Bahrain Commercial Facilities Company BSC - Bahrain Bourse

Bahrain Commercial Facilities Company BSC 30 September 2017 CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

Bahrain Commercial Facilities Company BSC Condensed consolidated interim financial information for the nine months ended 30 September 2017

CONTENTS

Independent auditors’ report on review of condensed consolidated interim financial Information

Page

1

Condensed consolidated interim financial information Condensed consolidated statement of financial position Condensed consolidated statement of profit or loss Condensed consolidated statement of comprehensive income Condensed consolidated statement of changes in equity Condensed consolidated statement of cash flows Notes to the condensed consolidated interim financial information

2 3 4 5-6 7 8-12

Bahrain Commercial Facilities Company BSC

4

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the nine months ended 30 September 2017 Bahraini Dinars Thousands

Nine months ended 30 September 30 September 2017 2016 (reviewed) (reviewed) Profit for the period Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Fair value gain /(loss) on cash flow hedge reserve Total comprehensive income for the period

Three months ended 30 September 30 September 2017 2016 (reviewed) (reviewed)

14,417

14,653

4,938

5,215

227

(723)

271

551

14,644

13,930

5,209

5,766

The condensed consolidated interim financial information consists of pages 2 to 12.


5

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the nine months ended 30 September 2017

30 September 2017 (reviewed)

Bahraini Dinars Thousands

Share capital

Treasury shares

Statutory Reserve*

Cash flow hedge reserve

Donation reserve

General reserve

Retained earnings

Total equity

As at 1 January 2017 2016 appropriations (approved by shareholders): - Donations declared - Dividend declared - Transfer to general reserve

16,335

(599)

33,542

313

791

21,750

52,161

124,293

-

-

-

-

300 -

1,500

(300) (8,057) (1,500)

(8,057) -

Balance after 2016 appropriations

16,335

(599)

33,542

313

1,091

23,250

42,304

116,236

-

-

-

-

-

-

14,417

14,417

-

-

-

227

-

-

-

227

Total comprehensive income for the period

-

-

-

227

-

-

14,417

14,644

Utilisation of donation reserve

-

-

-

-

(412)

-

-

(412)

16,335

(599)

33,542

540

679

23,250

56,721

130,468

Comprehensive income for the period: Profit for the period Other comprehensive income: - Net changes in cash flow hedge reserve

At 30 September 2017

*Includes BD 25,292 of share premium. The condensed consolidated interim financial information consists of pages 2 to 12.


6

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the nine months ended 30 September 2017 (continued)


Bahraini Dinars Thousands

Share capital

Treasury shares

Statutory Reserve*

Cash flow hedge reserve

Donation reserve

General reserve

Retained earnings

Total equity

As at 1 January 2016 2015 appropriations (approved by shareholders): - Donations declared - Dividend declared - Transfer to general reserve

16,335 -

(599) -

33,542 -

(224) -

814 300 -

20,250 1,500

41,302 (300) (7,251) (1,500)

111,420 (7,251) -

Balance after 2015 appropriations

16,335

(599)

33,542

(224)

1,114

21,750

32,251

104,169

-

-

-

-

-

-

14,653

14,653

-

-

-

(723)

-

-

-

(723)

Total comprehensive income for the period

-

-

-

(723)

-

-

14,653

13,930

Utilisation of donation reserve

-

-

-

-

(242)

-

-

(242)

16,335

(599)

33,542

(947)

872

21,750

46,904

117,857

Comprehensive income for the period: Profit for the period Other comprehensive income: - Net changes in cash flow hedge reserve

At 30 September 2016

*Includes BD 25,292 of share premium. The condensed consolidated interim financial information consists of pages 2 to 12.

Bahrain Commercial Facilities Company BSC CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the nine months ended 30 September 2017

7

Bahraini Dinars Thousands 30 September 2017 (reviewed)


206,830 41,223 951 2,019 540 (198,476) (30,443) (12,590) (4,904) (393) (8,148)

169,118 47,432 1,056 7,095 511 (179,605) (42,134) (11,782) (1,133) (350) (6,245)

(3,391)

(16,037)

Capital expenditure on property and equipment Addition to investment properties Proceeds from sale of property and equipment

(3,448) (66) 717

(4,362) (1,379) 413

Net cash used in investing activities

(2,797)

(5,328)

14,674 (7,974) (412)

32,136 (7,243) (242)

6,288

24,651

Net increase in cash and cash equivalents

100

3,286

Cash and cash equivalents at 1 January

917

(158)

1,017

3,128

2,868

5,311

(253) (1,598)

(224) (1,959)

1,017

3,128

Operating activities Loan repayments, interest received and other credit related receipt Cash receipts from automotive sales Insurance commission received Sale of land inventory Rental income received Loans and advances to customers disbursed Payments to suppliers Payments for operating expenses Payment for purchase of land inventory Directors' fees paid Interest paid Net cash used in operating activities Investing activities

Financing activities Bank term loans availed, net Dividends paid Donations paid Net cash generated from financing activities

Cash and cash equivalents at 30 September Cash and cash equivalents comprise: Cash and balances with banks Less: Restricted cash Bank overdrafts

The condensed consolidated interim financial information consists of pages 2 to 12.


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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION for the nine months ended 30 September 2017 Bahraini Dinars Thousands 1. REPORTING ENTITY Bahrain Commercial Facilities Company BSC (the “Company”) is a public shareholding company incorporated and registered in Kingdom of Bahrain. It provides short-term, medium-term and longterm loans and issue credit cards. Effective 26 June 2005, the Company became licensed and regulated by the Central Bank of Bahrain (“CBB”). This financial information is the reviewed condensed consolidated interim financial information (the “condensed consolidated interim financial information”) of the Company and its subsidiaries (together referred to as the “Group”) for the nine months ended 30 September 2017. In April 2017, the Company has incorporated a new subsidiary ‘Tasheelat Car Leasing Company WLL’ with paid up share capital of BD 1,000. The new company commenced its operations of car leasing activities from July 2017. 2. BASIS OF PREPARATION (a) Statement of compliance The condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard 34 (IAS), Interim Financial Reporting, which permits the condensed consolidated interim financial information to be in summarised form. The condensed consolidated interim financial information does not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2016. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual audited consolidated financial statements as at and for the year ended 31 December 2016. The condensed consolidated interim financial information is reviewed, not audited. The comparatives for the condensed consolidated statement of financial position have been extracted from the audited financial statements for the year ended 31 December 2016 and the comparatives for the condensed consolidated statement of profit or loss, comprehensive income, changes in equity and cash flows have been extracted from the reviewed condensed consolidated interim financial information for the nine-month period ended 30 September 2016. (b) Judgements and estimates Preparing the condensed consolidated interim 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 expenses. Actual results may differ from these estimates. In preparing the condensed consolidated interim financial information, significant judgments made by the management in applying the Group’s accounting policies and key source of estimation of uncertainty were the same as those applied to the audited consolidated financial statements as at and for the year ended 31 December 2016. (c) Financial risk management The Group’s financial risk management objectives and policies are consistent with those disclosed in the audited consolidated financial statements for the year ended 31 December 2016. 3. SIGNIFICANT ACCOUNTING POLICIES The condensed consolidated interim financial information has been prepared using the same accounting policies and methods of computation applied in the preparation of the latest audited financial statements for the year ended 31 December 2016. 4. SEASONALITY Interest income from loans and advances is spread evenly over the year. Majority of vehicle sales happen between August and April months.


9

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION for the nine months ended 30 September 2017 Bahraini Dinars Thousands 5. LOANS AND ADVANCES TO CUSTOMERS 30 September 2017 (reviewed)

31 December 2016 (audited)

Gross loans Provision for impairment

301,135 (10,529)

279,141 (9,015)

Net loans and advances to customers

290,606

270,126

6. INVENTORIES 30 September 2017 (reviewed)

31 December 2016 (audited)

Automotive stock: - Vehicles - Spare parts Land inventory

18,189 3,982 16,296

20,014 3,340 12,592

Provision on vehicles and spare parts

38,467 (271)

35,946 (350)

38,196

35,596

Movement on provisions (vehicle and spare parts)

2017

2016

At 1 January Net charge for the period Written off

350 17 (96)

278 79 (7)

At the end of period

271

350

7. TRANSACTIONS WITH RELATED PARTIES The Company’s major shareholders are Social Insurance Organisation, BBK BSC and National Bank of Bahrain with holding of 30.9%, 23.0% and 11.2% respectively of the Company’s share capital at 30 September 2017. The Company has the following transactions with these related parties: 30 September 2017 (reviewed) Shareholders: Term loans Bank overdrafts Bank balance

Interest Expense

39,505 499 819

31 December 2016 (audited) 27,810 1,073 893



1,285

813


10

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION for the nine months ended 30 September 2017 Bahraini Dinars Thousands 7. TRANSACTION WITH RELATED PARTY (continued) Key management personnel: Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The key management personnel comprise members of the Board of Directors, Chief Executive Officer, Senior Vice President and the General Managers. 30 September 2017 (reviewed) 981 502

Salaries and short term employee benefits Directors remuneration and attendance fees

30 September 2016 (reviewed) 913 407

No impairment losses have been recorded against balances outstanding during the period with related parties, and no specific allowance has been made for impairment losses on balances with related parties at the year end. 8. APPROPRIATIONS At the Annual General Meeting held on 28 March 2017, the following appropriations were approved by the shareholders for 2016 and effected during the current period: transfer to general reserve of BD 1,500; transfer to donations reserve of BD 300 and cash dividend of BD 8,057. 9. OPERATING SEGMENT INFORMATION Revenue Nine months Nine months ended 30 ended 30 September 2017 September 2016 (reviewed) (reviewed) Consumer finance Automotive Insurance Real estate

Profit Nine months Nine months ended 30 ended 30 September 2017 September 2016 (reviewed) (reviewed)

32,303 39,615 850 2,210

27,303 47,381 1,024 8,501

12,340 1,674 490 (87)

10,670 1,257 872 1,854

74,978

84,209

14,417

14,653

Majority of the Group’s assets and liabilities are concentrated in the lending and automotive segments. Total assets as of 30 September 2017 amounted to BD 301,921 and BD 48,952 (31 December 2016: BD 279,329 and BD 50,876) and total liabilities amounted to of BD 228,794 and BD 14,813 (31 December 2016: BD 218,075 and BD 8,052) in the lending and automotive segments respectively. 10. FAIR VALUE The Group's financial assets and financial liabilities are measured at amortised cost except for derivative financial instruments, which are carried at fair value. Fair value is 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 in the principal, or in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its nonperformance risk. Underlying the definition of fair value is a presumption that an enterprise is a going concern without any intention or need to liquidate, curtail materially the scale of its operations or undertake a transaction on adverse terms.


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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION for the nine months ended 30 September 2017 Bahraini Dinars Thousands 10. FAIR VALUE (continued) All financial assets of BD 301,282 (2016: BD 281,081) are categorised under ‘loans and receivables’ and are measured at amortised cost. All the financial liabilities of BD 241,119 (2016: BD 223,336) are measured at amortised cost except derivatives which are measured at fair value and categorised as at fair value through profit or loss. Fair value hierarchy The Group measures fair values of financial instruments using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Valuation techniques based on observable inputs, either directly (i.e. ask prices) or indirectly (i.e. derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly observable from market data. Level 3: Valuation techniques using significant unobservable inputs. This category includes instruments where the valuation technique includes inputs not based on market observable data. (i) Financial assets and liabilities measured at fair value The fair value of the derivatives, which are not exchange traded, is estimated at the amount the Group would receive or pay to terminate the contract at the reporting date taking into account current market conditions and the current credit worthiness of the counterparties. The Group’s exposure to derivatives, whose fair value as of 30 September 2017 is BD 540, are categorised under Level 2. (i) Financial assets and liabilities not measured at fair value The following tables set out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierarchy into which each fair value measurement is categorised: 30 September 2017 (reviewed)

Level 1

Loans and advances to customers Bank term loans Bonds issued 31 December 2016 (audited) Loans and advances to customers Bank term loans Bonds issued

Level 2

Level 1

184,344 39,882 Level 2

-

170,204 39,829

Level 3

290,606 Level 3

270,126 -

Fair value

290,606 184,344 39,882 Fair value

270,126 170,204 39,829

Carrying value

290,606 184,344 39,882 Carrying value

270,126 170,204 39,829

In case of loans and advances to customers, the average interest rate of the loan portfolio is in line with current market rates for similar facilities and hence after consideration of adjustment for prepayment risk and impairment charges it is expected that the carrying value would not be materially different to fair value of these assets.


12

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION for the nine months ended 30 September 2017 Bahraini Dinars Thousands 10. FAIR VALUE (continued) The fair value of bank term loans and bonds issued approximate their carrying value since they are at floating interest rates. The fair values of all other financial instruments approximated their respective book values due to their short-term nature. 11. COMPARATIVES Certain comparative figures have been regrouped to conform to the current period’s presentation. Such regrouping did not affect previously reported profit, comprehensive income or equity.