QNB FINANCE LTD CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2018
Condensed Statement of Comprehensive Income Six months to Six months to 30 June 30 June 2018 2017 (Reviewed) (Un-reviewed) Income Interest Income 195,322 124,352 Expenses Interest Expense (195,322) (124,352) Profit for the Period - - Total Comprehensive Income for the Period - - The attached notes 1 to 5 form an integral part of these condensed interim financial statements.
Condensed Statement of Changes in Equity Share Capital Retained Total Earnings Balance at 1 January 2018 - - - Profit for the Period (Reviewed) - - - Total Comprehensive Income for the Period (Reviewed) - - - Balance at 30 June 2018 (Reviewed) - - - Balance at 1 January 2017 - - - Profit for the Period (Un-reviewed) - - - Total Comprehensive Income for the Period (Un-reviewed) - - - Balance at 30 June 2017 (Un-reviewed) - - - The attached notes 1 to 5 form an integral part of these condensed interim financial statements.
Condensed Statement Cash Flows Six months to Six months to 30 June 30 June 2018 2017 (Reviewed) (Un-reviewed) Cash Flows from Operating Activities Profit for the Period - - Adjustment for: Interest income (195,322) (124,352) Interest expense 195,322 124,352 - - Changes in Operating Assets: Changes in Amounts Due from Parent Company (592,838) 94,186 Net Cash (used in) / from Operating Activities (592,838) 94,186 Cash Flows from Investing Activities Interest received 100,879 127,756 Net Cash from Investing Activities 100,879 127,756 Cash Flows from Financing Activities Interest paid (100,879) (127,756) Proceeds from issuance of Debt Securities 2,779,300 - Repayment of Debt Securities (2,100,000) (1,000,000) Proceeds from issuance of Other Borrowings 5,843,426 2,827,411 Repayment of Other Borrowings (5,929,888) (1,921,597) Net Cash from / (used in) Financing Activities 491,959 (221,942) Net increase in cash and cash equivalents - - Cash and cash equivalent at 1 January - - Cash and cash equivalent as at 30 June - - The attached notes 1 to 5 form an integral part of these condensed interim financial statements.
1. CORPORATE INFORMATION Notes to the Condensed Interim Financial Statements (the "Company") was incorporated on 18 October 2010 and registered as an exempt company with limited liability in Cayman Islands. The principal purpose of the Company is to raise funding through the international capital markets for lending to Qatar National Bank (Q.P.S.C.) (the "Bank" or "Parent Company"). All the Debt Securities and Other Borrowings issued by the Company are irrevocably and unconditionally guaranteed by the Bank. The registered office of the Company is situated at P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company is wholly owned by Qatar National Bank (Q.P.S.C.). During 2011, the Company established a USD7.5 billion Medium Term Note ("MTN") programme under Reg S format and certain of the Notes issued under the MTN programme are listed in London Stock Exchange. Notes to be issued under the programme may comprise senior Notes (the Senior Notes ) and subordinated Notes (the Subordinated Notes ). As at 31 December 2017, the aggregate nominal amount of Notes outstanding will not at any time exceed USD 17.5 billion (or the equivalent in other currencies) under the MTN programme. Also during 2017, the Company issued certain Series of Notes under the MTN programme which are dual-listed on the Taipei Exchange and the London Stock Exchange. During September 2017, QNB Group Successfully completed the issuance of Formosa bonds under its Euro Medium Term Note (EMTN) programme and listed on the Taipei Stock Exchange. Under this programme, a USD$630 million tranche was issued with a maturity of 30 years callable every 5 years. On 9 January 2018, subsequent to the end of the reporting period, the Company issued USD720 million Formosa bonds 2048. During February 2018, QNB Group Successfully completed the issuance of Kangaroo bonds under its Medium Term Note (MTN) programme. Under this programme, a USD$700 million tranche was issued with a maturity upto 10 years. 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION a) Basis of Presentation These interim condensed financial statements have been prepared in accordance with IAS 34 - "Interim Financial Reporting". These interim condensed financial statements should be read in conjunction with the 2017 annual financial statements of the Company. This interim condensed financial statements are presented in US Dollars. All financial information presented in US Dollars has been rounded to the nearest thousands. The functional currency of the Company has been assessed as the US Dollar. The interim condensed financial statements does not contain all information and disclosures required for full financial statements prepared in accordance with International Financial Reporting Standards. In addition, results for the six month period ended 30 June 2018 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2018. The significant accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those used in the preparation of the financial statements as at and for the year ended 31 December 2017, except for the effects of adoption of IFRS 9 as described in note 2(c) to the interim condensed financial statements. The preparation of the interim condensed financial statements 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. The significant judgments made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2017. The Company's financial risk management objectives and policies are consistent with those disclosed in the financial statements for the year ended 31 December 2017. As at 30 June 2018, all the financial assets of the Company are considered to be low risk assets. b) New Standards and Interpretations New standards, amendments and interpretations that are effective for the period ended 30 June 2018 The following new and amended standards have been adopted by the Company in preparation of these interim condensed financial statements. The new standards do not have any material impact to the Company, but they may result in additional disclosures at year-end: Standards - IFRS 9 Financial Instruments (Effective 1 January 2018) - IFRS 15 Revenue from Contracts with Customers (Effective 1 January 2018) Amendments to Standards - Amendments to IAS 40 - Transfers of Investment Property (Effective 1 January 2018) The adoption of the above did not result in any changes to previously reported net profit or equity of the Company. Standards Issued but not yet Effective IFRS 16 Leases is not yet effective and the Company is currently evaluating the impact of this new standard. The Company will adopt this new standard on the effective date (1 January 2019). Adoption of IFRS 9 The Company has adopted IFRS 9, as issued by the IASB in July 2014 with a date of transition of 1 January 2018, which resulted in changes in certain accounting policies those used in the preparation of the financial statements as at and for the year ended 31 December 2017. These changes to the accounting policies are summarized below. Financial Instruments From 1 January 2018, a financial asset is classified as measured at amortised cost, FVOCI or FVTPL on initial recognition based on the business model assessment and SPPI (solely payments of principal and interest) tests. There were no changes in the classification of the financial assets. Impairment of financial assets From 1 January 2018, the Company recognises loss allowances for ECL on the debt financial instruments that are not measured at FVTPL. Impairment is assessed in the form of ECL, and for such loss, it is not necessary for a loss event to occur before an impairment loss is recognised. As at 30 June 2018, no ECL charge has been recognized on the financial assets as these only include balances highly rated thereby reducing any residual counter party settlement risk, which is also evidenced by the fact of zero historical defaults.
3. DEBT SECURITIES Notes to the Interim Condensed Financial Statements 30 June 2018 31 December 2017 Face Value of the Bonds 6,437,903 5,810,000 Less: Unamortised discount (7,613) (13,486) 6,430,290 5,796,514 The table shows below the details of the debt securities issued: Maturity dates: 2018 749,689 2,848,040 2020 997,900 997,348 2021 2,820,419 1,321,724 2023 311,751-2028 201,720-2047 629,467 629,402 2048 719,344-6,430,290 5,796,514 The above debt securities are denominated in USD and AUD, and comprise of fixed and floating interest rates. 4. OTHER BORROWINGS The table below shows the maturity profile of the other borrowings outstanding as at the end of the reporting period: As at 30 June 2018 USD EUR GBP CHF CNY JPY HKD SGD AUD Total ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 2018 219,984 209,837 - - - - - - - 429,821 2019 256,932 505,773-50,383 83,078 125,595 42,309 - - 1,064,070 2020 2,911,301 - - - 19,637 148,175 - - 22,161 3,101,274 2021 158,983 - - 151,149 707,382 42,471 - - - 1,059,985 2022 264,984 - - - - - 25,487 - - 290,471 2023 19,925 46,456-100,766 - - 58,618 - - 225,765 3,832,109 762,066-302,298 810,097 316,241 126,414-22,161 6,171,386 As at 31 December 2017 USD EUR GBP CHF CNY JPY HKD SGD AUD Total ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 2018 2,207,470 997,673 268,660-220,316 202,925 19,832 74,630-3,991,506 2019 256,887 517,479-51,026 84,149 96,588 42,479 - - 1,048,608 2020 145,623 - - - - - - - 23,345 168,968 2021 139,000 - - 153,077-41,648 - - - 333,725 2022 245,000 - - - - - 25,590 - - 270,590 2023-23,870-102,051 - - 58,857 - - 184,778 2047 110,000 - - - - - - - - 110,000 3,103,980 1,539,022 268,660 306,154 304,465 341,161 146,758 74,630 23,345 6,108,175 The above comprise of fixed and floating interest rates. 5. ISSUED CAPITAL The issued and paid up share capital of the Company as at 30 June 2018 is USD 100 (31 December 2017: USD 100). The issued share capital of the Company comprises of 100 ordinary shares of par value of USD1 each. All shares carry equal voting rights.