (156) (496) 0.0002 (0.0033) Earnings I (loss) per share (AED) The notes set out on pages 10 to 21 form an integral part of these condensed interim financial information. The independent auditors' report on review of the condensed interim financial information is set out on pages 2 and 3. 7
10. National Takaful Company (Watania) PJSC Condensed interim statement of changes in shareholders' equity for the three months period ended 31 March Share capital AED'OOO As at 1January2016 (Audited) Loss for the period Other comprehensive loss for the period Total comprehensive loss for the period Total AED'OOO 1,235 - - (1,235) - 80,025 (496) (1,235) - - (1,235) (496) (1,731) - - (71,706) 78,294 39 (70,864) 33 79,175 33 (189) 150,000 As at I January 2017 (Audited) Profit for the period Other comprehensive loss for the period 150,000 As at 31March2017 (Unaudited) Revaluation Accumulated reserve losses AED'OOO AED'OOO - 150,000 As at 31 March 2016 (Unaudited) Total comprehensive (loss) I income for the period Transfer to legal reserve Legal reserve AED'OOO - (71,210) (496) - - - - (189) - - - (189) 33 (3) 150,000 3 - 42 (189) The notes set out on pages I 0 to 21 form an integral part of these condensed interim financial information. 8 (70,834) (156) 79,019
11. National Takaful Company (Watania) PJSC Condensed interim statement of cash flows for the three months period ended 31 March (Unaudited) 2017 AED'OOO Operating activities Profit I (loss) for the period 33 2016 AED'OOO (496) Adjustment for: 160 (1,531) 394 323 (4,321) 217 459 Cash used in operating activities (944) (3,818) Changes in: Takaful and retakaful receivables Advances, deposit and other assets Takaful and retakaful payables Takaful contract liabilities Retakaful contract assets Deferred policy acquisition costs Other liabilities 204 (754) (7,536) 16,975 (5,686) (1,798) 199 (12,299) (557) (2,412) 4,600 (6,437) (946) (1,312) Cash from I (used in) operating activities Payment for end of service benefits 660 (44) (23,181) (157) Net cash from I (used in) operating activities 616 (23,338) Depreciation and amortisation Income from investments Provision for end of service benefits Provision for impairment of takaful receivables Cash flows from investing activities Purchase of property and equipment Change in investments - net Income from investments including restricted deposits Change in restricted bank deposits Change in wakala bank deposits (26) (15,977) 887 2,400 (8,000) (49) 9,273 4,321 6,324 (10,000) Net cash (used in) I from investing activities (20,716) 9,869 Decrease in cash and cash equivalents (20,100) (13,469) Cash and cash equivalents at the beginning of the period 43,710 30,849 Cash and cash equivalents at the end of the period (note 7) 23,610 17,380 The notes set out on pages 10 to 21 form an integral part of these condensed interim financial information. The independent auditors' report on review of the condensed interim financial information is set out on pages 2 and 3. 9
12. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 1 Legal status and activities National Takaful Company (Watania) PJSC (the "Company") was incorporated in the Emirate of Abu Dhabi, United Arab Emirates on 12 July 2011 as a public joint stock company in accordance with the United Arab Emirates Federal Law No. 2 of 2015. Incorporation of the Company was approved by the Ministry of Economy with a ministerial resolution no. 379 on 28 June 2011. The registered office address of the Company is P.O. Box No. 6457 Abu Dhabi, United Arab Emirates. The Company is primarily authorised to engage in providing all classes of non family takaful solutions in accordance with UAE Federal Law No. 6 of 2007. 2 Basis of preparation (a) Statement of compliance These condensed interim financial information have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting. Accordingly, these do not include all of the information required for a complete set of financial statements, and should be read in conjunction with the financial statements of the Company as at and for the year ended 31 December 20 16, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The results for three months period ended 31 March 2017 are not necessarily indicative of the results for the year ending 31 December 201 7. UAE Federal Law No. 2 of 2015 being the Commercial Companies Law ("UAE Companies Law of 2015") was issued on I April 2015 and has come into force on 1July2015. Companies are allowed to ensure compliance with the new UAE Companies Law of2015 by 30 June 2017 as per the transitional provisions contained therein. The Company has finalised the process of amending its Articles of Association. As per Federal Law No. 6 of 2007, relating to Establishment of Insurance Authority and regulation of Insurance operations, a new financial regulation for insurance companies was issued on 28 January 2015 . The financial regulation provided an alignment period to insurance companies between one to three years from the publication of the financial regulation in the Public Gazette from 29 January 2015 to align the operations to the covenants of the regulation therein. The Company is in the process of aligning these operations with the requirements set out in the regulations and will be fully aligned before the deadline for alignment period. (b) Basis of measurement These financial information have been prepared on the historical cost basis except for the financial assets carried at fair value through profit or loss, financial assets available for sale and investment properties. (c) Functional and reporting currency These financial information are presented in United Arab Emirates Dirhams ("AED"), which is the Company's functional currency. Except as indicated, financial information presented in AED has been rounded to the nearest thousand. 10
13. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 2 Basis of preparation (continued) (d) Use of estimates and judgement The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated · and are based on historical experience as well as factors including expectations of future events that are believed to be reasonable under the circumstances. 3 Significant accounting policies The accounting policies applied by the Company in the presentation of these condensed interim financial information are consistent with those applied by the Company in its audited financial statements as at and for the year ended 31 December 2016. New and amended International Financial Reporting Standards (IFRS) in issue but not yet effective New and revised IFRS Effective date IFRS 15 Revenue from Contracts with Customers 1 January 2018 IFRS 9 Financial Instruments 1 January 2018 Amendment to IFRS 2 Classification and Measurement ofShare-based Payment Transactions 1 January 2018 Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts 1January2018 Amendments to IAS 40 Transfers of Investment Property 1January2018 Amendments to IFRS 1 and IAS 28 Annual Improvements to IFRSs 2014-2016 Cycle - various standards 1 January 2018 IFRlC 22 Foreign Currency Transactions and Advance Consideration 1 January 2018 IFRS 16 Leases 1January2019 Management anticipates that these new standards and amendments will be applied in the financial statement for the initial period when they become effective. Management is assessing the potential impact of the application of these standards and amendments. 4 Takaful and financial risk management The Company's takaful and financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended 31 December 2016. 5 Takaful and retakaful receivables (Unaudited) 31 March 2017 AED'OOO (Audited) 31 December 2016 AED'OOO Takaful and retakaful receivables Less: allowance for impairment of takaful and retakaful receivables 77,845 78,049 (1,886) (1,886) Net takaful and retakaful receivables 75,959 76,163 11
14. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 6 Restricted bank deposits Takaful operation assets Shareholders assets (Unaudited) 31 March 2017 AED'OOO (Audited) 31 December . 2016 AED ' OOO 3,700 8,415 6,100 8,415 12,115 14,515 Restricted deposits are held in margin accounts to issue takaful business related performance and tender bonds. Wakala deposits carry a profit rate from 2.00% to 2.35% (2016: 1.00% to 2. 00%) per annum. 7 Cash and cash equivalents Cash on hand Cash at bank - current accounts Takaful operation assets Shareholders assets 8 (Unaudited) 31 March 2017 AED'OOO (Audited) 31 December 2016 AED'OOO 20 23,590 11 43,699 23,610 43,710 13,536 10,074 22,165 21,545 23,610 43,710 (Unaudited) 31 March 2017 AED'OOO (Audited) 31 December 2016 AED'OOO 16,000 20,000 12,000 16,000 36,000 28,000 Wakala bank deposits Takaful operation assets Shareholders assets The above wakala bank deposits carry a profit rate of 1.40% to 2.35% per annum. Certain deposits are lien marked against the mudaraba financing facility of AED 14 million (2016:14 million) obtained by the Company which carry a profit rate of3 .10% per annum. 12
15. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 9 Investments at fair value through profit or loss (Unaudited) 31 March 2017 AED'OOO Held for trading Sukuk - Takaful operation assets Sukuk - Shareholders assets (Audited) 31 December 2016 AED'OOO 11,029 8,132 4,072 9,358 19,161 13,430 2017 AED'OOO 2016 AED'OOO 4,845 14,316 3,521 9,909 19,161 13,430 The geographical distribution of investments is as follows: Inside UAE Outside UAE 10 Investments - held to maturity (Unaudited) 31 March 2017 (Audited) 31 December 2016 20,307 19,212 2017 AED'OOO 2016 AED'OOO 14,014 6,293 14,019 5,193 20,307 19,212 Sukuk - Shareholders assets The geographical distribution of investments is as follows: Inside UAE Outside UAE This portfolio has been lien marked for issuance of takaful business related performance bonds. 13
16. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 11 Financial assets available for sale (Unaudited) 31 March 2017 (Audited) 31 December 2016 8,962 Quoted equity securities The geographical distribution of investments is as follows: 2017 AED'OOO Inside UAE Outside UAE 2016 AED'OOO 1,954 7,008 8,962 12 Investment properties (Unaudited) 31 March 2017 AED'OOO 13 (Audited) 31 December 2016 AED'OOO Balance as at 1 January Revaluation gain 24,400 24,375 25 Balance as at end of period I year 24,400 24,400 Reinsurance and retakaful contract assets and takaful contract liabilities AED'OOO (Audited) 31 December 2016 AED' OOO 67,501 12,018 1,427 110,000 678 62,000 13,528 1,323 95,923 1,875 191,624 174,649 (Unaudited) 31 March 2017 Takaful contract liabilities Outstanding claims reserve Incurred but not reported - claims reserve Unallocated loss adjusted expense Unearned contributions Reserves for unearned subscriptions 14
17. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 13 Reinsurance and retakaful contract assets and takaful contract liabilities (continued) (Unaudited) 31 March 2017 AED'OOO (Audited) 31 December 2016 AED'OOO Reinsurance and retakaful contract assets Outstanding claims reserve Incurred but not reported - claims reserve Unallocated loss adjusted expense 32,691 3,926 30,861 4,934 Retakaful and reinsurance share of claims 36,617 35,795 Retakaful and resinsurance share of unearned contributions Reserves for unearned subscriptions 29,498 477 24,634 477 Retakaful and reinsurance share of unearned contributions 29,975 25, 111 66,592 60,906 34,810 8,092 1,427 80,502 201 31,139 8,594 1,323 71,289 1,398 125,032 113,743 (Unaudited) 31 March 2017 AED'OOO (Audited) 31 December 2016 AED'OOO 150,000 150,000 Takaful liabilities - net Outstanding claims reserve Incurred but not reported - claims reserve Unallocated loss adjusted expense Unearned contributions Reserves for unearned subscriptions 14 Share capital Authorised, issued and fully paid up capital 150,000,000 shares of AED 1 each 15
18. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 15 Policyholders' fund (Unaudited) 31 March 2017 AED'OOO Deficit in policyholders' fund Balance at the beginning of the period I year Deficit for the period I year Qard Hasan from shareholders Balance at the beginning of the period I year Provided during the period I year (Audited) 31 December 2016 AED' OOO (119,600) (1,690) (105,465) (14,135) (121,290) (119,600) 119,600 1,690 105,465 14,135 121,290 119,600 Total deficit in participants' account The shareholders of the Company have financed the policyholders' deficit in accordance with the Company's policy. 16 Due from shareholders and due to policyholders Qard Hasan (note 15) Less: Wakala fee receivables Transfers and payments to takaful operations (Unaudited) 31 March 2017 AED'OOO (Audited) 31 December 2016 AED'OOO 121,290 119,600 (40,040) (54,720) (38,750) (57,856) 26,530 16 22,994
19. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 17 Related party transactions The Company, in the normal course of business, collects contributions, settles claims and enters into other transactions with other businesses that fall within the definition of related paities contained in the revised International Accounting Standard 24. The following are the details of significant transactions with related parties. (Unaudited) (Unaudited) Three month period ended 31 March 31 March 2017 2016 AED'OOO AED'OOO Transactions with related parties Compensation to key management personnel - Directors' reimbursement - Short term benefits - Long term benefits 504 79 (Unaudited) 31 March 2017 AED'OOO 64 336 62 (Audited) 31 December 2016 AED'OOO Balances with related parties 432 5,221 Receivable from related party - net Bank balances with a related party Sukuk investment Profit accrued 18 9,909 211 38 12,043 9,909 Wakala fees The shareholders manage the takaful operations of the Company for the policyholders and charge a maximum of 35% of gross written contributions. During the period ended 31 March 2017, wakala fee has been charged at 12% (2016: 12%). 17
20. National Takaful Company (Watania) PJSC Notes to the condensed interim financial information 19 Investment income (Unaudited) 31 March 2017 AED'OOO Profit on wakala bank deposits and sukuk bonds Dividend income Unrealised (loss) I gain on investments at fair value through profit or loss Realised gains on investments Rental income from investment properties - net Premium amortisation Asset management expenses 786 386 778 (3) 15 655 2,652 361 (7) (7) 326 1,531 20 (Unaudited) 31 March 2016 AED'OOO (90) 4,321 General and administrative expenses (Unaudited) 31 March 2017 AED'OOO 5,123 357 174 373 287 Staff costs Rent, rates and service charges Office stationary and maintenance IT maintenance costs Audit, legal and other professional Directors' remuneration (note 17) Depreciation and amortisation Provision for bad debts Other expenses 24 4,812 492 156 206 331 64 323 459 526 6,498 7,369 160 18 (Unaudited) 31 March 2016 AED' OOO