Takaful Emarat Insurance PSC : Financial statements for the 2nd QTR of 2022

TAKAFUL EMARAT - INSURANCE (PSC) AND ITS SUBSIDIARY

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 JUNE 2022

TAKAFUL EMARAT - INSURANCE (PSC) AND ITS SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six month period ended 30 June 2022

Contents	Pages
Independent auditors' review report	1-2
Interim condensed consolidated statement of financial position	3-4
Interim condensed consolidated statement of profit or loss	5
Interim condensed consolidated statement of comprehensive income	6
Interim condensed consolidated statement of changes in equity	7
Interim condensed consolidated statement of cash flows	8
Notes to the interim condensed consolidated financial statements	9 - 23

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REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF TAKAFUL EMARAT - INSURANCE (PSC)

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Takaful Emarat - Insurance (PSC) (the "Company") and its subsidiary (collectively referred to as the "Group"), which comprise the interim consolidated statement of financial position as at 30 June 2022, and the related interim consolidated statements of profit or loss and comprehensive income, statement of changes in equity and cash flows for the six months period then ended and explanatory notes. Management is responsible for the preparation and presentation of this interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting ("IAS 34"). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of 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.

Basis for Qualified Conclusion

The Group's takaful receivables and other assets and other receivables, which are carried in the interim condensed consolidated statement of financial position at AED 183.3 million (31 December 2021: AED

183.3 million) and AED 10.9 million (31 December 2021: AED 11.8 million), respectively, includes other receivables of AED 65.4 million (31 December 2021: AED 43.1 million). We were not provided with sufficient and appropriate audit evidence supporting the carrying amount of these other receivables as at 30 June 2022 and, consequently, were unable to determine whether any adjustments to the attached condensed consolidated financial statements were necessary as a result of any potential adjustments to such assets

The Group's takaful and other payables, which are carried in the interim condensed consolidated statement of financial position at AED 106.5 million (31 December 2021: AED 130.2 million), includes accrued expenses and other payables of AED 5.25 million (31 December 2021: AED 7.1 million). We were not provided with sufficient and appropriate audit evidence supporting the carrying amount of these liabilities as at 30 June 2022 and, consequently, were unable to determine whether any adjustments to the attached condensed consolidated financial statements were necessary as a result of any potential adjustments to such liabilities.

The predecessor auditor's audit opinion on the consolidated financial statements of the Group as of and for the year ended 31 December 2021 was also modified in respect of these matters.

Qualified Conclusion

Except for the possible effects of the matters described above, based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

A member firm of Ernst & Young Global Limited

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF TAKAFUL EMARAT - INSURANCE (PSC) (continued)

Emphasis of Matter

Without qualifying our conclusion, we draw attention to Note 22 to the condensed consolidated financial statements which states that the Group did not meet the Minimum Capital Requirements of AED 100 million as of 30 June 2022 and that the Group's ability to comply with the solvency requirements depends on the effective implementation of the business plan submitted to the Central Bank of UAE. This indicates that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern.

Other Matter

The interim condensed consolidated financial statements of the Group as of 30 June 2021 were reviewed by another auditor whose report dated 10 August 2021 expressed an unmodified conclusion on those interim condensed consolidated financial statements. Also, the consolidated financial statements of the Group as of 31 December 2021, were audited by another auditor whose report dated 18 April 2022 expressed a qualified opinion on those consolidated financial statements with regard to the same matters as described above in the Basis for Qualified Conclusion section.

For Ernst & Young

Signed by:

Ashraf Abu-Sharkh

Partner

Registration No. 690

12 August 2022

Dubai, United Arab Emirates

A member firm of Ernst & Young Global Limited

TAKAFUL EMARAT - INSURANCE (PSC) AND ITS SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2022 (Unaudited)

		30 June	31 December
		2022	2021
		(Unaudited)	(Audited)
	Notes	AED	AED
TAKAFUL OPERATIONS' ASSETS		31,673,187
Cash and bank balances	9	55,500,051
Financial instruments	7	395,067,223	418,502,384
Takaful receivables and other assets		183,345,333	183,312,850
Retakaful contract assets	8	84,064,067	113,870,544
Investment properties	6	57,503,031	54,962,472
Deferred policy acquisition cost		44,465,516	51,246,159
		────────	────────
Total Takaful Operations' Assets		796,118,357	877,394,460
Shareholders' Assets		════════	════════
	14,061,916
Cash and bank balances	9	11,377,988
Financial instruments	7	22,406,089	21,793,897
Other receivables		10,853,284	11,785,573
Statutory deposit	10	4,000,000	4,000,000
Property and equipment		43,627,250	45,369,456
Intangible assets		1,421,302	1,865,606
Receivable from policyholders		112,579,372	112,738,077
		────────	────────
Total Shareholders' Assets		208,949,213	208,930,597
		────────	────────
TOTAL ASSETS		1,005,067,570	1,086,325,057
		════════	════════
Takaful Operations' Liabilities and Deficit
Takaful Operations Liabilities		106,453,941
Takaful and other payables		130,184,069
Takaful contract liabilities	8	571,891,012	633,161,594
Payable to shareholders		112,579,372	112,738,077
		────────	────────
Total Takaful Operations liabilities		790,924,325	876,083,740
Deficit in Policyholders' Fund and		────────	────────
Qard Hassan from Shareholders		(5,194,031)
Deficit in policyholders' fund	11	(1,310,720)
Qard Hassan from shareholders	11	5,194,031	1,310,720
		────────	────────
Deficit in Policyholders' Fund and Qard Hassan from Shareholders	-	-
		────────	────────
TOTAL OPERATIONS' LIABILITIES AND SURPLUS		790,924,325	876,083,740
		════════	════════

The accompanying notes 1 to 23 form part of these interim condensed consolidated financial statements.

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