Qatar First Bank: Condensed Consolidated Interim Financial Statements - 30 June 2017

Transcription

1. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS QATAR FIRST BANK L .L.C (Public) 30 June 2017
2. QATAR FIRST BANK L .L.C (Public) CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 30 June 2017 CONTENTS INDEPENDENT AUDITOR’S REVIEW REPORT ......................................................................................................... 1 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS: Condensed consolidated statement of financial position .......................................................................................... 3 Condensed consolidated income statement ....................................................................................................................... 4 Condensed consolidated statement of changes in equity.......................................................................................... 5 Condensed consolidated statement of cash flows .......................................................................................................... 6 Notes to the condensed consolidated interim financial statements: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Reporting Entity ...................................................................................................................................................................... 7 Basis Of Preparation ............................................................................................................................................................. 8 Significant Accounting Policies .................................................................................................................................... 8 Investments Carried At Amortised Cost .................................................................................................................9 Financing Assets ....................................................................................................................................................................9 Equity Investments ............................................................................................................................................................ 10 Assets Classified As Held-For-Sale ........................................................................................................................... 11 Financing Liabilities ........................................................................................................................................................... 12 Equity Of Unrestricted Investment Account Holders ................................................................................... 12 Share Capital ........................................................................................................................................................................... 12 Revenue And Expenses From Non-Banking Activities................................................................................13 Basic / Diluted (Loss) / Earnings Per Share ........................................................................................................13 Contingent Liabilities ........................................................................................................................................................13 Commitments .........................................................................................................................................................................14 Related Parties Transactions And Balances ........................................................................................................14 Financial Risk Management .......................................................................................................................................... 15 Fair Value Of Financial Instruments ....................................................................................................................... 15 Segment Information .........................................................................................................................................................18 Comparative Figures......................................................................................................................................................... 20
6. QATAR FIRST BANK L .L.C (Public) CONDENSED CONSOLIDATED INCOME STATEMENT For the three and six-month periods ended 30 June 2017 (expressed in QAR’000) For the three-month period ended 30 June 30 June 2016 2017 Notes (Reviewed) (Unreviewed) CONTINUING OPERATIONS INCOME Revenue from non-banking activities 11 (Loss) / gain on re-measurement of investments at fair value through 6.2 income statement Dividend income Profit on investments carried at amortised cost Gain on disposal of investments carried at amortised cost Gain on disposal of equity investments Income from financing assets Income from placements with financial institutions Other (loss) / income Total Income Before Return To Unrestricted Investment Account Holders Return to investment account holders TOTAL INCOME EXPENSES Expenses from non-banking activities Staff costs Other operating expenses Financing costs Depreciation and amortisation TOTAL EXPENSES Provision for impairment on financing assets, net of recoveries NET (LOSS) / PROFIT BEFORE INCOME TAX Income tax expense 11 92,214 116,635 181,943 224,679 (20,774) 2,615 60,289 8,830 (19,186) 7,486 55,496 13,115 5,997 7,311 13,588 13,595 683 673 246 673 20,165 17,338 1,749 41,212 32,114 7,572 (22,329) 7,188 22,436 16,351 (13,987) 13,202 38,531 86,143 (22,836) 63,307 240,700 (20,479) 220,221 229,402 (44,610) 184,792 391,405 (39,001) 352,404 (91,078) (22,232) (11,011) (5,519) (2,454) (132,294) (112,637) (33,371) (23,059) (3,938) (3,205) (176,210) (180,421) (39,808) (24,383) (11,259) (5,576) (261,447) (219,195) (53,303) (38,797) (6,667) (6,514) (324,476) 2,010 (7,200) (70) (10,423) (66,977) 36,811 5 - NET (LOSS)/ PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS (66,977) DISCONTINUED OPERATIONS Profit from discontinued operations, net of tax NET (LOSS) / PROFIT FOR THE PERIOD - Attributable to: Equity holders of the Bank Non-controlling interest Basic/diluted (loss) / earnings per share –QAR For the six-month period ended 30 June 30 June 2016 2017 (Reviewed) (Reviewed) 12 36,811 529 (76,725) 17,505 - (76,725) 17,505 529 - (66,977) 37,340 (76,725) 18,034 (67,114) 137 (66,977) 36,423 917 37,340 (76,675) (50) (76,725) 16,825 1,209 18,034 (0.33) 0.18 (0.38) 0.08 The attached notes 1 to 19 form an integral part of these condensed consolidated interim financial statements. 4
7. QATAR FIRST BANK L .L.C (Public) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six-month period ended 30 June 2017 (expressed in QAR’000) Fair value reserves Share capital Investment fair value reserve Property fair value reserve Balance at 1 January 2016 (Audited) Fair value adjustment Net profit for the period Increase in non-controlling interests due to: - Subsidiary's management remuneration - Establishment of Aviation Structure - Increase of share capital of a subsidiary 2,000,000 - (27,256) 496 - 5,013 - 68,319 16,825 (877) - - Balance at 30 June 2016 (Reviewed) 2,000,000 (26,760) 4,136 85,144 Balance at 1 January 2017 (Audited) Fair value adjustment Net loss for the period Increase in non-controlling interests due to: - Establishment of Real Estate Structure 2,000,000 - (5,079) 18,708 - 4,518 - (200,754) (76,675) Balance at 30 June 2017 (Reviewed) - 7.2 - - - - 2,000,000 13,629 4,518 Retained Earnings / (Accumulated losses) (277,429) Total equity attributable to equity holders of the Bank Noncontrolling interests Total equity 53,968 1,209 2,100,044 496 18,034 4,954 39,606 13,447 4,077 39,606 13,447 2,062,520 113,184 2,175,704 1,798,685 18,708 (76,675) 76,366 (50) 1,875,051 18,708 (76,725) 2,046,076 496 16,825 (877) - - 45,666 45,666 1,740,718 121,982 1,862,700 The attached notes 1 to 19 form an integral part of these condensed consolidated interim financial statements. 5
8. QATAR FIRST BANK L .L.C (Public) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six-month period ended 30 June 2017 (expressed in QAR’000) For the six-month period ended 30 June 30 June 2016 2017 (Reviewed) Notes (Reviewed) OPERATING ACTIVITIES Net (loss) / profit for the period Adjustments for non-cash items in net (loss) / profit Depreciation and amortisation Subsidiary's management remuneration Loss on disposal of property and equipment Unrealised gains on equity investments Provision for impairment of financing assets Other provisions, net Changes in: Due from banks Investments carried at amortised cost Financing assets Accounts receivable Inventories Equity investments Investments in real estate Assets of disposal group classified as held-for-sale Other assets Customers' balances Liabilities of disposal group classified as held-for-sale Other liabilities Net cash from / (used in) operating activities INVESTING ACTIVITIES Purchase of fixed and intangible assets Net cash used in investing activities FINANCING ACTIVITIES Net change in financing liabilities Net change in equity of investment account holders Increase in non-controlling interest Net cash (used in) / from financing activities Net decrease 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 6.2 5 (76,725) 18,034 15,916 19,186 70 15,567 (25,986) 15,960 2,770 264 55,496 10,423 493 103,440 245,000 211,904 (38,852) (70,004) (28,915) 63,752 2,597 (276,573) (40,827) 93,326 188,909 24,962 349,293 (33,914) (314,786) (15,035) (8,722) (108,079) (1,385) (272,142) (62,538) 136,731 185,475 18,454 (372,501) (29,761) (29,761) (17,316) (17,316) (511,064) (112,254) 45,666 (577,652) 711,637 (591,640) 53,053 173,050 (258,120) 1,113,796 855,676 (216,767) 1,603,963 1,387,196 The attached notes 1 to 19 form an integral part of these condensed consolidated interim financial statements. 6
9. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 1. REPORTING ENTITY Qatar First Bank L.L.C (Public) (“the Bank” or “the Parent”) is an Islamic bank, which was established in the State of Qatar as a limited liability company under license No.00091, dated 4 September 2008, from the Qatar Financial Centre Authority. The Bank is authorised to conduct the following regulated activities by the Qatar Financial Centre Regulatory Authority (the “QFCRA”): • Deposit taking; • Providing credit facilities; • Dealing in investments; • Arranging deals in investments; • Arranging credit facilities; • Providing custody services; • Arranging the provision of custody services; • Managing investments; • Advising on investments; and • Operating a collective investment fund. All the Bank’s activities are regulated by the QFCRA and are conducted in accordance with Islamic Shari’a principles, as determined by the Shari’a Supervisory Board of the Bank and in accordance with the provisions of its Articles of Association. The Bank operates through its head office located on Suhaim bin Hamad Street, Doha, State of Qatar. The Bank’s issued shares are listed for trading on the Qatar Exchange effective from 27 April 2016 (ticker: “QFBQ”). The condensed consolidated interim financial statements of the Bank for the six-month period ended 30 June 2017 comprise the Bank and its subsidiaries (together referred to as “the Group” and individually as “Group entities”). The Parent Company / Ultimate Controlling Party of the Group is Qatar First Bank L.L.C (Public). The Bank had the following subsidiaries as at 30 June 2017 and 31 December 2016: Subsidiaries Future Card Industries LLC Al Wasita Emirates for Catering Services LLC Isnad Catering Services WLL QFB Money Market Fund 1 Ltd. QFB Capital (DIFC) Limited North Wolfe Property Corp. North Wolfe Operating Company LLC LEI-BFQ North Wolfe Venture LLC Effective ownership 30 June 31 December 2016 2017 Activity Year of incorporation Country Manufacturing 71.3% 71.3% 2012 UAE Catering Catering 81.9% 75.0% 81.9% 75.0% 2008 2012 Money market fund Managing a collective investment fund Owning and leasing real estate 100.0% 100.0% 2015 UAE Qatar Cayman Islands 100.0% - 2017 UAE 53.5% - 2017 USA Leasing real estate 53.5% - 2017 USA Leasing real estate 53.5% - 2017 USA 7
10. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 2. BASIS OF PREPARATION The condensed consolidated interim financial statements of the Group have been prepared in accordance with Financial Accounting Standards (“FAS”) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (“AAOIFI”). In line with the requirements of AAOIFI, for matters that are not covered by FAS, the Group uses the guidance from the relevant International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”). Accordingly, the condensed consolidated interim financial statements have been prepared in accordance with the guidance provided by International Accounting Standard 34 – ‘Interim Financial Reporting’. The condensed consolidated interim financial statements do not contain all information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group’s annual consolidated financial statements as at 31 December 2016. In addition, results for the six-month period ended 30 June 2017 are not necessarily indicative of results that may be expected for the financial year ending 31 December 2017. The condensed consolidated interim financial statements have been prepared under the historical cost convention except for valuation of equity investments, investments in real estate and Shariacompliant-risk management instruments which are carried at fair value. The condensed consolidated interim financial statements are presented in Qatari Riyals (“QAR”), which is the Bank’s functional and presentational currency, and all values are rounded to the nearest QAR thousand except when otherwise indicated. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Judgement and estimates The preparation of the condensed consolidated interim financial statements in conformity with FAS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are consistent with those applied to the annual consolidated financial statements as at 31 December 2016. 3. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those used in the preparation of the consolidated financial statements for the year ended 31 December 2016. 3.1 New standards, amendments and interpretations There were no new accounting standards, amendments and interpretations that (i) are issued and effective from 1 January 2017; (ii) are issued but not yet effective. 8
11. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 4. INVESTMENTS CARRIED AT AMORTISED COST 30 June 2017 (Reviewed) Investments in sukuk Unamortised premiums and discounts, net 31 December 2016 (Audited) 887,905 5,312 893,217 677,040 4,273 681,313 As at 30 June 2017, the fair value of the Group’s investments in sukuk portfolio amounted to QAR 676 million (31 December 2016: QAR 897 million). As at 30 June 2017, nil investments in sukuk were pledged against certain murabaha financing liabilities (31 December 2016: QAR 718 million). 5. FINANCING ASSETS 30 June 2017 (Reviewed) 31 December 2016 (Audited) Murabaha financing Ijarah receivable Others 1,689,717 51,791 14,777 1,642,904 64,721 12,742 Total financing assets 1,756,285 1,720,367 Deferred profit Provision for impairment on financing assets (215,933) (28,699) (218,867) (28,629) Net financing assets 1,511,653 1,472,871 Movements in the provision for impairment on financing assets are as follows: Specific provision At the beginning of the period/year Provision during the period / year, net of recoveries At the end of the period / year 21,723 (313) 21,410 31 December 2016 Collective provision 30 June 2017 Collective provision Total 6,906 28,629 3,313 - 3,313 383 70 18,410 6,906 25,316 7,289 28,699 21,723 6,906 28,629 Specific provision Total Provision for impairment for financing assets, net of recoveries for the six-month period ended 30 June 2017 was QAR 0.07 million (for the six-month period ended 30 June 2016: QAR 10.4 million). 9
12. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 6. EQUITY INVESTMENTS Notes 6.1 6.2 Investments at fair value through equity Investments at fair value through income statement 6.1. 30 June 2017 (Reviewed) 166,288 945,642 1,111,930 31 December 2016 (Audited) 147,580 1,028,580 1,176,160 Investments at fair value through equity Investments at fair value through equity comprise equity investments as follows: 30 June 2017 (Reviewed) Quoted Unquoted 140,000 26,288 166,288 31 December 2016 (Audited) 121,292 26,288 147,580 Unquoted equity securities of QAR 26.3 million as at 30 June 2017 (31 December 2016: QAR 26.3 million) are carried at cost less impairment in the absence of reliable measure of fair value. 6.2. Investments at fair value through income statement Investments at fair value through income statement comprise of equity investments as follows: 30 June 2017 (Reviewed) Investment type Venture capital investments Other investments at fair value through income statement 750,408 195,234 945,642 31 December 2016 (Audited) 760,458 268,122 1,028,580 As at 30 June 2017, equity investments with a carrying amount of QAR 269 million were pledged against certain murabaha financing liabilities (31 December 2016: QAR 421 million). 10
13. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 6 EQUITY INVESTMENTS (Continued) Movements in equity investments are as follows: Investments at fair value through equity (Reviewed) At the beginning of period/year Additions Disposal Fair value adjustments At the end of the period/year 30 June 2017 Investments at fair value through income statement Total Investments at fair value through equity 31 December 2016 Investments at fair value through income statement (Audited) (Audited) (Audited) Total (Reviewed) (Reviewed) 147,580 - 1,028,580 364 (64,116) 1,176,160 364 (64,116) 125,403 - 1,283,546 11,666 (90,136) 1,408,949 11,666 (90,136) 18,708 (19,186) (478) 22,177 (176,496) (154,319) 147,580 1,028,580 166,288 945,642 1,111,930 1,176,160 (Loss)/ gain on remeasurement of investments at fair value through income statement for the sixmonth period ended 30 June 2017 was a loss of QAR 19 million (for the six-month period ended 30 June 2016: a gain of QAR 55.5 million). 7. 7.1. ASSETS CLASSIFIED AS HELD-FOR-SALE Assets held-for-sale Subsequent to year-end 31 December 2016, the Bank signed a sale purchase agreement to sell one of its investments for a series of installments, accordingly the Bank had classified and presented the investment of QAR 86.3 million to assets held-for-sale in the consolidated financial statements for the year ended 31 December 2016. During the period, as part of the conditions precedent to the sale purchase agreement, the Bank partially exited QAR 16.5 million of the carrying amount. 7.2. Assets and liabilities of Real Estate Structure During June 2017, the Bank entered into a structure to invest in real estate property in the United States of America (the “USA”) using special purpose vehicles (the “Real Estate Structure”). The real estate property thereafter is leased under Ijara terms. Real estate property with a carrying value of QAR 267 million and related financing of QAR 188 million have been recorded on the Bank’s consolidated statement of financial position due to the consolidation of North Wolfe Property Corp. (‘SPV’), registered in USA. 11
14. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) ASSETS CLASSIFIED AS HELD-FOR-SALE (Continued) 7 This SPV has been consolidated by the Bank as a result of application of the accounting consolidation rules under Financial Accounting Standard 23 whereby an entity can consolidate an SPV based on economic substance despite the fact that the SPV is not legally owned by and not legally related to the Bank. SPV has a financing related to the real estate property, which have no recourse to the Bank. The Bank has acquired a 95% stake in the Real Estate Structure with an intention to sell substantial part of it to investors, and is currently in the process of marketing the structured product. During the period, the Bank sold a 41.5% stake of out 95% in the Real State Structure to its investors. As a result of investment in Real Estate Structure and partial disposal thereof, the Bank recorded an increase in non-controlling interest by QAR 45.7 million. The assets and corresponding liabilities of the Real Estate Structure have been presented in the consolidated financial statements as “heldfor-sale”. 8. FINANCING LIABILITIES 30 June 2017 (Reviewed) Accepted wakala deposits Murabaha financing Ijara financing Mudaraba financing 9. 100,069 453,349 23,632 12,114 589,164 36,427 1,046,337 17,464 1,100,228 EQUITY OF UNRESTRICTED INVESTMENT ACCOUNT HOLDERS 30 June 2017 (Reviewed) Term accounts Profit payable to equity of investment account holders 10. 31 December 2016 (Audited) 2,569,098 16,318 2,585,416 31 December 2016 (Audited) 2,681,783 15,887 2,697,670 SHARE CAPITAL 30 June 2017 (Reviewed) 31 December 2016 (Audited) Authorized 250,000,000 ordinary shares (2016: 250,000,000 ordinary shares) of QAR 10 each 2,500,000 2,500,000 Issued and paid 200,000,000 ordinary shares (2016: 200,000,000 ordinary shares) of QAR 10 each 2,000,000 2,000,000 12
15. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 11. REVENUE AND EXPENSES FROM NON-BANKING ACTIVITIES 30 June 2017 (Reviewed) Sales Other income Revenue from non-banking activities Cost of sales Other expenses Finance costs Expenses from non-banking activities Net income from non-banking activities 12. 30 June 2016 (Reviewed) 181,010 933 181,943 223,132 1,547 224,679 (142,919) (26,749) (10,753) (180,421) 1,522 (169,179) (40,191) (9,825) (219,195) 5,484 BASIC / DILUTED (LOSS) / EARNINGS PER SHARE The calculation of basic (loss) / earnings per share is based on the net (loss) / profit attributable to the Bank’s shareholders and the weighted average number of shares outstanding during the period. 30 June 2017 (Reviewed) 30 June 2016 (Reviewed) Basic (loss) / earnings per share Net (loss) /profit attributable to the equity holders of the Bank Total weighted average number of shares (76,675) 200,000 16,825 200,000 (0.38) 0.08 Basic (loss) / earnings per share (QAR) Since there is no significant dilutive impact, basic loss per share equal the dilutive loss per share. 13. CONTINGENT LIABILITIES The Group had the following contingent liabilities at the period / year end: 30 June 2017 (Reviewed) Letters of credit Letters of guarantee Unutilised credit facilities 91,501 7,379 98,880 31 December 2016 (Audited) 913 74,654 133,341 208,908 Contingent liabilities related to Sharia-compliant-risk-management instruments, representing notional amounts, amounted to QAR 2,683 million (31 December 2016: QAR 2,120 million). 13
16. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 14. COMMITMENTS 30 June 2017 (Reviewed) Commitment for operating lease Later than one year No later than one year Investment related commitment Commitment for operating and capital expenditure 15. 31 December 2016 (Audited) 46,823 26,692 73,515 71,797 27,522 99,319 118,576 616 192,707 22,306 729 122,354 RELATED PARTIES 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 the significant owners and entities over which the Group and the owners exercise significant influence, directors and senior management personnel of the Group, close family members, entities owned or controlled by them, associates and affiliated companies. Balances and transactions in respect of related parties included in the financial statements are as follows: 30 June 2017 (Reviewed) Affiliated Associates entities/ persons Total a) Condensed consolidated statement of financial position Financing assets Other assets 6,251 6,523 126,366 - 132,617 6,523 72 3,517 3,461 4,871 - 3,533 4,871 3,517 b) Condensed consolidated income statement Income from financing assets Dividend income Other income The balances of related parties as at 31 December 2016 are as follows: 31 December 2016 (Audited) Affiliated Associates entities/ persons Total a) Condensed consolidated statement of financial position Financing assets Other assets Other liabilities 5,587 9,846 65 14 114,460 - 120,047 9,846 65
17. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 15. RELATED PARTIES TRANSACTIONS AND BALANCES (Continued) Transactions with related parties for the corresponding period of six-month period ended 30 June 2016 are as follows: 30 June 2016 (Reviewed) Affiliated Associates entities/ persons Total b) Condensed consolidated income statement Income from financing assets Dividend income Revenue from non-banking activities 60 1,200 5,971 4,285 - 6,031 4,285 1,200 30 June 2017 (Reviewed) 30 June 2016 (Reviewed) Key management compensation is presented below: c)  Compensation of key management personnel Senior management personnel Directors’ remuneration Shari’a Supervisory Board remuneration 16. 17,236 268 17,504 17,537 4,574 240 22,351 FINANCIAL RISK MANAGEMENT The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value profit rate risk, cash flow profit rate risk and price risk), credit risk and liquidity risk. The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual consolidated financial statements; they should be read in conjunction with the Group’s annual consolidated financial statements as at 31 December 2016. There have been no significant changes. 17. FAIR VALUE OF FINANCIAL INSTRUMENTS The Group's financial instruments are accounted for under the historical cost method with the exception of equity investments. By contrast, the fair value represents the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Differences therefore can arise between book values under the historical cost method and fair value estimates. Underlying the definition of fair value is the presumption that the Group is a going concern without any intention or requirement to curtail materially the scale of its operation or to undertake a transaction on adverse terms. Generally accepted methods of determining fair value include reference to quoted prices and the use of valuation techniques such as discounted cash flow analysis. 15
18. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 17. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) Set out below is a comparison of the carrying amounts and fair values of financial instruments: Notes Financial Assets: Cash and cash equivalents Due from banks Investments carried at amortised cost Financing assets Accounts receivable Equity investments Assets of disposal group classified as held-for-sale Other assets Financial Liabilities: Financing liabilities Customers' balances Liabilities of disposal group classified as held-for-sale Other liabilities Equity of unrestricted investment account holders 4 5 6 8 9 Notes Financial Assets: Cash and cash equivalents Due from banks Investments carried at amortised cost Financing assets Accounts receivable Equity investments Assets of disposal group classified as held-for-sale Other assets Financial Liabilities: Financing liabilities Customers' balances Other liabilities Equity of unrestricted investment account holders 4 5 6 8 9 16 30 June 2017 (Reviewed) Carrying Amount Fair Value 855,676 110,000 681,313 1,511,653 319,695 1,111,930 362,826 194,139 5,147,232 855,676 110,000 676,477 1,511,653 319,695 1,111,930 362,826 194,139 5,142,396 589,164 201,722 188,909 221,416 2,585,416 3,786,627 589,164 201,722 188,909 221,416 2,585,416 3,786,627 31 December 2016 (Audited) Carrying Amount Fair Value 1,113,796 355,000 893,217 1,472,871 249,691 1,176,160 86,253 82,132 5,429,120 1,113,796 355,000 897,202 1,472,871 249,691 1,176,160 86,253 82,132 5,433,105 1,100,228 108,396 185,693 2,697,670 4,091,987 1,100,228 108,396 185,693 2,697,670 4,091,987
19. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 17. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) 17.1. Fair value hierarchy Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable market data (that is, unobservable inputs). Management applies judgment in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. Note Level 1 Level 2 Level 3 Total 140,000 - - 26,288 945,642 166,288 945,642 18,708 - - 18,708 - - (19,186) Level 2 Level 3 Total 30 June 2017 (Reviewed) Equity investments - at fair value through equity - at fair value through income statement 6.1 6.2 Net gains and losses included in the condensed consolidated statement of changes in equity Net gains and losses, recognized through condensed consolidated income statement (19,186) Note Level 1 6.1 6.2 121,292 - - 26,288 1,028,580 147,580 1,028,580 496 - - 496 - - 55,496 55,496 31 December 2016 (Audited) Equity investments - at fair value through equity - at fair value through income statement 30 June 2016 (Reviewed) Net gains and losses included in the condensed consolidated statement of changes in equity Net gains and losses, recognized through condensed consolidated income statement Sharia-compliant-risk management instruments for which fair value amounts to negative QAR 8.5 million (31 December 2016: QAR 5.2 million) is derived using Level 2 fair value hierarchy. The valuation techniques and key assumptions have remained consistent with those disclosed in the annual consolidated financial statements as at and for the year ended 31 December 2016. 17
20. QATAR FIRST BANK L .L.C (Public) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS As at and for the six-month period ended 30 June 2017 (expressed in QAR’000) 17. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) 17.1 Fair value hierarchy (Continued) The fair values of financial assets and financial liabilities carried at amortized cost are equal to the carrying value, hence, not included in the fair value hierarchy table. However, investments carried at amortised cost for which the fair value amounts to QAR 676 million (31 December 2016: QAR 897 million) is derived using Level 1 fair value hierarchy. 18. SEGMENT INFORMATION For management purposes, the Group has three reportable segments, as described below: Alternative Investments The Group's alternative investments business segment includes direct investment in the venture capital business and real estate asset classes. Alternative investments business is primarily responsible to acquire large or significant stakes, with board representation, in well managed companies and assets that have strong, established market positions and the potential to develop and expand. The team works as partners with the management of investee companies to unlock value through enhancing operational and financial performance in order to maximize returns. This segment seeks investments opportunities in growth sectors within the GCC and MENA region, as well as Turkey and United Kingdom, but remains opportunistic to attractive investment propositions outside of the geographies identified. Private Bank The Group’s private bank business segment includes private banking, corporate & institutional banking and treasury & investment management services. The Private banking department targets qualified High Net Worth clients with Sharia compliant up-market products and services that address personal, business and wealth requirements. The services offered under the private banking department includes advisory, deposit accounts, brokerage, funds and investments, treasury Forex products, plain vanilla & specialized financing, credit card and Elite services. The corporate & institutional banking department offers deposits accounts and plain vanilla & specialized financing solutions for corporates in Qatar, the GCC and the broader region for sectors and applications currently underserved by regional banks. The treasury department is offering short term liquid investments and FX products to banking clients, deploying the bank’s liquidity as well as leading the product development and idea conceptualization function. Other Unallocated assets, liabilities and revenues are related to some central management and support functions of the Group. Information regarding the results, assets and liabilities of each reportable segment is included below. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the management. Segment assets and liabilities The Group does not monitor segments on the basis of segment assets and liabilities and do not possess detailed information thereof. Consequently, disclosure of segment assets and liabilities are not presented in these condensed consolidated interim financial statements. 18