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					Dar Al-Maal Al-Islami Trust
             Annual Report

            2010
Registered Office:
Dar Al-Maal Al-Islami Trust
10 Deveaux Street
P.O. Box N-9935
Nassau
Commonwealth of the Bahamas


Correspondence Address:
DMI Administrative Services S.A.
84, Avenue Louis-Casaï
P.O. Box 64
1216 Cointrin/Geneva
Switzerland
Phone: (41 22) 791 71 11
Fax: (41 22) 791 72 98 / 9
E-mail: info@dmisa.com




      Dar Al-Maal Al-Islami Trust
      Annual Report 2010
                  Contents



      Board of Supervisors
       and Religious Board    2

Dar Al-Maal Al-Islami Trust
                              3
2010         Annual Report


                Chairman’s
                  Message     4

                     Report
     of the Religious Board   7

                  Ten-year
         Financial Summary    8

              Consolidated
       Financial Statements   9
                                   Board of Supervisors
                                    and Religious Board




Board of Supervisors                       Religious Board

Mohamed Al Faisal Al Saud,                 Nasr Farid Mohamed Wasel,
Chairman                                   Chairman

Abdelaziz Abdallah Alfadda                 Halil Gonenc

Mohamed A. Abdelkarim El Kheriji           Osama Mohamed Ali

Ebrahim Khalifa Al Khalifa

Amr Mohamed Al Faisal Al Saud

Khalid Omar Abdel Rahman Azzam

Ibrahim El Tayeb Elrayah

Mohammed Abdullah Abdulaziz
Alankari (Elected 6 May 2010)

Faisal Islamic Bank-Egypt
(Represented by Abdelhameed Abou Moussa)




                                           2    Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
                   Dar Al-Maal Al-Islami Trust
Dar Al-Maal Al-Islami Trust (DMI)       The Board of Supervisors of DMI
was founded in 1981. It has an          Trust directs and oversees the
extensive network stretching over       business of the Group. DMI
four continents, with well integrated   Administrative Services S.A.,
regional subsidiaries enabling it       located in Geneva, Switzerland,
to respond to local business            provides assistance to the
needs and conditions. Based on          Board of Supervisors, in
this geographic structure, the DMI      particular in the areas of legal
Group and associates act as a           and financial control, audit and
financial bridge between the world's    risk management and information
leading financial centres and Islamic   technology.
countries.
                                        DMI Trust is an institution
The Group comprises three main          that creates, maintains and
business sectors: Islamic banking,      promotes Islamic financial
Islamic investment and Islamic          institutions. Asset management
insurance.                              is one of the Group's core
                                        business activities. Clients' funds
Islamic banking is exercised in         are invested prudently with the
different forms: commercial and         objective of optimal return as
retail banking in the Gulf region and   well as asset preservation. DMI
other parts of the world; investment    has devised a comprehensive
banking in Bahrain and Pakistan;        range of Islamic financial
fund management and financial           instruments to channel investors’
services in Switzerland and Jersey.     funds into viable Sharia compatible
Islamic investment companies are        operations and investments.
located in Bahrain, Egypt and
Pakistan. There are also associated
Islamic insurance companies based
in Bahrain and Luxembourg,
providing services to the Islamic
communities in the Middle East
and Europe.




                                        3    Dar Al-Maal Al-Islami Trust
                                             Annual Report 2010
Dear Participants,

May the peace, blessings and
mercy of Allah be upon you.

On behalf of the Board of
Supervisors, I am pleased to
present the twenty-ninth annual
report of Dar Al-Maal Al-Islami
Trust for the financial year ended
31 December 2010.

Following      two    extremely
challenging years for the
global banking and financial
services industry, 2010 has
seen a slow but persistent
loosening of the credit markets
and corresponding improvements
in liquidity. However, downward
pressure remained on asset
valuations, largely a result
of the continued uncertainty
expressed in worldwide stock
and real estate markets.




         Chairman’s
           Message


The Group recorded a net profit
in 2010 of $130.2 million
compared to a net loss of
$108.9 million for 2009,
which includes charges of
$133.3 million for impairment
provisions mainly on investments
that were estimated on a
conservative basis. I am also
pleased to report that Trust
capital has increased from
$334.6 million at the end of
2009 to $524.4 million at
31 December 2010. As a result,
the value of each participation unit
rose to $132.57, an increase of
57% over the previous year.

The DMI Group has this
year focused on further
strengthening its asset base by
acquiring a controlling interest
of 53% in Ithmaar Bank B.S.C.



4    Dar Al-Maal Al-Islami Trust
     Annual Report 2010
after participating in its March rights   attributable to the shareholders of     ($14.0 million) after tax. This is
issue. The acquisition of an additional   the Bank. Ithmaar’s balance sheet       equivalent to its 2009 results.
8% of the outstanding shares              remains strong and continues to         FBL takes great pride in this
resulted in a one-time gain on the        grow with total assets increasing       achievement considering that
previously held portion of $375.1         by 10.4% to $6,743.6 million.           Pakistan encountered a natural
million, which has been recorded in       Owners’ equity, while marginally        disaster of massive proportions in
the net profit figures of the Group.      lower than the previous year, still     the form of devastating floods which
The Group now consolidates in full        remains strong at $654.0 million.       began in July 2010 and damaged
the income statement and balance                                                  25% of the agricultural heart
sheet of Ithmaar Bank B.S.C. and          As mentioned in last year’s annual      land, significantly impacting the
accounts for the non-controlling          report, Ithmaar Bank has embarked       economy of the country and
shareholding as a part of equity.         upon an ambitious plan through          resulting in the rate of inflation
                                          its merger with Shamil Bank and         surging to nearly 14%. During the
As I mentioned last year, it has been     conversion to an Islamic retail bank.   year FBL successfully completed the
our policy for a number of years to       Ithmaar is now emerging from this       acquisition of the whole of the
allocate a percentage of the Group’s      as a more efficient and significantly   Pakistan operations of the Royal
profit to a fiduciary risk reserve to     stronger bank. Though it faced          Bank of Scotland. RBS Pakistan
cover inherent fiduciary risks which      major liquidity challenges in 2010,     is comprised of retail, corporate,
might arise in the Group’s managed        as did many financial institutions in   commercial and Islamic banking
funds. In light of the difficult          the region, Ithmaar has through         services spread across the country,
years just experienced, the Board         its efforts in strengthening links      an excellent fit to FBL’s existing
has resolved to recommend an              with financial institutions raised      businesses. The combined entity
appropriation of $125.0 million to        interbank funds and restructured the    now has an asset base of
the fiduciary reserve out of earnings     terms of certain major liabilities.     PKR 260 billion ($3.0 billion) with
to reflect the increased risks as         Additionally, it has vigorously         a network of 226 branches, making
a result of the reduction in asset        sought to increase its retail           FBL one of the top ten banks in
valuations. The amount of the             customer base by introducing            Pakistan. The merger of FBL and
fiduciary risk reserve of $167.5          new customer-focused products,          RBS Pakistan has resulted in a
million will be kept under review in      including Thimaar, a best of its kind   stronger institution, well positioned
the light of market conditions and        prize-based savings account, by         to withstand any further market
will not be available for distribution.   improving a number of its retail        turbulence brought on by the
                                          products including its personal         political and economic situation of
Ithmaar Bank B.S.C. faced a year          and auto finance offerings and          the country.
of transformation in 2010. The            by opening four new branches
Bank, which previously focused on         and increasing its reach to the         Islamic Investment Company of the
investments and asset management          customer through additional ATMs.       Gulf (Bahamas) Limited, which is
as a licensed wholesale investment        Internationally, the Ithmaar Group,     wholly-owned by DMI, experienced
bank, has now converted to a              through its 66% held subsidiary         another difficult year in 2010.
licensed Islamic retail bank. This is     Faysal Bank Limited, acquired           Challenging market conditions
the result of the Bank’s completion       the Pakistan operations of Royal        exerted downward pressure on
of the comprehensive reorganisation       Bank of Scotland, thus significantly    fund values and returns while
with its then wholly-owned                expanding its retail base in            administrative costs continued to
subsidiary Shamil Bank of Bahrain         the country. These fore-mentioned       rise adding to the hurdles faced
B.S.C. in April 2010.                     challenges required a new               by management. Despite these
                                          organisation structure and new          difficulties, IICG continued to
The Ithmaar Group reported a              talent and I am happy to report that    focus on preserving its clients’
return to profitability with net          Ithmaar has successfully overcome       investments by swiftly adapting
income before provisions and taxes        these challenges and now is             to changing market conditions
of $51.4 million, as compared to a        approaching the future with renewed     through financial restructuring,
loss of $44.0 million in 2009. Due        energy, commitment and optimism         capital injections and providing
to the pressure on asset valuations       with the necessary attitudes and        strategic support to our asset
within the various regions, the Bank      sentiments to drive the Bank forward    management teams. Generating
has however recorded one-off              into the future.                        new business remained difficult
impairment provisions of $197.4                                                   and few opportunities arose for
million, a significant portion of         Faysal Bank Limited, in which the       new investments. In spite of these
which was for investment portfolios       Group owns an economic interest         pressures IICG was able to maintain
whose valuations were estimated on        of 35% through its ownership            a favourable net profit and most
a conservative basis, leading to a        in Ithmaar Bank, recorded a net         importantly the volume of funds
reported net loss of $150.1 million       profit in 2010 of PKR 1,190 million     under management remained at the



                                          5    Dar Al-Maal Al-Islami Trust
                                               Annual Report 2010
targeted levels and is projected to      will be the investment arm of
increase slightly in the coming year.    the Bank focussing on business
During 2010, IICG exited from a          investment, portfolio and investment
number of investments aggregating        funds management. In other areas
nearly $300 million which resulted       FIBE continues its development in
in modest capital gains which            other strategic sectors such as small
were mainly distributed to the           and medium size businesses and
investors. IICG also purchased           electronic services. Internally, the
from Ithmaar Bank four wholly-           Bank has committed resources to
owned subsidiaries, Faisal Finance       modernize its IT systems including a
(Jersey) Limited, Rayten Holdings        new core banking package and
Limited, MFAI (Jersey) Limited and       improvements to comply with Basel
DMI (Jersey) Limited, which no           II and IFRS. In spite of the political
longer fitted into Ithmaar’s retail      turmoil of recent months, FIBE is
banking strategy. These acquisitions     confident that the Bank will achieve
will create synergies and increase       further growth and be able to record
IICG’s competitiveness through           increased profits to the benefit of its
diversification and expansion of         shareholders in the coming years.
asset distribution. In June 2010,
IICG was granted an operating            In closing, I wish to assure the
license by the Saudi Arabian             owners and holders of DMI’s equity
Capital Market Authority for its         and participation certificates that
newly established subsidiary, Gulf       the Group, with its strategically
Investors Company for Asset              positioned investments in the world,
Management, a closed Saudi joint         remains committed to growth and to
stock company whose purpose is to        increasing the rate of return in the
engage in asset management and           coming years.
investment business. The company
is expected to foster new business       On behalf of the Board of
development and spearhead future         Supervisors, I would like to thank
growth opportunities in the Kingdom      our participants for their support
of Saudi Arabia and I hope to be         during the past year. I would also
able to report further progress on its   like to take the opportunity to thank
activities next year.                    the Religious Board for its counsel
                                         and guidance and the staff for their
Faisal Islamic Bank of Egypt, of         commitment and dedication.
which DMI owns 49%, reported
results which confirmed the Bank’s       Allah is the purveyor of success.
continued growth in the Egyptian
Islamic banking market. Net
profit reached EGP 338 million
($60 million), more than double the
previous year’s result. Total assets     Mohamed Al Faisal Al Saud
increased by 14% to EGP 31,654
million ($5 billion) at 31 December
2010 and total equity amounted to
EGP 2,161 million ($372 million),
an increase of 34% in shareholder
value. FIBE’s network contributed to
the continued growth in its customer
base as seen by the 13.2%
increase in savings accounts and
certificates amounting to EGP 68.8
billion and gains in net investment
accounts amounting to EGP 28.0
billion. During 2010 FIBE created
Faisal Company for Financial
Investment, a new company which




                                         6               6
                                               Dar Al-Maal Al-Islami Trust
                                               Annual Report 2010
The DMI Trust Religious Board held           The Board expressed its thanks
a meeting in Cairo, Egypt, on                to the DMI Group Management for
Wednesday 25 Jomad I, 1432H                  the correct understanding and
corresponding to 25 April 2011.              implementation of the standard
                                             contracts, rulings and directives
During the said meeting the                  issued by the Religious Board,
Religious Board went through and             complying thereby with principles
reviewed the investment operations           of the Glorious Islamic Sharia.
of DMI and its subsidiaries during
the period under review.                     The Board wishes further success
                                             to the DMI Group.
Furthermore the Religious Board
reviewed the 2010 balance sheet
and financial statements presented
to it and after examining and
discussing the same, the Religious
Board considered that all DMI                Allah is the purveyor of success.
Group investment activities, projects
and banking services undertaken
during the year were in conformity
with the principles of the glorious
Sharia and in line with the standard
contracts previously approved by             Dr. Nasr Farid Mohamed Wasel
the Religious Board.                         Chairman of the Religious Board




                                              Report
                              of the Religious Board
                                        1 January 2010 – 31 December 2010




                                             7    Dar Al-Maal Al-Islami Trust
                                                  Annual Report 2010
                                                                                            Millions of US dollars


                  2001     2002     2003       2004      2005     2006     2007    2008     2009       2010


Net profit
(loss)             9.6     12.5     14.4        18.9     28.7     52.1     50.7    12.3    (108.9) 130.2


Dividends          0.0      0.0      0.0        8.9       8.9     14.8     14.8    20.7     27.7         0.0


Trust capital      235      251      258        286      325      362      422     454      335         524


Return on
average capital   4.2%     5.1%     5.7%       7.0%     9.4%     15.2%     12.9%   2.8%    -27.6% 29.9%


Funds under
management        3,723    3,723    3,759      4,204    4,762    1,856     1,906   2,296   2,508       8,589


Average
number of
employees          881      929     1,095      1,294    1,475     896      232     232      214        2,845




Book value
per unit          $79.46   $84.65   $87.12     $96.86 $109.83 $122.41 $142.88 $114.85 $84.59 $132.57




                                           Ten-year
                                  Financial Summary




                                    8        Dar Al-Maal Al-Islami Trust
                                             Annual Report 2010
Dar Al-Maal Al-Islami Trust

2010         Annual Report

        1 January 2010 – 31 December 2010




              Consolidated
       Financial Statements



             9    Dar Al-Maal Al-Islami Trust
                  Annual Report 2010
                           INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                   Page                                       Page                                    Page

Independent auditors’ report          11         Discontinued operations       27    11. Fair value of financial
                                                                                          instruments                  49
Consolidated statement                           Due to banks and financial
 of financial position                12          institutions                 27    12. Accounts receivable           53
Consolidated statement                           Borrowings                    27    13. Investment property           53
 of income                            13
                                                 Retirement benefit plans      28    14. Investments in associates     54
Consolidated statement
 of comprehensive income              14         Taxation                      28    15. Property, plant and
                                                                                          equipment                    58
Consolidated Statement                           Deferred income taxes         28
 of changes in Equity                 15                                             16. Intangible assets             59
                                                 Trust capital and treasury
Consolidated Statement                             stock                       28    17. Non-current assets and
 of Cash Flows                        16                                                  liabilities and
                                                 Acceptances                   28         discontinued operations      60
Notes to the Consolidated Financial
 Statements                                      Cash and cash equivalents     28    18. Accounts payable              61
 1. Formation and activities          18         Fiduciary activities          29    19. Tax liability                 62
 2. Accounting policies               18     3. Critical accounting                  20. Massaref accounts             62
                                                 estimates and judgements
     Basis of preparation             18         in applying accounting              21. Provisions                    63
                                                 policies                      29
     Impact of new accounting                                                        22. Collateralised borrowings     63
       pronouncements                            Impairment of investments
       Amendments to                               in financings               29    23. Net trading income            63
       published standards            18
                                                 Fair value and impairment           24. Income from investments
     New accounting standards                     of available-for-sale                    in financings               63
      and IFRIC                       19          equity investments           29
                                                                                     25. Fee and commission
     Consolidation                    20         Fair value of investment                 income                       64
                                                  property                     29
     Foreign currency                                                                26. Dividend income               64
      translation                     21         Special purpose entities      29    27. Other income                  64
     Derivative financial                        Income taxes                  29
      instruments and hedging         22                                             28. Staff costs                   64
     Income from investments with                Impairment of associated            29. General and administrative
       Islamic institutions and                    companies                   29         expenses                     64
       investments in financings  22
                                                 Estimated impairment                30. Proposed dividend             64
     Fee and commission                           of goodwill                  30
      income                          22                                             31. Taxes                         65
                                                 Pension obligation            30
     Distribution to Massaref                                                        32. Non-controlling interests     65
      account holders                 23   4.    Financial instruments         31
                                                                                     33. Funds under management        66
     Sale and repurchase                         Strategy in using
      agreements                      23           financial instruments       31    34. Retirement benefit plan       66
     Financial assets                 23         Capital management            31    35. Related party transactions
                                                                                          and balances                 68
     Impairment of financial                     Financial risk
       assets                         24           management                  32    36. Contingent liabilities
                                                                                          and commitments              70
     Impairment of non financial                 Credit risk                   32
       assets                         25                                             37. Current and non current
                                                 Market risk                   36         assets and liabilities       72
     Investments with Islamic
       institutions                   25         Liquidity risk                40    38. Concentration of
                                                                                          assets and liabilities       73
     Intangible assets                25     5. Cash and cash
                                                 equivalents                   43    39. Maturities of assets and
     Investment property              26                                                  liabilities                  75
                                             6. Trading securities             44
     Property, plant and                                                             40. Currency exposure             76
      equipment                              7. Investments in financings      44
      and depreciation                26                                             41. Trust capital                 77
                                             8. Collateral received and
     Leases                           26         re-pledged                    45    42. Acquisitions and disposals    77
     Provisions                       27     9. Allowance account                    43. Date of authorization
                                                  from credit losses           46         for issue                    83
     Non-current asset held
      for sale                        27    10. Investment securities          47    44. Principal subsidiaries        83



                                           10     Dar Al-Maal Al-Islami Trust
                                                  Annual Report 2010
                INDEPENDENT AUDITORS’ REPORT
To the Bearers and Owners of Equity Participations of Dar Al-Maal Al-Islami Trust

                      Report of the auditor on the Consolidated Financial Statements
                      We have audited the accompanying consolidated financial statements of Dar Al-Maal Al-
                      Islami Trust and its subsidiaries (together, the “Group”), which comprise the consolidated
                      statement of financial position as at 31 December 2010, and the consolidated statement of
                      income, consolidated statement of comprehensive income, consolidated statement of
                      changes in equity and consolidated statement of cash flows for the year then ended and a
                      summary of significant accounting policies and other explanatory information.

                      Management’s Responsibility for the Consolidated Financial Statements
                      Management is responsible for the preparation and fair presentation of the consolidated
                      financial statements in accordance with the International Financial Reporting Standards (IFRS)
                      and for such internal controls as management determines is necessary to enable the
                      preparation of consolidated financial statements that are free from material misstatement,
                      whether due to fraud or error.

                      Auditor’s Responsibility
                      Our responsibility is to express an opinion on these consolidated financial
                      statements based on our audit. Except as discussed below, we conducted our audit
                      in accordance with International Standards on Auditing. Those Standards require that
                      we comply with ethical requirements and plan and perform the audit to obtain
                      reasonable assurance whether the consolidated financial statements are free from
                      material misstatement.

                      An audit involves performing procedures to obtain audit evidence about the amounts and
                      disclosures in the consolidated financial statements. The procedures selected depend on
                      the auditor’s judgment, including the assessment of the risks of material misstatement
                      of the consolidated financial statements, whether due to fraud or error. In making those risk
                      assessments, the auditor considers internal control relevant to the Group’s preparation and fair
                      presentation of the consolidated financial statements in order to design audit procedures that
                      are appropriate in the circumstances, but not for the purpose of expressing an opinion
                      on the effectiveness of the entity’s internal control. An audit also includes evaluating the
                      appropriateness of accounting policies used and the reasonableness of accounting estimates
                      made by management, as well as evaluating the overall presentation of the consolidated
                      financial statements.

                      We believe that the audit evidence we have obtained is sufficient and appropriate to provide
                      a basis for our audit opinion.

                      Basis for Qualified Opinion
                      As indicated in note 14 to the consolidated financial statements, on accounting for its
                      acquisition of a controlling stake in Ithmaar Bank B.S.C. (“Ithmaar”) during the year,
                      management has determined the fair value of the Group’s previously held interest on the basis
                      of an independent valuation which used an average of a peer group market analysis of
                      similar banks listed on the Bahrain stock exchange and a discounted cash flow, adjusted for
                      an estimated control premium. This methodology was accepted by management on the basis
                      that it does not consider that an active market exists for the shares of Ithmaar and therefore
                      the quoted market price was ignored. In our opinion, this valuation methodology is not in
                      accordance with IFRS which stipulates that the most recent transaction prices should be taken
                      into consideration as an input in the valuation model, unless it can be demonstrated that these
                      transactions related to distressed sales. Had the quoted market price been used as an input
                      into what we believe is an acceptable valuation methodology that market participants would
                      consider in valuing the Group’s previously held interest in Ithmaar, this would have resulted in
                      a valuation of US$ 483.6 million rather than US$ 587.1 million, and led to a decrease in the
                      consolidated net profit for the year ended 31 December 2010 in the amount of US$ 103.5
                      million and a corresponding decrease in goodwill and non-controlling interests in the amounts
                      of US$ 111.6 million and US$ 8.1 million respectively.

                      Qualified Opinion
                      In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion
                      paragraph above, the accompanying consolidated financial statements present fairly, in all
                      material respects, the financial position of the Group as at 31 December 2010, and of its
                      financial performance and its cash flows for the year then ended in accordance with
                      International Financial Reporting Standards.

                      PricewaterhouseCoopers SA




                      Prince Rahming                                          Ali Siddiqui

                      Geneva, 14 June 2011



                    11       Dar Al-Maal Al-Islami Trust
                             Annual Report 2010
       CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
                                   (Thousands of US dollars except participation units)



                                                                 Notes              2010       2009
Assets
Cash and cash equivalents                                            5              767,962     38,962
Restricted cash held in escrow                                       5               24,433     24,993
Investments with Islamic institutions                                               146,602     23,662
Trading securities                                                   6               41,343          3
Investments in financings                                            7            1,943,313    230,006
Investment securities                                               10            1,218,983      1,648
Accounts receivable                                                 12              193,829     12,593
Current tax receivable                                              19               14,476         43
Investment property                                                 13              392,820      1,003
Investments in associates                                           14              916,675    399,917
Property, plant and equipment                                       15              149,718      2,935
Intangible assets                                                   16              604,680     95,860
Non-current assets held for sale                                    17                2,104          -
Deferred tax assets                                                 19               53,401          -


Total assets                                                                      6,470,339    831,625


Liabilities
Accounts payable                                                    18              690,011     41,898
Current tax payable                                                 19                6,602         12
Massaref accounts                                                   20            4,603,486    455,127
Provisions                                                          21               78,000          -
Non-current liabilities held for sale                               17                   21          -
Deferred tax liabilities                                            19                4,915          -


Total liabilities                                                                 5,383,035    497,037



Equity
Trust capital attributable to equity participants
Capital                                                             41              390,316    390,316
Reserves                                                                            134,069    (55,728)


Total trust capital                                                                 524,385    334,588

Non-controlling interests                                           32              562,919           -



Total equity                                                                      1,087,304    334,588


Total equity and liabilities                                                      6,470,339    831,625


Number of trust capital participation units                                       3,955,606   3,955,606
Book value per unit                                                                 $132.57      $84.59




                                         12     Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
          CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER
                                                         (Thousands of US dollars)




                                                                                 Notes          2010        2009

Continuing operations
Income
Fund management and services                                                         33          23,476      20,105
Income from investments with Islamic institutions                                                 9,131       3,263
Net trading income                                                                   23           8,357           5
Income from investments in financings                                                24         124,415      12,705
Fee and commission income                                                            25          35,306       3,343
Losses from investment securities                                                    10         (59,165)          -
Dividend income                                                                      26          51,611         156
Other income                                                                         27          33,749        (472)


                                                                                                 226,880      39,105
Distribution to Massaref account holders                                                        (178,183)    (14,500)


Operating income                                                                                 48,697      24,605

Expenses
Staff costs                                                                        28            (91,283)    (23,475)
General and administrative expenses                                                29            (81,405)     (8,604)
Depreciation and amortisation                                                   15,16            (55,766)     (3,700)
Exchange gain/(loss)                                                                                 833        (210)
Provisions                                                                           21         (112,998)          -


Total expenses                                                                                  (340,619)    (35,989)

Operating (loss)                                                                                (291,922)    (11,384)

Share of profit/(loss) of associated companies                                       14         360,716      (95,883)


Profit/(loss) before income taxes                                                                68,794     (107,267)
Taxes                                                                                31           8,600            -


Gain/(loss) after income taxes from continuing operations                                        77,394     (107,267)

Discontinued operations
(Loss)/profit from discontinued operations                                      17,42                  -      (1,769)


Profit/(loss) after income taxes                                                                 77,394     (109,036)


Attributable to:
Equity participants                                                                             130,157     (108,923)
Non-controlling interests                                                            32         (52,763)        (113)


                                                                                                 77,394     (109,036)


The notes on pages 18 to 83 form an integral part of these consolidated financial statements.




                                                 13        Dar Al-Maal Al-Islami Trust
                                                           Annual Report 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER
                                                           (Thousands of US dollars)




                                                                                2010                                      2009
                                                               Equity holders          Non-controlling   Equity holders          Non-controlling
                                                  Notes                                   interests                                 interests

  (Loss)/profit after income taxes                                130,157                 (52,763)        (108,923)                     (113)

  Movements in reserves due to
    conversion of an associate
    to a subsidiary                                                40,263                612,007                     -                       -
  Movements in reserves due to
    acquisition of a subsidiary                                     (1,009)                (6,153)                   -                       -
  Movements in fair value reserves
    of associated companies                                        20,543                  (3,853)           26,685                          -
  Movements in currency translation
    of associated companies                                         (9,660)                         -        (5,401)                         -
  Movements in other reserves of
    associated companies                                              (194)                         -        (3,634)                         -
  Movements in currency translation
    due to disposal of
    associated companies                       17,42                          -                     -           (944)                        -
  Movements in currency
    translation due to disposal
    of a subsidiary                            17,42                 2,016                   1,654               108                 (1,415)
  Movement in fair value of
    available-for-sale investments                                      401                (2,085)                   -                       -
  Movements in fair value reserves
    due to disposal of
    available-for-sale investments
    in a subsidiary                                                     316                       890              60                        -
  Transfer to income statement
    due to impairment of
    available-for-sale investments                                   2,572                   5,432                   -                       -
  Movements in deferred tax of
    available-for-sale investments                                  (1,090)                (2,062)                   -                       -
  Foreign currency translation
    differences for foreign entities                                 5,482                   9,852                 18                    (33)


  Other comprehensive income                                       59,640                615,682             16,892                  (1,448)


  Continued operations                                            189,797                562,919            (90,450)                      -
  Discontinued operations                                               -                      -             (1,581)                 (1,561)


  Total comprehensive income/(loss)                            189,797                 562,919           (92,031)                  (1,561)




  The notes on pages 18 to 83 form an integral part of these consolidated financial statements.




                                                   14        Dar Al-Maal Al-Islami Trust
                                                             Annual Report 2010
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
                                                            (Thousands of US dollars)


                                                                       Attributable to equity participants

                                             Paid in       Fiduciary       Fair value      Currency            Other      Total  Non-controlling    Total
                                   Note      capital        reserve         reserve       translation        reserves   reserves    interests      equity


  At 1 January 2009                        410,316         22,453         (24,817) (32,377) 78,733                      43,992        1,561 455,869


  Total comprehensive
   income/(loss)                                       -           -       26,745          (6,219)(112,557) (92,031)                 (1,561) (93,592)
  Dividend declared                                    -           -                 -              - (27,689) (27,689)                      - (27,689)
  Allocation to fiduciary
    reserves                        41     (20,000) 20,000                           -              -               -   20,000               -              -




  At 31 December 2009                      390,316         42,453            1,928       (38,596) (61,513) (55,728)                          - 334,588




  Total comprehensive
   income/(loss)                                       -           -       42,198         55,993         91,606 189,797            562,919 752,716
  Dividend declared                                    -           -                 -              -               -          -             -              -
  Allocation to fiduciary
    reserves                        41                 - 125,000                     -              - (125,000)                -             -              -




  At 31 December 2010                      390,316 167,453                 44,126         17,397 (94,907) 134,069                  562,919 1,087,304




  The notes on pages 18 to 83 form an integral part of these consolidated financial statements.




                                                   15         Dar Al-Maal Al-Islami Trust
                                                              Annual Report 2010
  CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER
                                                         (Thousands of US dollars)



                                                                                 Notes          2010        2009

Cash flows from operating activities
 (including discontinued operations - Note 17)
(Loss)/profit before taxes and non-controlling interests                                         68,794     (108,969)

Adjustments for:

Depreciation and amortisation                                                   15,16             55,766       3,748
Fair value adjustments on trading securities                                                      (7,265)          -
Fair value adjustment on investments in financings                                 24             18,035     (10,714)
Loss on sale of discontinued operations                                         17,42                  -       1,040
(Gain)/loss on sale/liquidation of subsidiary                                                    (38,929)        644
(Income)/loss from associated companies                                          14             (360,716)     96,320
Changes in fair value of investment properties                                   13               12,314           -
Provisions for impairment                                                9,10,15,16              197,498           -



Operating loss before changes in operating assets and liabilities                                (54,503)    (17,931)
Net (increase)/decrease in investments with Islamic institutions                                (114,634)     10,817
Net decrease of trading securities                                                                 5,345       2,099
Net decrease in investments in financings                                                        512,516          80
Net (increase)/decrease of investment securities                                     10         (117,114)        875
Net decrease in accounts receivable                                                               53,201       9,596
Net increase/(decrease) in accounts payable, excluding taxes                                     152,016      (5,257)
Net (decrease) in Massaref accounts                                                             (115,828)     (4,699)
Taxes paid                                                                                       (18,936)         (1)



Net cash provided by/(used in) operating activities                                             302,063       (4,421)




The notes on pages 18 to 83 form an integral part of these consolidated financial statements.




                                                 16        Dar Al-Maal Al-Islami Trust
                                                           Annual Report 2010
  CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER
                                                         (Thousands of US dollars)



                                                                                 Notes          2010        2009

Cash flows from investing activities
Advance against investment                                                          5                  -    (24,993)
Purchase of investment property                                                    13            (16,415)         -
Sale of investment property                                                        13             27,054          -
Investments in associated companies                                                14             (8,000)      (805)
Dividends from associated companies                                                14             10,162      5,808
Purchase of property, plant and equipment and intangibles                       15,16            (10,569)      (682)
Sale of property, plant and equipment and intangibles                           15,16              3,243          -
Cash outflow on purchase of non-controlling interests                                             (5,829)         -
Cash inflow on sale of a subsidiary                                                               90,430        489
Cash outflow on purchase of a subsidiary                                                         (58,272)         -
Cash inflow on conversion of an associate to a subsidiary                            42          487,334          -
Cash outflow on conversion of an associateto a subsidiary                                       (100,000)         -



Net cash provided by/(used in) investing activities                                             419,138     (20,183)



Cash flows from financing activities
Dividends paid                                                                                    (2,267)   (23,155)
Cash outflow on sale of discontinued operations                                 17,42                  -     (5,963)
Net purchase of treasury shares                                                                   (1,337)         -



Net cash (used in) financing activities                                                           (3,604)   (29,118)



Foreign currency translation adjustments                                                         11,403         (56)



Net (decrease)/increase in cash and cash equivalents                                            729,000     (53,778)

Cash and cash equivalents at beginning of year                                                   38,962     92,740



Cash and cash equivalents at end of year                                                        767,962     38,962




The notes on pages 18 to 83 form an integral part of these consolidated financial statements.




                                                 17        Dar Al-Maal Al-Islami Trust
                                                           Annual Report 2010
                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Formation and activities               judgement in the process of applying     interest in Ithmaar Bank B.S.C. on
                                          the Group’s accounting policies. The     31 March 2010. This acquisition has
Dar Al-Maal Al-Islami Trust (DMI)         areas involving a higher degree of       occurred in stages. The revised
was formed by indenture under             judgement or complexity, or areas        standard requires goodwill to be
the laws of the Commonwealth              where assumptions and estimates          determined only at the acquisition
of The Bahamas for the purpose            are significant to the consolidated      date rather than at the previous
of conducting business affairs            financial statements, are disclosed in   stages. The determination of
in conformity with Islamic law,           note 3.                                  goodwill includes the previously
principles and traditions. DMI                                                     held equity interest to be adjusted to
subsidiaries and associates offer         Impact of New Accounting                 fair value, with any gain or loss
a wide range of Islamic financial         Pronouncements:                          recorded in the consolidated
services including investment,            International Financial                  statement of income. Acquisition-
commercial and private banking,           Reporting Standards                      related costs of $24.0 million (note
private equity, public and private                                                 29) were recognised in the
issue of securities, mergers              New and amended                          consolidated statement of income,
and acquisitions advice, takaful,         standards adopted by the                 which previously would have been
equipment leasing real estate             Group                                    included in the consideration
development and modarabas which                                                    for the business combination. The
                                          The following new standards and
are similar to investment funds. The                                               Group has chosen to recognise the
                                          amendments to standards are
modarabas, being separate entities,                                                proportionate share of net assets of
                                          mandatory for the first time for the
do not have their funds consolidated                                               Ithmaar Bank Group rather than the
                                          financial year beginning 1 January
in the annexed financial statements.                                               non-controlling interest at fair value
                                          2010.
They are included in off-balance                                                   for this acquisition, which is also
sheet accounts as disclosed in            IFRS 3 (revised), ‘Business              allowed. Previously there was no
note 33.                                  combinations’ , and consequential        choice. See note 42 for further
                                          amendments        to    IAS     27,      details of the business combination
2. Accounting policies                    ‘Consolidated      and     separate      that occurred in 2010.
                                          financial statements’, IAS 28,
The principal accounting policies         ‘Investments in associates’, and IAS     IAS 27 (revised) requires the effects
adopted in the preparation of these       31, ‘Interests in joint ventures’,       of all transactions with non-
consolidated financial statements         are effective prospectively to           controlling interests to be recorded
are set out below. These policies         business combinations for which          in equity if there is no change in
have been consistently applied to         the acquisition date is on or after      control and these transactions will
all the years presented, unless           the beginning of the first annual        no longer result in goodwill or gains
otherwise stated.                         reporting period beginning on or         and losses. The standard also
                                          after 1 July 2009.                       specifies the accounting when
Basis of preparation                                                               control is lost. Any remaining
                                          The revised standard continues to        interest in the entity is re-measured
The consolidated financial statements     apply the acquisition method to          to fair value, and a gain or loss is
of DMI and its subsidiaries (the          business combinations but with           recognised in profit or loss. IAS 27
Group) are prepared in accordance         some significant changes compared        (revised) has had no impact on the
with International Financial Reporting    with IFRS 3. For example, all            current period, as none of the non-
Standards (IFRS) and IFRS                 payments to purchase a business          controlling interests have a deficit
interpretations. The consolidated         are recorded at fair value at the        balance and there have been no
financial statements are prepared         acquisition date, with contingent        transactions whereby an interest in
under the historical cost convention,     payments classified as debt              an entity is retained after the loss
as modified by the revaluation of         subsequently re-measured through         of control of that entity. Transactions
available-for-sale financial assets,      the income statement. There is a         with non-controlling interests are
trading securities, financial assets      choice on an acquisition-by-             detailed in note 42.
and financial liabilities held at         acquisition basis to measure the
fair value through profit or loss,        non-controlling interest in the          IAS 38 (amendment), ‘Intangible
derivative instruments and investment     acquiree either at fair value or         assets’, effective 1 January 2010.
property.                                 at the non-controlling interest’s        The amendment clarifies guidance
                                          proportionate share of the acquiree’s    in measuring the fair value of an
The preparation of financial              net assets. All acquisition-related      intangible asset acquired in a
statements in conformity with IFRS        costs are expensed.                      business combination and permits
requires the use of certain critical                                               the grouping of intangible assets
accounting estimates. It also             The revised standard was applied to      as a single asset if each asset has
requires management to exercise its       the acquisition of the controlling       similar useful economic lives.



                                         18     Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

New and amended                           goods or services (or to do both).        notwithstanding the fact that the
standards, and                                                                      entity could be required by the
interpretations mandatory                 IFRIC 9, ‘Reassessment of                 counterparty to settle in shares at
for the first time for                    embedded derivatives and IAS 39,          any time.
the financial year beginning              Financial instruments: Recognition
1 January 2010                            and measurement’, effective 1 July        IAS 36 (amendment), ‘Impairment
but not currently relevant                2009. This amendment to IFRIC 9           of assets’, effective 1 January
to the Group                              requires an entity to assess whether      2010. The amendment clarifies that
(although they may affect                 an embedded derivative should be          the largest cash-generating unit
the accounting for future                 separated from a host contract            (or group of units) to which
transactions and events)                  when the entity reclassifies a hybrid     goodwill should be allocated for the
                                          financial asset out of the ‘fair value    purposes of impairment testing is
The following standards and               through profit or loss’ category.         an operating segment, as defined
amendments to existing standards          This assessment is to be made             by paragraph 5 of IFRS 8,
have     been    published     and        based on circumstances that               ‘Operating Segments’ (that is, before
are mandatory for the Group’s             existed on the later of the date the      the aggregation of segments with
accounting periods beginning after        entity first became a party to the        similar economic characteristics).
1 January 2010 or later periods,          contract and the date of any contract
but the Group has not early adopted       amendments that significantly             IFRS 2 (amendments), ‘Group
them.                                     change the cash flows of the              cash-settled share-based payment
                                          contract. If the entity is unable to      transactions’, effective from 1
IFRIC 17, ‘Distribution of non-           make this assessment, the hybrid          January 2010. In addition to
cash assets to owners’ (effective         instrument must remain classified         incorporating IFRIC 8 ‘Scope of
on or after 1 July 2009). The             as at fair value through profit or loss   IFRS2’, and IFRIC 11, ‘IFRS 2 –
interpretation was published in           in its entirety.                          Group      and    treasury      share
November 2008. This interpretation                                                  transactions’, the amendments
provides guidance on accounting           IFRIC 16, ‘Hedges of a net                expand on the guidance in IFRIC 11
for arrangements whereby an entity        investment in a foreign operation’        to address the classification of
distributes non-cash assets to            effective 1 July 2009.           This     group arrangements that were not
shareholders either as a distribution     amendment states that, in a hedge         covered by that interpretation.
of reserves or as dividends. IFRS 5       of a net investment in a foreign
has also been amended to require          operation, qualifying hedging             IFRS 5 (amendment), ‘Non-current
that assets are classified as held        instruments may be held by any            assets held for sale and
for distribution only when they           entity or entities within the Group,      discontinued operations’. The
are available for distribution in         including the foreign operation           amendment clarifies that IFRS 5
their present condition and the           itself, as long as the designation,       specifies the disclosures required in
distribution is highly probable.          documentation and effectiveness           respect of non-current assets (or
                                          requirements of IAS 39 that relate to     disposal groups) classified as
IFRIC 18, ‘Transfers of assets from       a net investment hedge are satisfied.     held for sale or discontinued
customers’, effective for transfer of     In particular, the Group should           operations. It also clarifies that the
assets received on or after 1 July        clearly document its hedging              general requirement of IAS 1 still
2009. This interpretation clarifies       strategy because of the possibility of    apply, in particular paragraph 15
the requirements of IFRS’s for            different designations at different       (to achieve a fair presentation)
agreements in which an entity             levels of the Group.                      and paragraph 125 (sources of
receives from a customer an item of                                                 estimation uncertainty) of IAS 1.
property, plant and equipment that        IAS 1 (amendment), ‘Presentation
the entity must then use either to        of financial statements’. The             New standards,
connect the customer to a network         amendment clarifies that the              amendments and
or to provide the customer with           potential settlement of a liability by    interpretations issued
ongoing access to a supply of             the issue of equity is not relevant to    but not effective
goods or services (such as a supply       its classification as current or non      for the financial year
of electricity, gas or water). In some    current. By amending the definition       beginning 1 January 2010
cases, the entity receives cash from      of current liability, the amendment       and not early adopted.
a customer that must be used only         permits a liability to be classified as
to acquire or construct the item of       non-current (provided that the            IFRS 9, ‘Financial instruments’,
property, plant, and equipment in         entity has an unconditional right to      issued in November 2009. This
order to connect the customer to a        defer settlement by transfer of cash      standard is the first step in the
network or provide the customer           or other assets for at least 12           process to replace IAS 39,
with ongoing access to a supply of        months after the accounting period)       ‘Financial instruments: recognition



                                         19     Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
                        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

and measurement’. IFRS 9                   liabilities with equity instruments’,      shareholding of more than one half
introduces new requirements for            effective 1 July 2010. The                 of the voting rights. The existence
classifying and measuring financial        interpretation        clarifies      the   and effect of potential voting rights
assets and is likely to affect the         accounting by an entity when               that are currently exercisable or
Group’s accounting for its financial       the terms of a financial liability         convertible are considered when
assets and liabilities. The standard       are renegotiated and result in the         assessing whether the Group
is not applicable until 1 January          entity issuing equity instruments to a     controls another entity. Subsidiaries
2013 but is available for early            creditor of the entity to extinguish all   are fully consolidated from the date
adoption.                                  or part of the financial liability (debt   on which control is transferred to
                                           for equity swap). It requires a gain       the Group. They are de-consolidated
Revised IAS 24 (revised), ‘Related         or loss to be recognised in profit or      from the date on which control
party disclosures’, issued in              loss, which is measured as the             ceases.
November 2009. It supersedes IAS           difference between the carrying
24, ‘Related party disclosures’,           amount of the financial liability          The purchase method of accounting
issued in 2003. IAS 24 (revised) is        and the fair value of the equity           is used to account for the acquisition
mandatory for periods beginning on         instruments issued. If the fair value      of subsidiaries by the Group. The
or after 1 January 2011. Earlier           of the equity instruments issued           cost of an acquisition is measured
application, whole or in part, is          cannot be reliably measured, the           as the fair value of the assets
permitted. The revised standard            equity instruments should be               given, equity instruments issued
clarifies and simplifies the definition    measured to reflect the fair value         and liabilities incurred or assumed
of a related party and removes the         of the financial liability extinguished.   at the date of exchange, plus
requirement for government-related         The Group will apply the                   costs directly attributable to
entities to disclose details of all        interpretation from 1 January 2011.        the acquisition. Identifiable assets
transactions with the government                                                      acquired and liabilities and
and other government-related               ‘Prepayments of a minimum                  contingent liabilities assumed in
entities. The Group will apply the         funding requirement’ (amendments           a business combination are
revised standard from 1 January            to IFRIC 14). The amendments               measured initially at their fair values
2011. When the revised standard            correct an unintended consequence          at the acquisition date, irrespective
is applied, the Group and the              of IFRIC 14, ‘IAS 19 – The limit           of the extent of any non-controlling
parent will need to disclose               on a defined benefit asset,                interest. The excess of the cost of
any transactions between its               minimum funding requirements and           acquisition over the fair value of the
subsidiaries and its associates.           their interaction’. Without the            Group’s share of the identifiable net
                                           amendments, entities are not               assets acquired is recorded as
‘Classification of rights issues’          permitted to recognise as an asset         goodwill. If the cost of acquisition is
(amendment to IAS 32), issued in           some voluntary prepayments for             less than the fair value of the net
October 2009. The amendment                minimum funding contributions.             assets of the subsidiary acquired,
applies     to   annual     periods        This was not intended when                 the difference is recognised directly
beginning on or after 1 February           IFRIC 14 was issued, and the               in the consolidated statement of
2010. Earlier application is               amendments correct this. The               income.
permitted.     The    amendment            amendments are effective for
addresses the accounting for rights        annual periods beginning 1 January         Intercompany transactions, balances
issues that are denominated in a           2011. Earlier application is               and unrealised gains on transactions
currency other than the functional         permitted. The amendments should           between group companies are
currency of the issuer. Provided           be applied retrospectively to              eliminated. Unrealised losses are
certain conditions are met, such           the earliest comparative period            also eliminated unless the
rights issues are now classified           presented. The Group will apply            transaction provides evidence of an
as equity regardless of the                these amendments for the financial         impairment of the asset transferred.
currency in which the exercise             reporting period commencing on             Subsidiaries’ accounting policies
price is denominated. Previously,          1 January 2011.                            have been changed where
these issues had to be accounted                                                      necessary to ensure consistency
for as derivative liabilities. The         Consolidation                              with the policies adopted by the
amendment applies retrospectively                                                     Group.
in accordance with IAS 8                   (a) Subsidiaries
‘Accounting policies, changes in                                                      Costs      associated      with    the
accounting estimates and errors’.          Subsidiaries are all entities (including   restructuring of a subsidiary as a
The Group will apply the amended           special purpose entities) over which       part of the acquisition or subsequent
standard from 1 January 2011.              the Group has the power to                 to the acquisition are included in the
                                           govern the financial and operating         consolidated statement of income
IFRS 19, ‘Extinguishing financial          policies generally accompanying a          upon the date of commitment.



                                          20     Dar Al-Maal Al-Islami Trust
                                                 Annual Report 2010
                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(b) Transactions and                      are initially recognised at cost. The    subsidiaries are measured using
    non-controlling interests             Group’s investment in associates         the currency of the primary
                                          includes goodwill (net of any            economic environment in which the
The Group treats transactions             accumulated impairment loss)             entity operates (the functional
with non-controlling interests as         identified on acquisition.               currency). The consolidated financial
transactions with equity owners of                                                 statements are presented in United
the Group. For purchases from non-        The Group’s share of its associates’     States dollars, which is DMI’s
controlling interests, the difference     post-acquisition profits or losses is    functional and presentation currency.
between any consideration paid and        recognised in the consolidated
the relevant share acquired of the        statement of income, and its share       (b) Transactions and balances
carrying value of net assets of the       of post-acquisition movements in
subsidiary is recorded in equity.         reserves is recognised in reserves.      Foreign currency transactions are
Gains or losses on disposals to           The cumulative post-acquisition          translated into the functional
non-controlling interests are also        movements are adjusted against the       currency using the exchange
recorded in the statement of              carrying amount of the investment.       rates prevailing at the dates of
comprehensive income.                     When the Group’s share of losses in      the transactions. Foreign exchange
                                          an associate equals or exceeds its       gains and losses resulting from the
When the Group ceases to have             interest in the associate, including     settlement of such transactions and
control or significant influence, any     any other unsecured receivables,         from the translation at year-end
retained interest in the entity is        the Group does not recognise             exchange rates of monetary assets
remeasured to its fair value, with        further losses, unless it has incurred   and liabilities denominated in
the change in carrying amount             obligations or made payments on          foreign currencies are recognised
recognised in profit or loss. The fair    behalf of the associate.                 in the consolidated statement
value is the initial carrying amount                                               of income, except where hedge
for the purposes of subsequently          Unrealised gains on transactions         accounting is applied.
accounting for the retained interest      between the Group and its
as an associate, joint venture or         associates are eliminated to the         Translation differences on non-
financial asset.                          extent of the Group’s interest in        monetary items, such as equities
                                          the associates. Unrealised losses        held at fair value through profit or
In addition, any amounts previously       are also eliminated unless the           loss, are reported as part of their
recognised in other comprehensive         transaction provides evidence of an      fair value gain or loss. Translation
income in respect of that entity are      impairment of the asset transferred.     differences on non-monetary items,
accounted for as if the Group had         Accounts for associated companies        such as equities classified as
directly disposed of the related          have been restated to conform            available-for-sale financial assets,
assets or liabilities. This may mean      with Group accounting policies, if       are included in the consolidated
that amounts previously recognised        necessary, except as otherwise           statement of comprehensive income.
in other comprehensive income are         disclosed.
reclassified to profit or loss.
                                                                                   (c) Group companies
                                          Where a subsidiary or an associated
If the ownership interest in an           company is acquired and held
associate is reduced but significant                                               The results and financial position
                                          exclusively with a view to its
influence is retained, only a                                                      of all group entities (none of
                                          disposal within the next twelve
proportionate share of the amounts                                                 which has the currency of a hyper
                                          months, the subsidiary or associated
previously recognised in other                                                     inflationary economy) that have a
                                          company is classified as an
comprehensive         income     are                                               functional currency different from the
                                          investment held for sale in the
                                                                                   presentation currency are translated
reclassified to profit or loss where      Group’s consolidated financial
                                                                                   into the presentation currency as
appropriate.                              statements.
                                                                                   follows:
                                          Dilution gains and losses arising in
(c) Associates                            investments in associates are               (i) assets and liabilities for each
                                          recognised in the income statement.         statement of financial position
Associates are all entities over                                                      presented are translated at the
which the Group has significant                                                       closing rate at the date of that
                                          Foreign currency translation                statement of financial position;
influence but not control, generally
accompanying a shareholding               (a) Functional and presentation             (ii) income and expenses for
of between 20% and 50% of                     currency                                each statement of income are
the voting rights. Investments in                                                     translated at average exchange
associates are accounted for by the       Items included in the financial             rates (unless this average is not
equity method of accounting and           statements of each of the Group’s           a reasonable approximation of



                                         21     Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
                      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

   the cumulative effect of the rates    fair value of a recognised asset          therefore treated as derivatives held
   prevailing on the transaction         or liability (fair value hedge); or       for trading with fair value gains and
   dates, in which case income           (b) a hedge of highly probable            losses reported in the consolidated
   and expenses are translated at        future cash flows attributable            statement of income.
   the dates of the transactions);       to a recognised asset or liability, a
   and                                   forecast transaction or a firm
                                         commitment (cash flow hedge). At
                                                                                   Income from investments
   (iii) all resulting exchange                                                    with Islamic institutions and
   differences are recognised as         present the Group does not hedge
                                         future cash flows. Hedge accounting
                                                                                   investments in financings
   a separate component in the
   statement of comprehensive            is used for derivatives provided
                                                                                   Income from investments with
   income.                               certain criteria are met.
                                                                                   Islamic institutions and investments
                                                                                   in financings, which are included in
Exchange differences arising from        The Group’s criteria for a derivative
                                                                                   the IAS 39 category “Loans and
the translation of the net investment    instrument to be accounted for as a
                                                                                   Receivables”, are both contractually
in foreign entities, and of              hedge include:
                                                                                   determined and quantifiable at the
borrowings and other currency                                                      commencement of the transaction,
instruments designated as hedges         (a) Formal documentation of the
                                                                                   are accrued on the effective return
of such investments, are taken to        hedging instrument, hedged item,
                                                                                   method basis over the period
the statement of comprehensive           hedging objective, strategy and
                                                                                   of the transaction. Where income is
income on consolidation. When            relationship is prepared before
                                                                                   not contractually determined or
a foreign operation is sold, such        hedge accounting is applied;
                                                                                   quantifiable, it is recognised when
exchange differences are recognised      (b) the hedge is documented
                                                                                   reasonably certain of realisation
in the consolidated statement of         showing that it is expected to be
                                                                                   or when realised. Once a financial
income as part of the gain or loss       highly effective in offsetting the risk
                                                                                   asset or a group of similar financial
on sale.                                 in the hedged item throughout the
                                                                                   assets has been written down as a
                                         reporting period; and (c) the hedge
                                                                                   result of an impairment loss, income
Goodwill and fair value adjustments      is highly effective on an ongoing
                                                                                   is thereafter recognised using the
arising on the acquisition of a          basis.
                                                                                   rate of return used to discount the
foreign entity are treated as assets                                               future cash flows for the purpose of
and liabilities of the foreign entity    Changes in the fair value of the
                                                                                   measuring the impairment loss.
and translated at the closing rate.      effective portions of derivatives that
                                         are designated and qualify as fair
                                         value hedges and that prove               Fee and commission income
Derivative financial                     to be highly effective in relation to
instruments and hedging                  hedged risk, are recorded in the          Fees and commissions are generally
                                         consolidated statement of income,         recognised as income when earned.
Derivative financial instruments         along with the corresponding              Origination fees for financings which
including      foreign     exchange      change in fair value of the hedged        are probable of being drawn down,
contracts, equity options and equity     asset or liability that is attributable   are deferred and recognised over
futures are initially recognised         to that specific hedged risk.             the term of the financing as an
in the consolidated statement of                                                   adjustment to the effective yield.
financial position at fair value and     If the fair value hedge no longer         Structuring fees, commission and
subsequently remeasured at their         meets the criteria for hedge              fees arising from negotiating or
fair value. Fair values are obtained     accounting, an adjustment to the          participating in the negotiation of an
from quoted market prices in active      carrying amount of a hedged               Islamic transaction for a third party,
markets, discounted cash flow            financial instrument is amortised in      are recognised on completion of the
models, and options pricing models       the consolidated statement of             underlying transaction.
as appropriate. All derivatives are      income over the period to maturity.
carried as assets when fair value is     The adjustment to the carrying            Asset management fees related to
positive and as liabilities when fair    amount of a hedged equity security        investment funds are recognised
value is negative.                       remains in retained earnings until        over the period the service is
                                         the disposal of the equity security.      provided and are recorded in fund
Changes in the fair value of                                                       management and services income
derivatives held for trading are         Certain derivative transactions,          when capable of being reliably
included in trading income.              while providing effective economic        measured.
                                         hedges under the Group’s risk
On the date a derivative contract is     management policies, do not               Management advisory and technical
entered into, the Group designates       qualify for hedge accounting under        service fees are recognised based
derivatives as either (a) a hedge of     the specific rules in IAS 39 and are      on applicable service contracts



                                        22     Dar Al-Maal Al-Islami Trust
                                               Annual Report 2010
                        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

usually on a time-apportioned basis         Financial Assets                           the date that the Group commits to
and are recorded in other income.                                                      purchase or sell the asset.
                                            The Group classifies its financial
Distribution to Massaref                    assets into the following categories:      (b) Loans and receivables
account holders                             financial assets at fair value through
                                            profit or loss; loans and receivables;     Loans and receivables, which
Massaref accounts are included in           held-to-maturity investments and           include investments in financings,
the IAS 39 category of “Other               available-for-sale financial assets.       are non-derivative financial assets
Financial Liabilities” which are            The classification of investments is       with fixed or determinable payments
measured at amortised cost and the          determined at initial recognition.         that are not quoted in an active
resulting expense charged to the            Financial assets are initially             market other than: (a) those that the
consolidated statement of income            recognised at fair value plus              Group intends to sell immediately
as a distribution to Massaref               transaction costs for all financial        or in the short term, which are
account holders represents the share        assets not carried at fair value           classified as held for trading, and
of the Group’s income from all              through profit or loss (refer to           those that the entity upon initial
sources which is due to customers           details below). Financial assets are       recognition designates as at fair
of the Group under contractual              derecognised when the rights to            value through profit or loss; (b)
arrangements in force.                      receive cash flows from the financial      those that the entity upon initial
                                            assets have expired or when the            recognition designates as available-
Sale and repurchase                         Group has transferred substantially        for-sale; or (c) those for which the
agreements                                  all risks and rewards of ownership.        holder may not recover substantially
                                                                                       all of its initial investment, other
Securities sold subject to a linked         (a) Financial assets at fair value         than because of credit deterioration.
repurchase agreement (repos) are                through profit or loss                 In general, they arise when the
recognised in the consolidated                                                         Group provides money, goods or
statement of financial position and         This category includes financial           services directly to a debtor with no
are measured in accordance with             assets held for trading, including         intention of trading the receivable
related accounting policies for             trading securities, and those              and also includes purchased loans
trading or investment securities. The       designated at fair value through           and receivables that are not quoted
counterparty liability for amounts          profit or loss at inception. A financial   in an active market. Loans and
received under these agreements is          asset is classified in this category       receivables are carried at amortised
included in customer investment             if acquired principally for the            cost using the effective yield
accounts. The difference between            purpose of selling in the short term       method. All loans are recognised
the sale and repurchase value is            or if so designated by management.         when cash is advanced to the
accrued over the period of the              Derivatives are also categorised as        customer.
contract and recorded as expense            held for trading unless qualifying for
in the consolidated statement of            hedge accounting.                          (c) Held-to-maturity
income.
                                            Financial assets at fair value             Held-to-maturity investments are
Securities purchased under agreement        through profit and loss are initially      non-derivative financial assets with
to resell (reverse repos) are not           recognised at fair value (which            fixed or determinable payments and
recognised in the consolidated              excludes transaction costs) and            fixed maturities and there is the
statement of financial position, as         subsequently carried at fair value         intent and the ability to hold
the Group does not obtain control           based on quoted bid prices. All            them to maturity. If more than an
over the assets. Amounts paid under         related realised and unrealised            insignificant amount of held-to-
these agreements are included               gains and losses are included in           maturity assets is sold, the entire
under investments in financings.            net trading income in the period           category will be considered tainted
The difference between the                  in which they arise. Dividends             and reclassified as available-for-
contracted price and the resale price       declared are included in dividend          sale.
is amortised over the period of             income.
the contract and is recognised                                                         Held-to-maturity investments are
as income in the consolidated               All purchases and sales of financial       carried at amortised cost using
statement of income.                        assets held for trading and at             the effective yield method, less any
                                            fair value through profit and loss         provision for impairment.
Obligations for the return of securities    that require delivery within the
or for forward sales, which are a           time frame established by regulation       (d) Available-for-sale
part of the repurchase agreements,          or market convention (‘regular
are recognised as commitments as            way’ purchases and sales) are              Available-for-sale investments are
disclosed in note 36.                       recognised at trade date, which is         those intended to be held for an



                                           23     Dar Al-Maal Al-Islami Trust
                                                  Annual Report 2010
                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

indefinite period of time, which may      as available-for-sale are recognised       individually assessed financial
be sold in response to needs for          in comprehensive income.                   asset, whether significant or not, it
liquidity or changes in exchange                                                     includes the asset in a group of
rates, equity prices or other market                                                 financial assets with similar credit
                                          Impairment of Financial
rates. All regular way purchases                                                     risk characteristics and collectively
                                          Assets
and sales of investment securities                                                   assesses them for impairment.
are recognised at trade date, which                                                  Assets that are individually
is the date that the entity commits to    (a) Assets carried at amortised cost       assessed for impairment and for
purchase or sell the asset.               The Group assesses at each                 which an impairment loss is or
                                          reporting date whether there is            continues to be recognised are not
Available-for-sale investments are        objective evidence that a financial        included in a collective assessment
initially recognised at fair value        asset or group of financial assets is      of impairment.
(which includes transaction costs)        impaired. A financial asset or a
and subsequently carried at fair          group of financial assets is impaired      The amount of the loss is measured
value. The fair values of quoted          and impairment losses are incurred         as the difference between the asset’s
investments in active markets are         only if there is objective evidence of     carrying amount and the present
based on current bid prices. If the       impairment as a result of one or           value of estimated future cash flows
market for a financial asset is not       more events that occurred after            (excluding future credit losses that
active or the asset is an unlisted        the initial recognition of the asset       have not been incurred) discounted
security, the Group establishes           (a “loss event”) and that loss event       at the financial asset’s original
fair value by using valuation             (or events) has an impact on the           effective profit rate. The carrying
techniques. These include the use         estimated future cash flows of             amount of the asset is reduced
of recent arm’s length transactions,      the financial asset or group of            through the use of an allowance
discounted cash flow analysis,            financial assets that can be reliably      account and the amount of the loss
option pricing models and other           estimated.                                 is recognised in the consolidated
valuation techniques commonly                                                        statement of income. If a loan or
used by market participants.              The criteria that the Group uses           held-to-maturity investment has a
                                          to determine that there is objective       variable profit rate, the discount rate
Unrealised gains and losses arising       evidence of an impairment include:         for measuring any impairment loss
from changes in the fair value of                                                    is the current effective profit rate
securities classified as available-           i) Delinquency in contractual          determined under the contract. As a
for-sale which are not part of a                   payments of principal or          practical expedient, the Group may
hedging relationship are recognised                return;                           measure impairment on the basis of
in comprehensive income. When                 ii) Cash flow difficulties             an instrument’s fair value using an
the securities are disposed of or                  experienced by the borrower       observable market price.
impaired, the related accumulated                  (for example, equity ratio,
fair value adjustments are included                net income percentage of          The calculation of the present value
in the consolidated statement of                   sales);                           of the estimated future cash flows of
income as gains or losses from                iii) Breach of loan covenants or       a collateralised financial asset
investment securities. Dividends                   conditions;                       reflects the cash flows that may
declared are included in dividend             iv) Initiation of bankruptcy           result from foreclosure less costs
income.                                            proceedings;                      for obtaining and selling the
                                              v) Deterioration of the                collateral, whether or not foreclosure
Changes in the fair value of                       borrower’s competitive            is probable.
monetary securities denominated in                 position;
a foreign currency and classified as          vi) Deterioration in the value of      For the purposes of a collective
available for sale are analysed                    collateral; and                   evaluation of impairment, financial
between translation differences               vii) Downgrading below                 assets are grouped on the basis of
resulting from changes in amortised                investment grade level.           similar credit risk characteristics
cost of the security and other                                                       (i.e, on the basis of the Group’s
changes in the carrying amount            The Group first assesses whether           grading process that considers
of the security. The translation          objective evidence of impairment           asset type, industry, geographical
differences on monetary securities        exists individually for financial          location, collateral type, past-due
are recognised in profit and loss;        assets that are individually               status and other relevant factors).
translation differences on non-           significant, and individually or           Those characteristics are relevant to
monetary securities are recognised        collectively for financial assets that     the estimation of future cash flows
in comprehensive income. Changes          are not individually significant. If the   for groups of such assets by being
in the fair value of monetary and         Group determines that no objective         indicative of the debtors’ ability to
non-monetary securities classified        evidence of impairment exists for an       pay all amounts due according to



                                         24     Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
                        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

the contractual terms of the assets        recognised in the consolidated             Impairment of non-financial
being evaluated.                           statement of income.                       assets

Future cash flows in a group               In the case of Islamic financings          Assets that have an indefinite
of financial assets that are               to customers in countries where            useful life are not subject to
collectively evaluated for impairment      there is an increased risk of              amortisation and are tested annually
are estimated on the basis of the          difficulties in servicing external debt,   for impairment. Assets that are
contractual cash flows of the assets       an assessment of the political and         subject to amortisation are reviewed
in the Group and historical loss           economic situation is made and             for impairment whenever events or
experience for assets with credit risk     additional country risk provisions         changes in circumstances indicate
characteristics similar to those in the    may be established.                        that the carrying amount may not
Group. Historical loss experience is                                                  be recoverable. An impairment loss
adjusted on the basis of current           (b) Assets classified                      is recognised for the amount by
observable data to reflect the effects         as available-for-sale                  which the asset’s carrying amount
of current conditions that did not                                                    exceeds its recoverable amount. The
affect the period on which the                                                        recoverable amount is the higher of
                                           In the case of equity investments
historical loss experience is based                                                   an asset’s fair value less costs
                                           classified as available-for-sale, a
and to remove the effects of                                                          to sell and value in use. For the
                                           significant or prolonged decline in
conditions in the historical period                                                   purposes of assessing impairment,
                                           the fair value of the security below
that do not currently exist.                                                          assets are grouped at the lowest
                                           its cost is considered in determining
                                                                                      levels for which there are separately
                                           whether the assets are impaired.
                                                                                      identifiable cash flows (cash-
Estimates of changes in future             If any such evidence exists for
                                                                                      generating units). Non-financial
cash flows for groups of assets            available-for-sale equity financial
                                                                                      assets other than goodwill that
should reflect and be directionally        assets, the cumulative loss -
                                                                                      suffered an impairment are
consistent with changes in related         measured as the difference between
                                                                                      reviewed for possible reversal of the
observable data from period                the acquisition cost and the current
                                                                                      impairment at each reporting date.
to period (for example, changes            fair value, less any impairment loss
in unemployment rates, property            on that financial asset previously
prices, payment status, or other
                                                                                      Investments with Islamic
                                           recognised in profit or loss -
factors indicative of changes in
                                                                                      Institutions
                                           is removed from equity and
the probability of losses in the           recognised in the consolidated
                                                                                      Investments with Islamic institutions
Group and their magnitude). The            statement of income. Impairment
                                                                                      comprises mainly short term
methodology and assumptions                losses recognised in the consolidated
                                                                                      deposits in the form of parallel
used for estimating future cash            statement of income on equity
                                                                                      purchase and sale of currencies and
flows are reviewed regularly by the        instruments are not reversed
                                                                                      commodities (PPSC), which are
Group to reduce any differences            through the consolidated statement
                                                                                      spot purchases of internationally
between loss estimates and actual          of income. If, in a subsequent period,
                                                                                      traded currencies and commodities
loss experience.                           the fair value of a debt instrument
                                                                                      and a corresponding forward sale of
                                           classified as available for sale
                                                                                      the same. For the purpose of
When a loan is uncollectible, it is        increases and the increase can
                                                                                      accounting, these are treated as
written off against the related            be objectively related to an event
                                                                                      term deposits and the return
provision for loan impairment. Such        occurring after the impairment loss
                                                                                      is recorded as income from
loans are written off after all the        was recognised in profit or loss, the
                                                                                      investments with Islamic institutions
necessary procedures have been             impairment loss is reversed through
                                                                                      in the statement of income.
completed and the amount of the            the consolidated statement of
loss has been determined.                  income.
                                                                                      Intangible assets
If, in a subsequent period, the            (c) Renegotiated loans                     (a) Goodwill
amount of the impairment loss
decreases and the decrease can             Loans that are either subject to           Goodwill represents the excess of
be related objectively to an event         collective impairment assessment           the cost of an acquisition over the
occurring after the impairment             or individually significant and            fair value of the Group’s share of
was recognised (such as an                 whose terms have been renegotiated         the net identifiable assets of the
improvement in the debtor’s credit         are no longer considered to be             acquired subsidiary/associate at
rating), the previously recognised         past due but are treated as new            the date of acquisition. Goodwill
impairment loss is reversed by             loans. In subsequent years, the            on acquisitions of subsidiaries
adjusting the allowance account.           asset is considered to be past due         is included in intangible assets.
The amount of the reversal is              and disclosed only if renegotiated.        Goodwill on acquisitions of



                                          25     Dar Al-Maal Al-Islami Trust
                                                 Annual Report 2010
                      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

associates is included in investments    carrying amount of core deposits         is written down immediately to its
in associates. Goodwill on               and customer relationships has           recoverable amount. The asset’s
subsidiaries is tested annually for      been determined by independent           residual value and useful life are
impairment and carried at cost less      appraisers, based on the interest        reviewed, and adjusted if appropriate,
accumulated impairment losses.           differential on the expected deposit     at each statement of financial
An impairment loss is recognised         duration method.                         position date.
for the amount by which the asset’s
carrying amount exceeds its              Investment Property                      Subsequent costs are included in the
recoverable amount. The recoverable                                               asset’s carrying amount or are
amount is an asset’s fair value less     Investment property principally          recognised as a separate asset, as
costs to sell. Gains and losses on       comprises office buildings which         appropriate, only when it is probable
the disposal of an entity include the    are held to earn rental income or for    that future economic benefits
carrying amount of goodwill relating     long-term capital appreciation or        associated with the item will flow to
to the entity sold.                      both. Investment property is treated     the Group and the cost can be
                                         as a long-term investment and is         measured reliably. All other repairs
Goodwill is allocated to cash-           carried at fair value, representing      and renewals are charged to the
generating units for the purpose of      open market value determined             consolidated statement of income
impairment testing.                      annually by reference either to          during the financial period in which
                                         external valuers or to other             they are incurred.
(b) Computer software                    independent valuation sources.
                                         Changes in fair values are recorded      Gains and losses on disposal of
                                         in the consolidated statement of         property, plant and equipment are
Acquired computer software licenses
                                         income and are included in other         determined by comparing proceeds
are capitalised on the basis of the
                                         income. The Group does not classify      with carrying amounts. These are
costs incurred to acquire and bring
                                         operating leases as investment           included as other operating income
to use the specific software. These
                                         property.                                or expenses in the consolidated
costs are amortised on the basis of
                                                                                  statement of income.
the expected useful lives (three to
five years).                             Property, plant and
                                         equipment and depreciation               Leases
Costs associated with developing
                                         Property, plant and equipment            Total payments made under
or maintaining computer software
                                         are stated at historical cost less       operating leases are charged to
programs are recognised as an
                                         subsequent depreciation and              the consolidated statement of
expense as incurred. Costs that
                                         impairment, except for land, which       income on a straight-line basis over
are directly associated with the
                                         is shown at cost less impairment.        the period of the lease. When an
production of identifiable and
                                         Land is not depreciated. Cost            operating lease is terminated before
unique software products controlled
                                         includes expenditure that is directly    the lease period has expired, any
by the Group, and that will
                                         attributable to the acquisition of the   payment required to be made to
probably      generate    economic
                                         items.                                   the lessor by way of penalty is
benefits exceeding costs beyond
                                                                                  recognised as an expense in the
one year, are recognised as
                                         Depreciation is calculated on the        period in which termination takes
intangible assets. Direct costs
                                         straight-line method to write off the    place.
include software development
employee costs and an appropriate        cost of each asset over its estimated
                                         useful life as follows:                  When a Group company is the
portion of relevant overheads.
                                                                                  lessee of property, plant and
                                             Buildings: 50 years                  equipment and the Group has
Computer software development
                                                                                  substantially all the risks and
costs recognised as assets are               Leasehold improvements:              rewards of ownership, they are
amortised using the straight line            over the period of the lease         classified as finance leases.
method over their useful lives.
                                             Furniture, equipment and motor       Finance leases are capitalised
                                             vehicles: 3-10 years                 at the inception of the lease at
(c) Other acquired intangible assets                                              the lower of the fair value of the
                                             Aircraft: 25 years
                                                                                  leased property or the present value
Other acquired intangible assets                                                  of the minimum lease payments.
determined to have finite lives, such    Depreciation is calculated separately    Each lease payment is allocated
as core deposits and customer            for each significant part of an asset    between the liability and finance
relationships, are amortised on a        category. Where the carrying             charges so as to achieve a constant
straight line basis over their           amount of an asset is greater than       rate on the finance balance
estimated useful lives. The original     its estimated recoverable amount, it     outstanding. The corresponding



                                        26     Dar Al-Maal Al-Islami Trust
                                               Annual Report 2010
                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

rental obligations, net of finance        continuing use. A non-current asset       are reclassified and included in the
charges, are included in payables.        must be available for immediate           consolidated statement of income
The profit element of the finance         sale in its present condition subject     from continuing operations for all
cost is charged to the consolidated       only to terms that are usual and          periods presented.
statement of income over the lease        customary for sales of such assets
period. The asset acquired under          (or disposal groups). Its sale must
finance leases is depreciated over        be planned and committed and an           Discontinued Operations
the shorter of the useful life of the     active programme initiated to locate
asset or the lease term.                  a buyer and complete the plan             A discontinued operation is a
                                          within one year. The asset (or            component (cash generating unit)
When a Group company is the               disposal group) must be actively          of an entity that either has been
lessor and assets are held subject to     marketed for a price that is              disposed of or is classified as held
a finance lease, the value of the         reasonable in relation to its current     for sale and a) represents a major
lease payments is recognised as a         fair value.                               business line or geographical area
receivable. The difference between                                                  of operations; b) is part of a
the gross receivable and the present      A non-current asset held for sale         single coordinated plan to dispose
value of the receivable is recognised     is carried at the lower of its carrying   of a separate major business line
as unearned finance income. Lease         amount and the fair value less            or geographical area of operations;
income is recognised over the term        costs to sell. Impairment losses are      or c) is a subsidiary acquired
of the lease using the actuarial          recognised through the consolidated       exclusively with a view to resell.
method.                                   statement of income for any initial or
                                          subsequent write down of the asset        The Group presents after tax results
                                          (or disposal group) to fair value         from discontinued operations as a
Provisions                                less costs to sell. Subsequent gains      single separate component of the
                                          in fair value less costs to sell are      statement of income. Revenues,
Provisions are recognised when
                                          recognised to the extent they do not      expenses, taxes, gains or losses on
the Group has a present legal or
                                          exceed the cumulative impairment          the measurement to fair value less
constructive obligation as a result
                                          losses previously recorded. A non-        costs to sell and cash flows are
of past events; it is more likely than
                                          current asset is not depreciated          additionally disclosed. Prior periods
not that an outflow of resources
                                          while classified as held for sale or      are reclassified in order to present
embodying economic benefits will
                                          while part of a disposal group held       all operations that have been
be required to settle the obligation;
                                          for sale.                                 discontinued by the statement of
and a reliable estimate of the
                                                                                    financial position date of the latest
amount of the obligation can be
                                          The Group separately classifies the       period presented.
made. Provisions are measured at
                                          material non-current assets held
the present value of management’s
                                          for sale (or disposal group) in the
best estimate of the expenditure                                                    Due to banks and financial
                                          consolidated statement of financial
required to settle the obligation at                                                institutions
                                          position. Furthermore, all major
the statement of financial position
                                          classes of assets and liabilities are
date.
                                          disclosed. Any cumulative income          Due to banks and financial institutions
                                          or expense is disclosed as a              are initially recorded at fair value
Employee entitlements to annual
                                          separate item within equity. Prior        and subsequently measure at
leave and long service leave are
                                          period amounts are not re-presented       amortised cost using the effective
recognised when they accrue to
                                          to reflect the classification of the      return method.
employees. A provision is made for
                                          assets (or disposal group) in the
the estimated liability for annual
                                          current period.
leave and long-service leave as a                                                   Borrowings
result of services rendered by
                                          Non-current assets, which are to
employees up to the statement of
                                          be abandoned, are not classified          Borrowings are recognised initially
financial position date.
                                          as held for sale and are reclassified     at fair value net of transaction
                                          as discontinued operations, to the        costs incurred. Borrowings are
Non-current-assets held                   extent they meet the requirements         subsequently stated at amortised
for sale                                  of discontinued operations in the         cost; any difference between
                                          paragraph which follows.                  proceeds net of transaction costs
The Group classifies a non-current                                                  and the redemption value is
asset (or disposal group) as held         If a non-current asset (or disposal       recognised in the consolidated
for sale if its carrying amount will      group) ceases to be classified as         statement of income over the period
be recovered principally through a        held for sale or as discontinued          of the borrowings using the effective
sale transaction rather than through      operations, the results of operations     return method.



                                         27     Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Retirement benefit plans                  The current income tax charge is            Trust capital
                                          calculated on the basis of tax laws         and treasury stock
The Group operates a number               enacted or substantially enacted at
of defined benefit and defined            the date of the statement of financial      Dividends on participation units
contribution pension plans throughout     position in the countries where the         Dividends on participation units are
the world, the assets of which            Group’s subsidiaries and associates         recognised in Trust capital in the
are generally held in separate            operate.                                    period in which they are declared.
trustee-administered funds. The
pension plans are generally                                                           Treasury stock
funded      by    payments       from     Deferred income taxes                       Where DMI purchases its own capital
employees and by the relevant                                                         or obtains rights to purchase its own
Group companies, taking into              Deferred income tax is provided,            capital, the consideration paid is
account the recommendations of            using the comprehensive liability           shown as a deduction from Trust
independent qualified actuaries.          method, for all temporary differences       capital. Gains and losses on sales
                                          arising between the tax bases of            of own capital are charged or
For defined benefit plans, the            assets and liabilities and their            credited to the treasury stock
pension accounting costs are              respective carrying values for              account in Trust capital.
assessed using the projected unit
                                          financial reporting purposes. The           Fiduciary risk reserve
credit method. Under this method,
                                          amount of deferred taxes on these
the cost of providing pensions                                                        The fiduciary risk reserve is a
                                          differences is determined using
is charged to the consolidated                                                        component of Trust capital and is
statement of income so as to spread       the provisions of local tax laws,
                                          including rates, and is adjusted            established by an appropriation
the regular cost over the service                                                     of net profit or, where this is
lives of employees in accordance          upon enactment of changes in
                                                                                      insufficient, by a transfer from paid
with the advice of qualified actuaries    these laws. Provision is made for
                                                                                      in capital, for the financial year to
who carry out a valuation of              potential taxes which could arise on
                                                                                      cover potential fiduciary risks which
the plans every year. The pension         the remittance of retained overseas         might arise and which are not
obligation is measured as the             earnings where there is a current           subject to other specific provision,
present value of the estimated            intention to remit such earnings.           in the Group’s capacity as fund
future cash outflows using high                                                       manager. The fiduciary risk reserve
standard corporate bond rates             A deferred tax asset is recognised          is not distributable.
which have terms to maturity              for all deductible temporary
approximating the terms of the            differences and carry forward of
related liability. Actuarial gains and
                                                                                      Acceptances
                                          unused tax losses and tax credits to
losses arising from experience
                                          the extent that it is probable that         Acceptances comprise undertakings
adjustments, and changes in
                                          future taxable profit will be available     by the Group to pay bills of
actuarial assumptions, in excess
                                          against which the deductible                exchange drawn on customers. The
of the greater of 10% of the value
                                          temporary differences and unused            Group expects most acceptances to
of plan assets or 10% of the
                                          tax losses and tax credits can be           be settled simultaneously with the
defined benefit obligation, are
                                          utilised.                                   reimbursement from the customers.
charged or credited to income over
                                                                                      Acceptances are accounted for
the employees’ expected average
                                          Deferred tax related to fair value          as off-balance sheet transactions
remaining working lives.
                                          remeasurement of investments                and are disclosed as contingent
                                                                                      liabilities and commitments, unless
The Group’s contributions to              available-for-sale which is charged
                                                                                      payment is probable.
defined contribution pension plans        or credited directly to Trust capital, is
are charged in the consolidated           also credited or charged directly to
statement of income in the year to        Trust capital and is subsequently           Cash and cash equivalents
which they relate.                        recognised in the consolidated
                                                                                      For the purposes of the cash
                                          statement of income together with
                                                                                      flow statement, cash and cash
Taxation                                  the deferred gain or loss.
                                                                                      equivalents comprise balances with
                                                                                      maturities of three months or
Taxes are provided and charged            Deferred tax related to fair value          less from the date of acquisition,
in the consolidated statement of          remeasurement of investment property,       including cash and non-restricted
income on the basis of the estimated      which is charged or credited to the         balances with central banks, loans
tax expense payable currently and         consolidated statement of income,           and advances to banks, amounts
in future years, arising in respect of    is also charged or credited to the          due from other banks and short-
the results of current operations.        consolidated statement of income.           term government securities.



                                         28     Dar Al-Maal Al-Islami Trust
                                                Annual Report 2010
                      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fiduciary activities                     there is any observable data            Fair value of investment
                                         indicating that there is a measurable   properties
The Group through its asset              decrease in the estimated future
management subsidiary provides           cash flows. This evidence may           The Group may from time to time
fund management and advisory             include observable data indicating      hold investment properties which
services to third parties which          that there has been an adverse          are carried at fair value, representing
involve the Group making allocation      change in the payment status            open market value determined
and purchase and sale decisions in       of a borrower, or national or           annually by reference either to external
relation to a wide range of financial    local economic conditions that          valuers or to other independent
instruments. Those assets that are       correlate with defaults on assets.      valuation sources.
held in a fiduciary capacity are         The methodology and assumptions
not included in these financial          used for estimating both the amount     Special purpose entities
statements.                              and timing of future cash flows are
                                         reviewed regularly to reduce any        The Group sponsors the formation
Income     arising   from     fund       differences between loss estimates      of special purpose entities (SPE’s)
management and advisory services         and actual loss experience.             primarily for the purpose of allowing
comprises the revenues earned from                                               clients to hold investments. The
the management of the funds in the       Fair value and impairment               Group does not consolidate SPE’s
modarabas accrued on the basis of        of available-for-sale equity            that it does not control. As it can
the terms and conditions of the          investments                             sometimes be difficult to determine
related management agreements.                                                   whether the Group controls an SPE,
Funds under management represent         The Group may from time to time         it makes judgements about its
amounts invested by clients and          hold investments in financial           exposure to the risks and rewards,
placed with funds managed by the         instruments that are not quoted         as well as about its ability to govern
Group.                                   in active markets. Fair values of       operational and financial decisions
                                         such instruments are determined         for the SPE in question. In many
3.   Critical accounting                 using valuation techniques. Where       instances, elements are present
3.   estimates and                       valuation techniques are used to        that considered in isolation indicate
3.   judgements in applying              determine fair values, they are         control or lack of control over an
3.   accounting policies                 validated and periodically reviewed     SPE, but when considered together
                                         by Group management.                    make it difficult to reach a clear
The Group makes estimates and                                                    conclusion. In such cases, the SPE
assumptions that affect the              The Group determines that available-    is consolidated.
reported amounts of assets and           for-sale equity investments are
liabilities, income and expenses.        impaired when there has been a          Income taxes
Estimates and judgements are             significant or prolonged decline in
continually evaluated and are            the fair value below its cost. This     The Group is subject to income taxes
based on historical experience and       determination of what is significant    in some jurisdictions. Estimates are
other factors, including expectations    or prolonged requires judgement. In     required in determining the provision
of future events that are believed       making this judgement, the Group        for income taxes. There are some
to be reasonable under the               evaluates among other factors, the      transactions and calculations for
circumstances. The estimates and         normal volatility in share price.       which the ultimate tax determination
assumptions        that    have     a    In addition, impairment may be          is uncertain. Where the final tax
significant risk of causing a            appropriate when there is evidence      outcome of these matters is different
material adjustment to the carrying      of a deterioration in the financial     from the amounts that were initially
amounts of assets and liabilities        health of the investee, industry and    recorded, such differences impact
within the next financial year are       sector performance, changes in          the income tax and deferred tax
discussed below:                         technology, and operational and         provisions in the period in which
                                         financing cash flows.                   such determination is made.
Impairment of investments
in financings                            On occasion the Group may hold          Impairment of associated
                                         investments whose fair value cannot     companies
The Group reviews its investments        be reliably measured. In those
in financings to assess impairment       instances, full disclosure with a       The Group assesses at each
at least on a quarterly basis. In        description of the investment, the      statement of financial position date
determining whether an impairment        carrying value and an explanation       whether there is objective evidence
loss should be recorded in the           of why fair value cannot be measured    that its investments in associated
consolidated statement of income,        reliably are included in the notes to   companies are impaired. In general,
judgements are made as to whether        the financial statements.               an investment in an associated



                                        29    Dar Al-Maal Al-Islami Trust
                                              Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Critical accounting       company is impaired and an                 have been determined based on
   estimates and             impairment loss incurred when the          estimated future cash flows and
   judgements in applying    carrying amount of the investment          comparisons with market multiples.
   accounting policies       exceeds its recoverable amount. The        These calculations require the use
   (continued)               recoverable amount is defined as           of estimates, which are subject to
                             the higher of its fair value less costs    judgement. Changes in the underlying
                             to sell and its value in use.              assumptions may impact the reported
                                                                        numbers.
                             On assessing its investments for
                             impairment at the year end, the            During 2010 the Group used a
                             Group has relied upon cash flow            discounted cash flow model to arrive
                             projections as approved by the             at a value in use for its assessment of
                             board of the underlying associates         impairment of goodwill in its two main
                             that are based upon judgements             subsidiaries. In its assessment of
                             and estimates related to future            Ithmaar Bank B.S.C. the value in use
                             events which ultimately could              materially exceeded its carrying value
                             have a significant impact on the           and as such no impairment charge
                             recoverable amounts of these               was taken. The key assumptions used
                             investments in the consolidated            in this value in use computation were
                             financial statements.                      a growth rate of 3.2% and discount
                                                                        rates of 11% and 21% for Ithmaar
                             On the basis that the Group used           Bank B.S.C. and Faysal Bank Limited
                             a discounted cash flow model               as the two cash-generating units. A
                             to arrive at a value in use which          shift in either the growth or discount
                             ultimately was higher than both the        rates of 1% would also not have
                             carrying amount and the fair value         resulted in any impairment.
                             less cost to sell (based on the
                             underlying quoted market price),           Management’s assessment of the
                             no impairment charge was recorded          value in use of Islamic Investment
                             in the consolidated financial              Company of the Gulf (Bahamas)
                             statements. Had the assumptions            Limited resulted in an impairment
                             utilised in the discounted cash flow       charge of $35.0 million in the
                             model for future cash flows                consolidated financial statements
                             decreased by 10% this would                on the basis that the recoverable
                             equate to a value in use in Faisal         amount was below the carrying value.
                             Islamic Bank of Egypt of $ 562.6           The key assumptions used in the value
                             million. Had the assumptions               in use computation were a growth rate
                             utilised in the discounted cash            of 1.5% and a discount rate of 13%.
                             flow model for the underlying
                             discounting factor increased by            Pension obligations
                             12.5% this would equate to a value
                             in use in Faisal Islamic Bank              The assumptions the Group has
                             of Egypt of $ 550.0 million. The           to make in connection with the
                             carrying value in the consolidated         actuarial calculation of pension
                             statement of financial position            obligations an pension expenses
                             as at 31 December 2010 for                 affect the discount rate, the expected
                             Faisal Islamic Bank of Egypt was           annual rate of compensation
                             $226.9 million, which is lower             increase, the expected employee
                             than the “value in use” amounts            turnover rate, the expected average
                             mentioned above.                           remaining working life, the expected
                                                                        annual adjustments to pensions
                             Estimated impairment                       and the expected annual return on
                             of goodwill                                plan assets. These assumptions are
                                                                        subject to review by the Group.
                             The Group tests annually whether           A change in any of these key
                             goodwill has suffered any impairment,      assumptions may have an impact
                             in accordance with the accounting          on the projected benefit obligations,
                             policy stated in note 2. The recoverable   funding requirements and periodic
                             amounts of cash-generating units           pension cost.



                            30     Dar Al-Maal Al-Islami Trust
                                   Annual Report 2010
                        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                               (Thousands of US dollars)

4. Financial instruments                   The Group utilises the following           broader concept than the ‘equity’ on
                                           derivative instruments for both            the face of statement of financial
A. Strategy in using financial             hedging and non-hedging purposes.          positions, are:
A. instruments
                                           (i) Currency forwards represent                i) To safeguard the Group’s
By its nature, the Group’s activities      commitments to purchase foreign                ability to continue as a going
are principally related to the use         and domestic currency, including               concern so that it can continue
of financial instruments. The Group        undelivered spot transactions;                 to provide returns for
accepts investments from customers         (ii) equity futures are contractual            shareholders and benefits for
at varying rates of return and for         obligations to receive or sell shares          other stakeholders; and
various periods and seeks to earn          on a future date at a specified price          ii) To maintain a strong capital
above average profits by investing         established in an organised                    base to support the
these funds in high quality assets.        financial market; and (iii) equity             development of its business;
The Group seeks to increase these          options are contractual agreements
margins by consolidating short-            under which the seller (writer)            DMI itself does not engage in
term funds and investing for longer        grants the purchaser (holder) the          banking business and is not
periods at higher return potential         right, but not the obligation,             therefore required to comply with
whilst maintaining sufficient liquidity    either to buy (a call option)              any minimum capital adequacy
to meet all claims that might fall due.    or sell (a put option) at or by a          requirements.
                                           set date or during a set period, a
The Group also seeks to raise its          specific amount of shares at a             In order to maintain or adjust
profit margins by obtaining above          predetermined price. In consideration      capital, the Group may adjust the
average margins, net of provisions,        for the assumption of the risk,            amounts of dividends paid to equity
through transactions with its              the seller receives a premium from         participants, issue new equity or sell
commercial and retail customers.           the purchaser. Options may be              assets to reduce debt. The Group
Such exposures involve not just on-        either exchange-traded or negotiated       monitors capital on the basis of a
balance sheet Islamic financings           between the Group and a customer           gearing ratio. This ratio is calculated
but the Group also enters into             (over the counter).                        as net debt divided by total
Islamically acceptable guarantees                                                     capital. Net debt is calculated as
and other commitments such as                                                         total borrowings less cash and
letters of credit and performance          B. Capital management                      cash equivalents. Total capital is
and other bonds.                                                                      calculated as equity as shown on
                                           The Group’s objectives when                the face of the consolidated financial
The Group also trades in financial         managing capital, which is a               statements.
instruments where it takes positions
in traded and over the counter
instruments including derivatives to
take advantage of short-term market        The Group’s debt-to-equity ratios for the given years were as follows:
movements in the equity and bond
markets and in currency and profit
rates. The individual subsidiary’s                                                          2010               2009
boards place trading limits on the
level of exposure that can be
taken in relation to both overnight        Total debt                                    1,942,978            455,127
and intra-day market positions.            Less: cash and cash equivalents                 (792,395)          (63,955)
With the exception of specific
hedging arrangements, foreign
exchange and profit rate exposures         Net debt                                      1,150,583            391,172
associated with these derivatives
are normally offset by entering into
counterbalancing positions, thereby        Total equity                                     524,385           334,588
controlling the variability in the net
cash amounts required to liquidate
market positions.                          Debt-to-equity ratio                             219%               117%




                                          31     Dar Al-Maal Al-Islami Trust
                                                 Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. Financial instruments      C. Financial risk                         instruments, such as loan
   (continued)                   management                             commitments.         Credit     risk
                                                                        management and control are carried
                              The Group’s activities expose it          out by credit risk management
                              to a variety of financial risks           teams, which report to the Boards of
                              and those activities involve the          Directors through risk management
                              analysis, evaluation, acceptance          committees.
                              and management of some degree
                              of risk or combination of risks.          Credit risk measurement
                              The Group’s aim is to achieve an
                              appropriate balance between risk          Loans and advances
                              and return and minimise potential         The Group has well defined credit
                              adverse effects on the Group’s            structures under which credit
                              financial performance.                    committees, comprising senior
                                                                        officers with required credit
                              The Group’s risk management               background, critically scrutinise
                              policies are designed to identify         and sanction financing. The Group’s
                              and analyse these risks, to set           exposure to credit is measured on
                              appropriate risk limits and controls,     an individual counterparty basis, as
                              and to monitor the risks and              well as by groups of counterparties
                              adherence to limits by means of           that share similar attributes.
                              reliable and up-to-date information       To reduce the potential of risk
                              systems. The Group regularly              concentration, credit limits are
                              reviews its risk management               established and monitored in
                              policies and systems to reflect           light of changing counterparty
                              changes in markets, products and          and market conditions. Besides
                              emerging best practice.                   financial, industry and transaction
                                                                        analysis, the credit evaluation also
                              Risk management is carried out by         includes risk rating systems which
                              individual entities within the Group      gauge risk rating of all customers.
                              under policies approved by their
                              respective Boards of Directors. The       Risk limit control and
                              Boards provide written principles for     mitigation policies
                              overall management, as well as
                              written policies covering specific        The Group manages limits and
                              areas, such as market rate risk,          controls concentrations of credit
                              credit risk and use of non-derivative     risk wherever they are identified –
                              financial instruments. In addition,       in    particular,   to    individual
                              internal audit is responsible             counterparties and groups, and
                              for the independent review of risk        to industries and countries.
                              management and the control
                              environment. The most important           The Group structures the levels of
                              types of risk are credit, liquidity and   credit risk it undertakes by placing
                              market risk. Market risk includes         limits on the amount of risk
                              currency risk, profit rate and other      accepted in relation to one
                              price risk.                               borrower, or groups of borrowers,
                                                                        and to geographical and industry
                              D. Credit risk                            segments. Such risks are monitored
                                                                        on a revolving basis and are subject
                              The Group takes on exposure to            to an annual or more frequent
                              credit risk, which is the risk that a     review, when considered necessary.
                              counterparty will cause a financial       Limits on the level of credit risk by
                              loss for the Group by failing to          industry sector and by country are
                              discharge an obligation. Credit           approved by the boards of directors
                              exposures arise principally in            of Group entities.
                              lending activities that lead to loans
                              and advances (including accounts          The exposure to any one borrower
                              receivables). There is also credit risk   including banks and brokers is
                              in off-balance sheet financial            further restricted by sub-limits



                             32     Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. Financial instruments      covering on- and off-balance sheet      (b) Derivatives
   (continued)                exposures, and daily delivery risk
                              limits                                  The Group maintains control limits
                                                                      on net open derivative positions (i.e.
                              in relation to trading items such as    the difference between purchase and
                              forward foreign exchange contracts.     sale contracts), by both amount
                              Actual exposures in relation to daily   and term. At any one time, the
                                                                      amount subject to credit risk is
                              delivery risk limits are monitored on
                                                                      limited to the current fair value of
                              a daily basis, whereas other limits
                                                                      instruments that are favourable to
                              are monitored on a quarterly, semi
                                                                      the Group (i.e. assets where their
                              annual or annual basis.                 fair value is positive), which in
                                                                      relation to derivatives is only a
                              Exposure to credit risk is also         small fraction of the contract, or
                              managed through regular analysis        notional values used to express the
                              of the ability of borrowers and         volume of instruments outstanding.
                              potential borrowers to meet payment     This credit risk exposure is
                              obligations and by changing these       managed as part of the overall
                              lending limits where appropriate.       lending limits with customers,
                                                                      together with potential exposures
                              Some other specific control and         from market movements. Collateral
                              mitigation measures are outlined        or other security is not usually
                              below.                                  obtained for credit risk exposures on
                                                                      these instruments, except where the
                                                                      Group requires margin deposits
                              (a) Collateral
                                                                      from counterparties.
                              The Group employs a range of
                                                                      Settlement risk arises in any
                              policies and practices to mitigate      situation where a payment in cash,
                              credit risk. The most traditional of    securities or equities is made in
                              these is the taking of security for     the expectation of a corresponding
                              funds advances, which is common         receipt in cash, securities or
                              practice. The principal collateral      equities. Daily settlement limits are
                              types for loans and advances are:       established for each counterparty to
                                                                      cover the aggregate of all settlement
                                  i) Mortgages over residential       risk arising from the Group’s market
                                  and commercial properties;          transactions on any single day.
                                  ii) Charges over business
                                                                      (c) Credit-related commitments
                                  assets such as premises,
                                  inventory and accounts              The primary purpose of these
                                  receivable;                         instruments is to ensure that funds
                                  iii) Charges and pledges over       are available to a customer as
                                  financial instruments such as       required. Guarantees and standby
                                  debt securities and equities.       letters of credit carry the same
                                                                      credit risk as loans. Documentary
                              In order to minimise the credit loss    and commercial letters of credit –
                              the Group will seek immediate           which are written undertakings by
                                                                      the Group on behalf of a customer
                              recovery or additional collateral
                                                                      authorising a third party to draw
                              from the counterparty as soon as
                                                                      drafts on the Group up to a
                              impairment indicators are noticed
                                                                      stipulated amount under specific
                              for the relevant individual loans and   terms and conditions – are
                              advances.                               collateralised by the underlying
                                                                      shipments of goods to which they
                              Collateral held as security for         relate and by other collaterals that
                              financial assets other than loans       are obtained in the normal course of
                              and advances is determined by the       business and therefore carry less
                              nature of the instrument.               risk than a direct loan.



                             33     Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. Financial instruments      Commitments to extend credit              encompasses         collateral   held
   (continued)                represent unused portions of              (including re-confirmation of its
                              authorisations to extend credit in the    enforceability) and the anticipated
                              form of loans, guarantees or letters      receipts for that individual account.
                              of credit. With respect to credit risk
                              on commitments to extend credit,          Collectively assessed impairment
                              the Group is potentially exposed to       allowances are provided for:
                              loss in an amount equal to the            (i) portfolios of homogeneous
                              total unused commitments, where           assets that are individually
                              these are not unconditionally             below materiality thresholds; and
                              cancellable. However, the likely          (ii) losses that have been incurred
                              amount of loss is less than               but have not yet been identified,
                              the total unused commitments,             by using the available historical
                              as     most      commitments        to    experience, experienced judgement
                              extend credit are contingent upon         and statistical techniques.
                              customers maintaining specific
                              credit standards. The Group
                              monitors the term to maturity of
                              credit commitments because
                              longer-term commitments generally
                              have a greater degree of credit risk
                              than shorter-term commitments.

                              Impairment and provisioning
                              policies
                              The internal rating systems referred
                              to in “credit risk measurement”
                              focus more on credit-quality
                              mapping from the inception of the
                              lending and investment activities. In
                              contrast, impairment provisions are
                              recognised for financial reporting
                              purposes only for losses that have
                              been incurred at the date of the
                              statement of financial position
                              based on objective evidence of
                              impairment. Due to the different
                              methodologies applied, the amount
                              of incurred credit losses provided
                              for in the financial statements are
                              usually lower than the amount
                              determined from the expected loss
                              model that is used for internal
                              operational management purposes.

                              The Group’s policy requires the
                              review of individual financial assets
                              that are above materiality thresholds
                              at least annually or more regularly
                              when individual circumstances
                              require. Impairment allowances on
                              individually assessed accounts are
                              determined by an evaluation of
                              the incurred loss at statement of
                              financial position date on a
                              case-by-case basis, and are
                              applied to all individually significant
                              accounts. The assessment normally



                             34     Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Thousands of US dollars)

4. Financial instruments      Credit risk exposure relating to on-balance sheet assets are as follows:
   (continued)
                                                                                   Maximum exposure


                                                                               2010              2009

                              Investments with Islamic institutions           146,602            23,662
                              Trading securities                                41,343                    3
                              Investments in financings:
                                  Corporate financing                       1,407,166                     -
                                  Bank and other financial institutions         26,771                    -
                                  Agricultural financing                        61,157                    -
                                  Government/public financing                 115,708                     -
                                  Funds under management financing                     -        129,681
                                  Trust financing                             102,243           100,211
                                  Consumer financing                          207,926                    70
                                  Other financing                               22,342                   44
                              Investment securities                         1,218,983              1,648
                              Accounts receivable (note 12)                   193,829            12,593


                              Credit risk exposure relating to
                              off-balance sheet items are as follows:

                              Financial acceptances, performance
                                bonds, guarantees and
                                irrevocable letters of credit                 725,709            11,164

                              Financing commitments, undrawn
                                facilities and other
                                credit related liabilities                  1,172,545                     -


                              At 31 December                                5,442,324           279,076




                              Restructuring activities include            Renegotiated loans reported under
                              extended payment arrangements,              corporate financing, that would
                              approved external management                otherwise be past due or impaired,
                              plans, modification and deferral of         amounted to $29.8 million at
                              payments. Following restructuring,          31 December 2010 (2009: $Nil).
                              a previously overdue customer
                              account is reset to a normal
                              status and managed together with
                              other similar accounts. Restructuring
                              policies and practices are based on
                              indicators or criteria which, in the
                              judgement of management, indicate
                              that payment will most likely
                              continue. These policies are kept
                              under continuous review.



                             35     Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                      (Thousands of US dollars)

4. Financial instruments      Investments in financings and receivables past due but not
   (continued)                impaired

                              Investments in financings and receivables less than 90 days past due are
                              not considered impaired, unless other information is available to indicate
                              the contrary. The gross amount of investments in financings by class and
                              receivables that were past due but not impaired were as follows:


                              2010                                                     Investments in financings
                                                                        Banks and other                            Government/
                                                              Corporate    Financial    Agricultural Consumer         Public        Other   Accounts    Total
                                                              financing   institutions   financing financing        financing    financing receivable


                              Past due up to 30 days           26,732             -        908        9,423              -            -     5,434       42,497
                              Past due from 31 to 90 days      73,819     10,008        1,523       28,223            93              -     1,016 114,682
                              Past due greater than 90 days    72,383             -            -        944              -         29      10,122       83,478

                              Total                           172,934     10,008        2,431       38,590            93           29      16,572 240,657

                              Fair value collateral           199,717             8     2,379       48,896            93              -            - 251,093




                              The collateral comprises $242.9 million relating to financings of $154.7
                              million where the coverage of client exposure is 100% or greater; and $8.2
                              million relating to financings of $21.3 million where the coverage is less than
                              100%. At 31 December 2009 the Group had investments in other financing of
                              $0.1 million, which were past due greater than 90 days, but not impaired.

                              Upon initial recognition of investments in financings, the fair value of collateral
                              is based on valuation techniques commonly used for the corresponding assets.
                              In subsequent periods, the fair value is updated by reference to market price or
                              indexes of similar assets.




                              E. Market risk

                              The Group takes on exposure to                                       The market risks arising from
                              market risks, which is the risk that                                 trading and non-trading activities,
                              the fair value or future cash flows of                               are monitored by individual entities
                              a financial instrument will fluctuate                                within the Group. Regular reports
                              because of changes in market                                         are submitted to management.
                              prices. Market risks arise from open
                              positions in currency, equity, profit                                Trading portfolios include those
                              rate and other products, all of which                                positions arising from market-
                              are exposed to general and specific                                  making transactions where the
                              market movements and changes in                                      Group acts as principal with
                              the level of volatility of market rates                              clients or with the market. Non-
                              or prices such as profit rates, credit                               trading portfolios primarily arise
                              spreads, foreign exchange rates and                                  from the management of the entity’s
                              equity prices. The Group separates                                   retail and commercial banking
                              exposures to market risk into either                                 assets and liabilities. Non-trading
                              trading or non-trading portfolios.                                   portfolios also consist of foreign
                                                                                                   exchange and equity risks arising
                                                                                                   from the Group’s available-for-sale
                                                                                                   investments and held-to-maturity
                                                                                                   investments.



                             36        Dar Al-Maal Al-Islami Trust
                                       Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                       (Thousands of US dollars)

4. Financial instruments      (a) Foreign exchange risk                                             The profit rate exposure taken
   (continued)                                                                                      by the Group arises from
                              The Group takes on exposure to the                                    investing in corporate, small-
                              effects of fluctuations in the prevailing                             medium enterprises, consumer
                              foreign currency exchange rates on                                    financing, investment banking and
                              its financial position and cash                                       inter-banking activities where
                              flows. The boards of directors of                                     variation in market profit rates may
                              individual entities within the Group                                  affect the profitability of the Group.
                              set limits on the level of exposure by                                The risk is managed by the
                              currency and in aggregate for both                                    management of individual entities.
                              overnight and intra-day positions,                                    The profit rate dynamics are
                              which are monitored daily.                                            reviewed at regular intervals and
                                                                                                    repricing of assets and liabilities are
                                                                                                    adjusted to ensure that the spread
                              (b) Profit rate risk                                                  of the subsidiary remains at an
                                                                                                    acceptable level.
                              Profit rate risk is the risk that the
                              value of the financial instrument will                                The financings and deposits of the
                              fluctuate due to changes in the                                       Group are broadly linked to the
                              market profit rates. Movement in the                                  market variable rates and thus get
                              market profit rates may affect the                                    automatically repriced on a periodic
                              earnings of the Group.                                                basis based on profit rate scenarios.


                              Profit rate risk

                              The table below summarises the Group’s exposure to profit rate risks. It includes
                              the Group’s financial instruments at carrying amounts, categorised by the
                              earlier of contractual repricing or maturity dates.


                              As at 31 December 2010
                                                               Up to     One-three   Three-twelve      One-five       Over five        Non rate       Total
                                                             one month    months       months           years          years           sensitive


                              Assets
                              Cash and cash equivalents      426,727       7,648               -                  -               -   358,020       792,395
                              Investments with Islamic
                                institutions                 111,037      23,000      12,066              179               -             320        146,602
                              Trading securities                   -           -           3                -               -               -              3
                              Investments in financings      457,101     273,341     624,401          559,230             195          29,045      1,943,313
                              Investment securities          224,134     407,053      85,324          187,647               -         314,825      1,218,983
                              Accounts receivable             38,265      19,731       5,933           12,343               -          87,798        164,070

                              Total financial assets        1,257,264    730,773     727,727          759,399             195         790,008      4,265,366

                              Liabilities
                              Massaref accounts             2,021,154    391,924 1,371,464            125,273             241         693,430      4,603,486
                              Accounts payable                      3          -         -                  -               -         504,710        504,713

                              Total financial liabilities   2,021,157    391,924 1,371,464            125,273             241 1,198,140            5,108,199

                              Total repricing gap           (763,893) 338,849        (643,737)        634,126              (46) (408,132)           (842,833)




                             37         Dar Al-Maal Al-Islami Trust
                                        Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                       (Thousands of US dollars)

4. Financial instruments      As at 31 December 2009
   (continued)                                                Up to         One-three   Three-twelve    One-five       Over five       Non rate      Total
                                                            one month        months       months         years          years          sensitive
                              Assets
                              Cash and cash equivalents        6,920                -             -                -               -   57,035       63,955
                              Investments with Islamic
                                institutions                   3,238                -    20,000            179                     -       244      23,662
                              Trading securities                   -                -         3              -                     -         -           3
                              Investments in financings            -                -   100,211        129,751                     -        45     230,006
                              Investment securities
                                available-for-sale                      -           -             -                -     1,648                 -     1,648

                              Total financial assets          10,158                -   120,214        129,930           1,648         57,324      319,274

                              Liabilities
                              Massaref accounts                         -   295,615     159,012                    -               -       500     455,127

                              Total financial liabilities               -   295,615     159,012                    -               -       500     455,127

                              Total repricing gap             10,158 (295,615)          (38,798)       129,930           1,648         56,824      (135,853)




                              Profit rate sensitivities

                              At 31 December 2010 if the US dollar market rates had been 34 (2009: 138)
                              basis points higher/lower with all other variables held constant, post-tax profit
                              for the year would have been $0.7 million (2009: $2.8 million) higher/lower,
                              mainly as a result of lower/higher expense on US dollar denominated financings
                              and borrowings.

                              At 31 December 2010 if the Euro market rates had been 27 (2009: Nil) basis
                              points higher/lower with all other variables held constant, post-tax profit for the
                              year would have been $1.1 million (2009: Nil) higher/lower, mainly as a result
                              of lower/higher expense on Euro denominated borrowings.

                              At 31 December 2010 if the Pakistani rupee market rates had been
                              18 (2009: Nil) basis points higher/lower with all other variables held constant,
                              post-tax profit for the year would have been $1.7 million (2009: Nil)
                              higher/lower, mainly as a result of lower/higher expense on Pakistani rupee
                              denominated financings and borrowings.

                              At 31 December 2010 if the Bahraini dinar market rates had been
                              20 (2009: Nil) basis points higher/lower with all other variables held constant,
                              post-tax profit for the year would have been $1.1 million (2009: Nil)
                              higher/lower, mainly as a result of lower/higher expense on Bahraini dinar
                              denominated borrowings.

                              At 31 December 2010 if the United Arab Emirates dinar market rates had been
                              157 (2009: Nil) basis points higher/lower with all other variables held
                              constant, post-tax profit for the year would have been $5.0 million (2009: Nil)
                              higher/lower, mainly as a result of lower/higher expense on United Arab
                              Emirates dinar denominated borrowings.




                             38         Dar Al-Maal Al-Islami Trust
                                        Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Thousands of US dollars)

4. Financial instruments      As at 31 December 2010
                                                                  USD      EURO         PKR         BHD            AED
   (continued)
                              Total profit rate exposure
                               in the consolidated statement
                               of financial position           198,767   407,203   970,986      545,848       315,977
                              Reasonable shift                  0.34%     0.27%      0.18%        0.20%        1.57%


                              Total effect on income              676      1,099      1,701        1,084        4,961




                              As at 31 December 2009

                              Total profit rate exposure
                               in the consolidated statement
                               of financial position           201,753         -           -            -              -
                              Reasonable shift                  1.38%          -           -            -              -


                              Total effect on income             2,784         -           -            -              -




                              The basis for calculation of the reasonable shift is arrived at by comparing the
                              interbank lending rate at the beginning and the end of the period.




                              Price risk
                              Price risk is the risk that the fair values of the equities or the managed funds
                              increase or decrease as a result of changes in the corresponding value of
                              equity indices or the value of individual equity stocks held as available-for-sale.

                              The table below summarises the impact of increase/decrease of equity indices
                              on the Group’s post tax profit for the year and on other components of equity.
                              The analysis is based on the assumptions that equity indices
                              increased/decreased by 10% with all other variables held constant and all the
                              Group’s equity instruments moved according to the historical correlation with the
                              indices.
                                                                               Impact on other components of equity


                                                                                    2010                    2009

                              Pakistan stock exchange (+/-10%)                      8,154                          -



                              The Group had no exposure to equity indices at 31 December 2009.




                             39      Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Thousands of US dollars)

4. Financial instruments      Currency risk
   (continued)                Assuming that all other variables held constant, the impact of currency risk
                              on the consolidated statement of income/equity based on reasonable shift is
                              summarised below:


                              As at 31 December 2010
                                                                          USD/EUR    USD/BHD      USD/AED    USD/GBP

                              Total currency exposure                    (243,257) (439,106) (301,890)       (36,763)
                              Reasonable shift                              0.2 %       0.1 %       0.1 %       0.4%


                              Total effect on income/equity                 (431)       (326)       (386)       (149)




                              The basis for calculation of the reasonable shift is arrived at by comparing
                              the foreign exchange spot rate at 31 December as compared to the one year
                              forward rate for the same period.

                              The Group had no material exposure to currency risk at 31 December 2009.




                              F. Liquidity risk

                              Liquidity risk is the risk that the                   The Group maintains an active
                              Group is unable to meet its payment                   presence in money markets to
                              obligations associated with its                       enable this to happen;
                              financial liabilities when they
                              fall due and to replace funds                         ii) Maintaining a portfolio
                              when they are withdrawn. The                          of highly marketable assets
                              consequence may be the failure to                     that can easily be liquidated
                              meet obligations to repay investors                   as protection against any
                              and fulfil commitments to lend.                       unforeseen interruption to
                                                                                    cash flow;
                              Liquidity risk management
                              process                                               iii) Monitoring statement of
                                                                                    financial position liquidity ratios
                              The Group’s liquidity risk management                 against internal and regulatory
                              process, as carried out within the                    requirements; and
                              Group and monitored by management
                              in individual entities within the Group,              iv) Managing the concentration
                              includes:                                             and profile of debt maturities.

                                  i) Day-to-day funding,
                                  managed by monitoring future
                                  cash flows to ensure that
                                  requirements can be met.
                                  This includes replenishment of
                                  funds as they mature or are
                                  borrowed by customers.



                             40     Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                      (Thousands of US dollars)

4. Financial instruments      Monitoring and reporting of treasury                              and projections. The starting point
   (continued)                and capital market maturities is                                  for those projections is an analysis
                              done through monitoring of daily                                  of the contractual maturity of the
                              maturities. Similarly the overall                                 financial liabilities and the expected
                              liquidity maintenance is done                                     collection date of the financial
                              through monthly maturity gap                                      assets.
                              analysis at balance sheet level.
                              Hence, monitoring and reporting                                   The Group also monitors unmatched
                              takes the form of regular and                                     medium-term assets.
                              periodic cash flow measurement

                              The table below presents the cash flows payable by the Group under financial
                              liabilities by remaining contractual maturities at the statement of financial
                              position date. The amounts disclosed in the table are the contractual
                              undiscounted cash flows, whereas the Group manages the inherent liquidity
                              risk based on expected cash inflows.


                              As at 31 December 2010
                                                                          Up to     One-three    Three-twelve    One-five    Over five       Total
                                                                        one month    months        months         years       years

                              Liabilities
                              Customer current accounts                 684,358           -             -             -           -        684,358
                              Customer investment accounts            1,087,583     194,029       589,744        93,319      48,800      2,013,475
                              Due to banks and financial
                                institution                           1,082,650     132,772       473,434        19,223      16,875      1,724,954
                              Investments from off-
                                balance sheet funds                         19        1,273        30,015       194,386       1,537       227,230
                              Accounts payable                         498,758       22,889        75,915        89,827       2,623       690,012
                              Non-current liabilities held for sale          -            -             -             -          21            21


                              Total liabilities liquidity risk        3,353,368     350,963 1,169,108           396,755      69,856      5,340,050

                              Total assets (less discounting)
                               liquidity risk                         1,705,709     807,790       668,675 1,077,591 2,211,415            6,471,180



                              As at 31 December 2009
                              Liabilities
                              Customer investment accounts                      -         -             -             -           -             -
                              Due to banks                                      -    13,229        35,811         9,578     190,500       249,118
                              Investments from off-
                                balance sheet funds                            -      1,519        28,494       192,372            -      222,385
                              Accounts payable                                41      8,317        24,280         8,856          405       41,899
                              Current tax payable                              -          -            12             -            -           12

                              Total liabilities liquidity risk                41     23,065        88,597       210,806     190,905       513,414

                              Total assets (less discounting)
                               liquidity risk                            43,021      99,887        53,071       178,589     511,305       885,873




                             41         Dar Al-Maal Al-Islami Trust
                                        Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

4. Financial instruments      The table below presents the cash flows payable by the Group under off-balance
   (continued)                sheet liabilities.

                                                                    No later than       One-five             Over five           Total
                                                                     one year            years                years

                              As at 31 December 2010
                              Acceptances and endorsements       31,964                            -                     -      31,964
                              Guarantees and irrevocable
                               letters of credit                497,206                 68,257               1,257             566,720
                              Performance bid bonds              20,064                  3,927                   -              23,991
                              Other contingent liabilities          294                      -             102,740             103,034
                              Undrawn facilities and other
                               commitments to finance         1,006,306                        -             36,402          1,042,708
                              Operating lease commitments            91                       46                  -                137
                              Open foreign currency positions    30,520                        -             58,036             88,556
                              Repurchased and resale
                               transactions                     129,837                            -                     -     129,837


                              Total off-balance sheet liabilities 1,716,282             72,230             198,435           1,986,947



                              As at 31 December 2009
                              Guarantees and irrevocable
                               letters of credit                      10,831                333                          -      11,164


                              Total off-balance sheet liabilities     10,831                333                          -      11,164



                              Assets held for managing
                              liquidity risk

                              The Group holds a diversified                                       Government bonds
                              portfolio of cash and high-quality                                  and other securities that
                              high-liquid securities to support                                   are readily acceptable
                              payment obligations and contingent                                  in repurchase agreements
                              funding in a stressed market                                        with central banks; and
                              environment. The Group’s assets                                     Secondary sources
                              held for managing liquidity risk                                    of liquidity in the
                              comprise:                                                           form of highly liquid
                                                                                                  instruments in the Group’s
                                     Cash and balances                                            trading portfolios and
                                     with central banks;                                          investment securities
                                     Certificates of deposit;                                     available-for-sale.

                              Derivative liabilities

                              The Group’s derivatives that will be settled on a net basis include over-
                              the-counter (OTC) currency options, currency futures and exchange traded
                              currency options. The table below analyses the Group’s derivative financial
                              liabilities that will be settled on a net basis into relevant maturity groupings
                              based on the remaining period at the date of the consolidated statement of
                              financial position to the contractual maturity date. The amounts disclosed in the
                              table are the contractual undiscounted cash flows.

                                                                           Up to        One-three      Three-twelve One-five       Total
                              As at 31 December 2010                     one month       months          months      years



                              Derivatives held for trading:
                              - Foreign exchange derivatives                        -         -         8,359       19,286      27,645




                             42      Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Thousands of US dollars)

4. Financial instruments      Derivative liabilities
   (continued)
                              The Group’s derivatives that will be settled on a gross basis include foreign
                              exchange derivatives i.e. currency forward, currency swaps. The table below
                              analyses the Group’s derivative financial assets that will be settled on a gross
                              basis into relevant maturity groupings based on the remaining period at the date
                              of the consolidated statement of financial position to the contractual maturity
                              date. The amounts disclosed in the table are the contractual undiscounted cash
                              flows.

                                                                   Up to     One-three   Three-twelve One-five      Total
                              As at 31 December 2010             one month    months       months      years



                              Derivatives held for trading:
                              - Foreign exchange derivatives
                              - Outflow                                -         -            -           -             -
                              - Inflow                                 -       476        7,814       9,240        17,530




                              Funding approach
                              Sources of liquidity are regularly             of business, a proportion of
                              reviewed to maintain a diversification         customer loans contractually
                              by currency, geography, provider,              repayable within one year will
                              product and term.                              be extended. In addition, certain
                                                                             assets have been pledged to
                              Assets available to meet liabilities           secure liabilities. The Group would
                              and to cover outstanding loan                  also be able to meet unexpected
                              commitments include cash and                   net cash outflows by selling
                              bank balances; loans and advances              strategic investments, securities
                              to banks; and loans and advances               and accessing additional funding
                              to customers. In the normal course             sources such as undrawn facilities.




5. Cash and cash                                                                    2010                     2009
   equivalents
   and restricted cash        Cash   on hand                                       59,797                            33
                              Cash   at central banks – statutory reserve         113,725                             -
                              Cash   at central banks – current account           100,960                             -
                              Cash   at other banks                               493,480                        38,929


                              Cash and cash equivalents                           767,962                        38,962


                              Restricted cash held in escrow                        24,433                       24,993



                              At 31 December 2010, the National Commercial Bank in the Kingdom of Saudi
                              Arabia held $24.4 million (2009: $25.0 million) in escrow for the purpose
                              of establishing a new subsidiary holding at 76%, Gulf Investors for Asset
                              Management.

                              The cash at central bank-statutory reserve is not available for use.



                             43      Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)


6. Trading securities                                                           2010              2009
                                Trading securities – at fair value

                                 - Government securities                        32,732                   -
                                 - Corporate securities                          8,611                   3


                                                                                41,343                   3


                                The movement in trading securities is summarised as follows:


                                                                                2010              2009

                                At 1 January                                          3                 12
                                Conversion of an associate
                                  to a subsidiary                                40,215                   -
                                Additions                                     1,295,482                   -
                                Disposals                                    (1,296,574)               (14)
                                Gain/(loss) on trading                           (4,253)                 5
                                Revaluation of trading securities                 7,265                   -
                                Exchange differences                               (795)                  -


                                At 31 December                                  41,343                   3




7. Investments in financings                                                    2010              2009
                                Islamic investments in financings            2,085,181            230,602
                                Financings subject to finance leases           101,449                   -
                                Provision for bad and doubtful debts          (235,708)              (596)
                                Provision for impairment on finance leases      (7,609)                  -


                                                                             1,943,313            230,006



                                Islamic investments in financings largely comprise conventional loans and
                                advances made by a subsidiary of the Group and a loan on a profit
                                sharing basis to a trust outside the Group in the amount of $102.2 million
                                (2009: $100.2 million).

                                At 31 December 2009, investments in financings included an amount of
                                $129.7 million, representing the principal outstanding of $167.9 million less
                                fair value adjustments, relating to a Kard Hassan granted to Islamic Investment
                                of the Gulf (Bahamas) Limited acting on behalf of certain funds under its
                                management. On 31 March 2010, the principal was reduced by
                                $124.0 million to settle the subscription for new shares in Ithmaar Bank B.S.C.
                                (note 42) together with professional fees due to Islamic Investment Company of
                                the Gulf (Bahamas) Limited which acted on DMI’s behalf. In addition,
                                $33.0 million of the remaining principal was waived by DMI and the balance
                                of $10.9 million was repaid on 28 June 2010. The total profit in the
                                consolidated statement of income in 2010 related to fair value adjustments in
                                respect of the Kard Hassan amounted to $5.2 million.



                               44     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

7. Investments in financings    Financings subject to finance leases
   (continued)
                                                                                      2010

                                                             Gross investment in    Unearned future      Net investment
                                                               finance leases       finance income      in finance leases
                                                                  receivable       on finance leases



                                Not later than one year         60,555                (5,618)                54,937
                                Later than one year and
                                 not later than five years      53,136                (6,624)                46,512
                                Later than five years                -                     -                      -


                                                               113,691              (12,242)            101,449



                                The allowance for uncollectible finance lease receivables included in the
                                provision for impairment amounted to $7.6 million at 31 December 2010
                                (2009: Nil).




8. Collateral received and      Assets held as collateral against advances to financial institutions
   re-pledged                   are as follows:

                                                                                         Fair value amount


                                                                                    2010                 2009

                                Assets available to be repledged with
                                 obligation to return (shares)                       2,399                         -
                                Assets repledged with obligation
                                 to return (reverse repo)                               125                        -
                                Assets available to be sold with
                                 obligation to return (real estate)                  7,069                         -




                                Repossessed collateral
                                The Group obtained assets by taking possession of collateral held as follows:

                                2010
                                                                                        Classification on statement
                               Nature of assets                 Carrying amount            of financial position


                                Real estate                           17,985                 Accounts receivable


                                Repossessed properties are sold as soon as practicable, with the proceeds used
                                to reduce the outstanding indebtedness.

                                The Group repossessed no collateral in 2009.



                               45    Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

9. Allowance account from    Allowance for impairment
   credit losses             Reconciliation of allowance account for losses on investments in financings by
                             class and receivables is as follows:

                                                                                 Investments in financings

                                                                       Banks and other
                                                           Corporate      financial    Agricultural      Consumer       Other       Other
                             2010                          financing     institutions   financing        financing   financing   receivables     Total

                             Balance at 1 January                  -              -              -             19      576         515           1,110
                             Conversion of an associate
                              to a subsidiary           110,322                   -        1,811        31,063           48        (473)       142,771
                             Acquisition of a
                              subsidiary                    88,107                -          689        11,979             -       697         101,472
                             Provision for impairment        7,662          2,518              50       13,254             -     39,998         63,482
                             Reversal of impairment
                              provision                            -              -              -               -         -     (5,000)        (5,000)
                             Amounts recovered              (1,272)               -           (10)           (173)         -       (388)        (1,843)
                             Foreign exchange                      -              -              -     (30,904)         (31)     (2,366)       (33,301)



                             Balance at 31 December        204,819          2,518          2,540        25,238         593       32,983        268,691



                             General impairments                   -              -              -           2,539         -           -         2,539

                             Individually impaired loans 204,819            2,518          2,540        22,699         593       32,983        266,152

                             Fair value of collateral      428,304          3,430        13,943         60,485             1         75        506,238



                             2009
                             Balance at 1 January                  -              -              -             19      573         515           1,107
                             Provision for impairment              -              -              -               -       67            -            67
                             Reversal of impairment provision      -              -              -               -      (66)           -           (66)
                             Amounts recovered
                             Foreign exchange                      -              -              -               -         2           -                 2



                             Balance at 31 December                -              -              -             19      576         515           1,110



                             Individually impaired loans           -              -              -             19      576         515           1,110

                             Fair value of collateral              -              -              -               -         -           -                 -




                            46        Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (Thousands of US dollars)


10. Investment securities                                                  2010        2009

                             Investment securities available-for-sale     1,104,038    1,648
                             Investment securities held to maturity         114,945        -


                                                                          1,218,983    1,648


                             Investment securities
                             available-for-sale
                             Investment securities – at fair value
                             - Listed                                      203,193         -
                             - Unlisted                                    900,845     1,648


                                                                          1,104,038    1,648




                             (Losses)/gains from
                             investment securities


                                                                            2010       2009

                             Sale of available-for-sale assets              26,647         -
                             Derecognition of available-for-sale assets       (739)        -
                             Provision for impairment
                               of available-for-sale assets                 (84,500)       -
                             Term finance certificates                         (573)       -


                                                                            (59,165)       -




                            47     Dar Al-Maal Al-Islami Trust
                                   Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (Thousands of US dollars)

10. Investment securities    The movement in investment securities available-for-sale is summarised
    (continued)              as follows:


                                                                       2010             2009

                             At 1 January                                1,648          2,463

                             Conversion of an associate
                               to a subsidiary                         729,141               -
                             Acquisition of a subsidiary               343,824               -
                             Additions                               1,130,014               -
                             Disposals                              (1,012,321)           (875)
                             Transfer of provision
                               from accounts payable                    (2,500)              -
                             Net gains from derecognition
                               of fair value on disposal                      -             60
                             Net gains/(losses) from changes
                               in fair value                            (1,482)              -
                             Exchange differences                          214               -
                             Provision for impairment                  (84,500)              -


                             At 31 December                          1,104,038          1,648




                             The movement in investment securities held-to-maturity is summarised
                             as follows:


                                                                       2010             2009

                             At 1 January                                     -              -
                             Conversion of an associate
                               to a subsidiary                         102,312               -
                             Additions                                  39,152               -
                             Maturity                                  (30,521)              -
                             Exchange differences                        4,002               -


                                                                       114,945               -




                            48    Dar Al-Maal Al-Islami Trust
                                  Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

11. Fair value of financial    a) Financial instruments measured at fair value
    instruments
                               The fair values of quoted investments in active markets are based on current bid
                               prices. If there is no active market for a financial asset, the Group establishes
                               fair value using valuation techniques. These include the use of recent arm’s
                               length transactions, discounted cash flow analysis, option pricing models and
                               other valuation techniques commonly used by market participants. There
                               was no change in fair value estimated using a valuation technique that was
                               recognised in the consolidated statement of income (2009: $Nil).




                               b) Financial instrument not measured at fair value

                               The table below summarises the carrying amounts and fair values of those
                               financial assets and liabilities not presented on the Group’s consolidated
                               statement of financial position at their fair value.

                                                                 Carrying amount              Fair value



                                                              2010          2009         2010         2009
                               Financial assets

                               Investments in financings
                                 Corporate financing      1,361,170                -   1,198,833           -
                                 Bank and other
                                   financial institutions     5,857                -      3,340            -
                                 Agricultural financing      63,697                -     61,157            -
                                 Consumer financing         241,765                -    205,353            -
                                 Government/public
                                   financing                115,708                -    115,708            -
                                 Other financing              2,348                -      2,299            -
                                 Investment securities        1,648                -      1,648            -

                               Financial liabilities

                               Customer investment
                                accounts
                                Private individuals          892,572               -    883,646            -
                                Financial institutions        57,019               -     56,449            -
                                Corporate institutions       915,932               -    906,772            -




                              49     Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. Fair value of financial    Investments in financings
    instruments
    (continued)                Investments in financings are stated net of provisions for impairment. The
                               estimated fair value of investments in financings represents the discounted
                               amount of estimated future cash flows expected to be received. Expected cash
                               flows are discounted at current market rates to determine fair value.



                               Due to banks and customers

                               The estimated fair value of deposits with no stated maturity, which includes non-
                               interest bearing deposits, is the amount repayable on demand.



                               Fair value

                               In the opinion of Group management, the fair value of those financial
                               instruments which are measured at amortised cost in the consolidated
                               statement of financial position are not significantly different from their carrying
                               values since assets and liabilities are either short-term in nature or in the case
                               of customer financing and deposits, are linked to the market variable rates and
                               hence are being regularly repriced.




                              50     Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. Fair value of financial    c) Fair value hierarchy
    instruments
    (continued)                IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs
                               to those valuation techniques are observable or unobservable. Observable
                               inputs reflect market data obtained from independent sources; unobservable
                               inputs reflect the Group’s market assumptions. These two types of inputs have
                               created the following fair value hierarchy:

                                     Quoted prices (unadjusted) in active markets for identical assets or
                                     liabilities (level 1). This level includes listed equity securities and
                                     debt instruments on exchanges and exchange traded derivatives like
                                     futures.

                                     Inputs other than quoted prices included within level 1 that are
                                     observable for the asset or liability, either directly (that is, as prices)
                                     or indirectly (that is, derived from prices) (level 2). This level
                                     includes the majority of the OTC derivative contracts, traded loans
                                     and issued structured debt.

                                     Inputs for the asset or liability that are not based on observable
                                     market data (that is, unobservable inputs) (level 3). This level
                                     includes equity investments and debt instruments with significant
                                     unobservable components.


                               The level in the fair value hierarchy within which the fair value measurement is
                               categorised in its entirety is determined on the basis of the lowest level input that
                               is significant to the fair value measurement in its entirety. For this purpose, the
                               significance of an input is assessed against the fair value measurement in its
                               entirety. If a fair value measurement uses observable inputs that require
                               significant adjustment based on unobservable inputs, that measurement is a
                               level 3 measurement. Assessing the significance of a particular input to the fair
                               value measurement in its entirety requires judgement, considering factors
                               specific to the asset or liability.


                               The determination of what constitutes ‘observable’ requires significant
                               judgement by the Group. The Group considers observable data to be that
                               market data that is readily available, regularly distributed or updated, reliable
                               and verifiable, not proprietary, and provided by independent sources that are
                               actively involved in the relevant market.




                              51     Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                       (Thousands of US dollars)

11. Fair value of financial    Assets and liabilities measured at fair value
    instruments
    (continued)                At 31 December 2010                                         Level 1           Level 2                 Level 3                      Total

                               Trading securities

                                 - Equity securities                                           3                         -             8,608                       8,611
                                 - Debt securities                                             -                         -            32,732                      32,732

                               Investment securities - available-for-sale

                                - Equity securities                                    7,132                 3,055                   799,217                809,404
                                - Debt securities                                          -                     -                   307,582                307,582
                               Derivatives held for trading                              477                     -                         -                    477


                               Total assets                                            7,612                 3,055               1,148,139                 1,158,806


                               Derivatives held for trading                                     -                        -            44,698                      44,698


                               Total liabilities                                                -                        -            44,698                      44,698



                               Reconciliation of Level 3 items


                                                                Trading securities            Investment securities
                                                              Equity            Debt            Equity        Debt               Total    Financial liabilities       Total
                               2010                          Securities       securities       securities   securities          Assets      held for trading       liabilities


                               At 1 January 2010                          -           -         1,648                -          1,648                  -                         -
                               Conversion of an
                                 associate to a subsidiary    30,680           9,535          687,975       440,437 1,168,627                          -                         -
                               Total profit/(loss)
                               Profit/(loss)                    1,876             917          57,898        35,522            96,213           5,348                 5,348
                               - Other comprehensive
                                   income/(loss)                          -           -                -     (1,543)            (1,543)                -                         -


                               Purchases                      21,591 1,398,197                 73,653 1,331,306 2,824,747                     39,350                39,350
                               Sales                         (45,539)(1,375,917)              (21,957)(1,498,140)(2,941,553)                           -                         -



                               At December 2010                 8,608         32,732          799,217       307,582 1,148,139                 44,698                44,698




                               Total Profit/(losses) for the year included in profit or loss for assets/liabilities held



                               At 31 December 2010            10,462                  -        82,663                -         93,125                  -                         -




                               Sensitivity of Level 3 measurements to reasonably possible alternative assumptions



                               An assumed ± 10% movement in the fair value of level 3 measurement has the following impact:


                                                                                                                                Impact in equity

                               At 31 December 2010                                                          Favourable changes             Unfavourable changes


                               Trading securities                                                                            4,134                         (4,134)
                               Investment securities – available for sale                                            110,680                          (110,680)




                               The Group’s trading and investment securities were classified under level 3 of the fair value
                               hierarchy as at 31 December 2009 and consisted mainly of unquoted investment securities which
                               were not considered material to the Group.




                              52        Dar Al-Maal Al-Islami Trust
                                        Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (Thousands of US dollars)


12. Accounts receivable                                                       2010               2009

                             Accounts receivable                            135,269                  4,236
                             Receivables from associated
                              companies (note 35)                                    7               3,091
                             Provision for bad and doubtful
                              debts (note 9)                                 (32,983)                 (515)
                             Funds under management                           91,059                 5,781
                             Derivative financial instruments                    477                     -


                                                                            193,829                12,593



                             Included in accounts receivable are prepayments in the amount of
                             $16.4 million (2009: $1.0 million) and loans to employees and directors of
                             $43.2 million (2009: $1.6 million). The remaining balance relates primarily to
                             project management fees and balances due from customers. Included in the
                             receivable from funds under management at 31 December 2010 was
                             $25.9 million in bridge financings made to real estate development funds which
                             were sponsored by a subsidiary of the Group. Bridge financings are generally
                             short-term in nature and are repaid following the sale of participation units in
                             the funds to external investors.


                             Derivative financial instruments
                                                                                         2010
                                                                         Contractual amount     Fair value


                             Foreign exchange derivatives
                              held for trading:
                                OTC equity options                            28,582                   477




13. Investment property                                                       2010               2009

                             At 1 January                                      1,003                 1,838

                             Conversion of an associate to
                              a subsidiary                                  414,824                      -
                             Additions                                       16,415                      -
                             Disposals                                      (27,054)                  (840)
                             Fair value losses during the year              (12,314)                     -
                             Net exchange differences                           (54)                     5


                             At 31 December                                 392,820                  1,003



                             Rental income from investment property amounting to $2.4 million
                             (2009: $0.1 million) has been included in the consolidated statement of
                             income under other income. There were $0.1 million direct operating expenses
                             (including repairs and maintenance) arising from investment property that
                             generated rental income (2009: $Nil) and $0.1 million operating expenses
                             arising from investment property that did not generate rental income
                             (2009: $Nil).



                            53    Dar Al-Maal Al-Islami Trust
                                  Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (Thousands of US dollars)

13. Investment property      Investment property under operating leases
    (continued)
                             The Group leases out part of its investment property under operating leases.
                             The leases are for terms of one to five years.

                             The future aggregate minimum rentals receivable under non cancellable
                             operating leases are as follows:



                                                                           2010              2009

                             Not later than one year                         1,361                  -
                             Later than one year and
                              not later than five years                        841                  -


                                                                             2,202                  -




14. Investments in                                                         2010              2009
    associates
                             At 1 January                                 399,917           483,148

                             Share of results before tax                   57,791            (95,631)
                             Share of tax                                  (8,901)              (253)
                             Dividends paid                               (10,162)            (5,808)
                             Share of treasury shares                        (194)            (3,634)
                             Share of fair value gains/(losses)            16,689             26,686
                             Additions                                      8,000                746
                             Acquired goodwill                                  -                 59
                             Goodwill impairment                          (18,000)                 -
                             Amortisation of intangibles                   (5,061)                 -
                             Exchange differences                          (7,632)            (5,396)


                             Mark up to fair value                        375,149                   -
                             Conversion of an associate
                              to a subsidiary                            (587,125)                  -
                             Addition of associates of subsidiary         696,204                   -


                             At 31 December                               916,675           399,917




                            54    Dar Al-Maal Al-Islami Trust
                                  Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (Thousands of US dollars)

14. Investments in           Ithmaar Bank B.S.C.
    associates
    (continued)              On 31 March 2010, DMI acquired an additional 400 million shares of Ithmaar
                             Bank B.S.C. by participation in a rights issue at a price of $0.25 per share for
                             a total consideration of $100 million. As a result of this transaction, DMI owns
                             52.6% of the outstanding shares of Ithmaar Bank B.S.C. converting it from an
                             associate to a subsidiary (note 42), which has resulted in the full consolidation
                             of Ithmaar’s income statement and balance sheet at 31 December 2010.

                             The step acquisition from the associated company to the subsidiary company
                             resulted in a net gain of $334.9 million, which is included in the consolidated
                             statement of income. This amount comprised a mark up to fair value of the
                             associated company shareholding of 44.9%. In assessing the above gain, DMI
                             has relied upon an independent valuation commissioned from an international
                             firm of chartered accountants who established a value using various valuation
                             methodologies comprising the average of a peer group market analysis of
                             banks listed on the Bahrain Bourse and a discounted cash flow adjusted for an
                             estimated control premium but which did not include a reference to the market
                             price of Ithmaar Bank’s shares at the relevant time. Both the independent valuer
                             and DMI believe that the share price quoted on the Bahrain Bourse does not
                             reflect the fair value of the business and they also do not consider that the
                             historical turnover of the shares constitutes an active market. As a result, the
                             share price was disregarded in the valuation. In addition, DMI’s share of Ithmaar
                             Bank B.S.C. reserves held in equity were recycled as follows:


                             At 31 March 2010

                             44.9% carrying value                            211,976
                             44.9% fair value                                587,125


                             Mark up to fair value                           375,149
                             Reserves held in equity:
                             Investment security revaluation reserve         (14,892)
                             General reserve                                     973
                             Foreign exchange                                (26,345)


                             Net gain on step acquisition                    334,886




                            55    Dar Al-Maal Al-Islami Trust
                                  Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

14. Investments in           The summarised financial information of the Group’s principal associates is as
    associates               follows:
    (continued)              Name and Country of                                                         Published       ---------% holding---------

                             incorporation               Assets   Liabilities   Income   Profit/(loss) price quotation   Subsidiary          Group




                             2010
                             Unlisted:
                             Solidarity Group
                             Holding B.S.C. (c)
                             (Bahrain)                  276,915   79,627        10,134   (10,973)                 -            34                 18

                             First Leasing Bank
                             B.S.C. (c) (Bahrain)       147,535   46,868         6,505     (3,508)                -            35                 19

                             CITIC International
                             Asset Management
                             Limited (Hong Kong)        423,403   50,106        55,690    29,643                  -            20                 11

                             Sanpak Engineering
                             (Pakistan)                   9,720     7,396         653        (115)                -            31                 17

                             *Islamic Company for
                             Production, Printing and
                             Packing Materials
                             “Icopack” (Egypt)           21,303     7,541       10,395      1,884                 -            23                 12

                             *Misr Company for
                             Packing Materials
                             “Egywrap” (Egypt)           31,293   10,289        19,629      2,335                 -            23                 12

                             Faysal Asset
                             Management
                             Limited (Pakistan)           3,896        780       1,000        180                 -            30                 16

                             *Ithraa Capital
                             (Saudi Arabia)              20,664        648        356      (2,062)                -            23                 12

                             Naseej B.S.C. (c)
                             (Bahrain)                  294,641        324       9,650      6,689                 -            29                 15

                             *Chase Manara
                             B.S.C. (c) (Bahrain)         5,207          24         90         (95)               -            40                 21

                             *Islamic Trading
                             Company E.C.
                             (Bahrain)                    8,588          68       620         241                 -            24                 13

                             *Emerging Markets
                             Partnership Bahrain
                             B.S.C. (c) (Bahrain)         2,880        899       5,163        336                 -            40                 21




                             * For some of the associates, published information is not available for
                             31 December 2010 and therefore the income and profit and loss have been
                             arrived at by using the last audited financial statements and projecting for 2010.
                             For presentation purposes, the assets and liabilities for these associates,
                             however, represent the amounts as per the last audited financial statements.




                            56         Dar Al-Maal Al-Islami Trust
                                       Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

14. Investments in           The summarised financial information of the Group’s principal associates is as
    associates               follows:
    (continued)              Name and Country of                                                          Published       ---------% holding---------

                             incorporation              Assets    Liabilities    Income   Profit/(loss) price quotation   Subsidiary       Group




                             2010

                             Listed:
                             Faisal Islamic Bank
                             of Egypt (Egypt)       5,453,843    5,081,403      325,721    59,905         USD 3.47           49             49

                             BBK B.S.C. (Bahrain)   6,491,186    5,853,143      289,332   103,825         BHD 0.43           25             13




                             2009
                             Listed:
                             Ithmaar Bank B.S.C.    5,213,861    4,276,462      106,050 (235,003)         USD 0.24           45             45
                             (Bahrain)

                             Faisal Islamic Bank
                             of Egypt (Egypt)       5,045,392    4,758,331      234,726    22,308         USD 3.39           49             49



                             USD United States Dollar
                             BHD Bahrain Dinar




                             Included in investment in associates at 31 December 2010 is $175.1 million
                             (2009: $67.9 million) of goodwill. The movement is as follows:


                                                                                              2010                            2009

                             At 1 January                                                     67,878                            67,819

                             Conversion of an associate
                              to a subsidiary                                               (23,334)                                         -
                             Additions from conversion of an
                              associate to a subsidiary                                    148,597                                        -
                             Additions                                                           -                                       59
                             Provision for impairment                                      (18,000)                                       -



                             At 31 December                                                175,141                              67,878




                            57         Dar Al-Maal Al-Islami Trust
                                       Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

15. Property, Plant and                                                          Leasehold
                                                                             property, furniture,
    Equipment                                                Land and    aircrafts, equipment and
                                                             buildings         motor vehicles         Total

                             Cost
                             At 1 January 2010                1,656               5,854               7,510
                             Conversion of associate
                              to a subsidiary                57,322             95,295              152,617
                             Acquisition of a subsidiary     18,225             56,777               75,002
                             Additions                        2,855              5,638                8,493
                             Disposals                         (785)           (18,500)             (19,285)
                             Currency effect                    719                 52                  771


                             At 31 December 2010             79,992           145,116               225,108


                             Depreciation
                             At 1 January 2010                  653               3,922               4,575
                             Conversion of associate
                               to a subsidiary                1,436             48,091               49,527
                             Acquisition of a subsidiary      1,255             29,461               30,716
                             Charge for the year                583              8,639                9,222
                             Impairment reversal               (936)            (2,300)              (3,236)
                             Disposals/transfers                (23)           (16,168)             (16,191)
                             Currency effect                    723                 54                  777


                             At 31 December 2010              3,691             71,699               75,390


                             Cost
                             At 1 January 2009                1,620               5,369               6,989
                             Additions                           36                 544                 580
                             Disposals                            -                 (59)                (59)
                             Currency effect                      -                   -                   -


                             At 31 December 2009              1,656               5,854               7,510


                             Depreciation
                             At 1 January 2009                  588               3,222               3,810
                             Charge for the year                 65                 759                 824
                             Disposals                            -                 (59)                (59)
                             Currency effect                      -                   -                   -


                             At 31 December 2009                653               3,922               4,575


                             Net book value
                             At 31 December 2010             76,301             73,417              149,718


                             At 31 December 2009              1,003               1,932               2,935


                             Land and buildings at 31 December 2010 included cost of land aggregated
                             $64.1 million (2009: $0.04 million).

                             Leasehold property at         31 December 2010 aggregated $52.1                  million
                             (2009: $3.2 million),         less accumulated depreciation of $21.8             million
                             (2009: $2.1 million).




                            58      Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  (Thousands of US dollars)

16. Intangible assets                                                 Customer      Core
                                                           Goodwill   relations   deposits     Other*   Total


                             2010
                             Year ended 31 December
                             Opening net book amount        67,186      1,552      26,620       502  95,860
                             Additions                     258,824      8,120       5,680     2,077 274,701
                             Acquisition of a subsidiary         -     29,856           -       378  30,234
                             Disposal                            -          -           -      (151)   (151)
                             Conversion of an associate
                               to a subsidiary              81,683     61,481 106,177          5,221 254,562
                             Foreign exchange                 (268)       126    (377)          (227)    (746)
                             Amortisation                        -       (598) (7,778)        (5,654) (14,030)
                             Impairment                    (35,000)         -       -           (750) (35,750)



                             Closing net book amount       372,425    100,537     130,322     1,396 604,680


                             At 31 December
                             Cost                          407,939    123,331     172,130    15,312 718,712
                             Accumulated amortisation
                              and impairment               (35,514)   (22,794) (41,808)      (13,916) (114,032)


                             Net book amount               372,425    100,537     130,322     1,396 604,680



                             2009
                             Year ended 31 December
                             Opening net book amount        67,186      2,506      28,350       693     98,735
                             Additions                           -          -           -         -          -
                             Amortisation                        -       (954)     (1,730)     (191)    (2,875)


                             Closing net book amount        67,186      1,552      26,620       502     95,860


                             At 31 December
                             Cost                           67,186      4,772      32,458       960 105,376
                             Accumulated amortisation            -     (3,220)     (5,838)     (458) (9,516)


                             Net book amount                67,186      1,552      26,620       502     95,860


                             * Other intangible assets included $1.4 million at 31 December 2010
                             (2009: $0.5 million) of computer software related to core banking systems,
                             which is being amortised over five years.

                             Included in additions in customer relations in 2010 is an amount of
                             $29.9 million due to an acquisition of a subsidiary in Pakistan (note 42).




                            59      Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

16. Intangible assets          The carrying amount of goodwill has been allocated to cash-generating units
    (continued)                as follows:

                                                                                  2010             2009
                               Ithmaar Bank B.S.C.                                258,824                -
                               Ithmaar Bank B.S.C.
                                 (formerly Shamil Bank B.S.C.)                     66,070                -
                               Faysal Bank Limited                                 15,345                -
                               Islamic Investment Company
                                 of the Gulf (Bahamas) Limited                     32,186          67,186


                                                                                  372,425          67,186




17. Non-current assets         Non-current assets and liabilities held for sale
    and liabilities and
    discontinued operations    On 1 October 2010, the Board of Directors of Faysal Management Services
    held for sale              (Private) Limited (FMSL), a subsidiary of Faysal Bank Limited in which it has
                               60% shareholding, has decided to voluntarily wind up the company and
                               accordingly, resolved to initiate proceedings of winding up by the members
                               of FMSL under the Companies Ordinance, 1984. In view of this, the net assets
                               of FMSL have been classified as “non-current assets held for sale” in the
                               consolidated financial statements and valued at lower of cost and fair value less
                               cost to sell.

                               Discontinued operations held for sale

                               In 2008, the assets and liabilities related to DMI’s West African subsidiary,
                               Banque Islamique du Guinée and associated companies, Banque Islamique du
                               Sénégal and Banque Islamique du Niger pour le Commerce et l’Investissement
                               were presented as held for sale following the decision to sell these investments
                               and the execution of conditional sale and purchase agreements. Details of the
                               sale of these investments, which was completed on 10 August 2009, are found
                               in note 42, Disposals of discontinued operations.

                               Following are amounts included in the consolidated statement of total net cash
                               flows for discontinued operations held for sale:


                                                                                  2010             2009
                               Operating cash flows                                      -           (711)
                               Investing cash flows                                      -           (107)
                               Foreign currency translation adjustments                  -            352
                               Sale of discontinued operations (note 42)                 -         (5,963)


                                                                                         -         (6,429)




                              60     Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

17. Non-current assets         Analysis of the profit/(loss) after tax of discontinued operations is as follows:
    and liabilities and
    discontinued operations
    held for sale                                                                 2010                2009
    (continued)                Operating income                                           -                291
                               Operating expenses                                         -               (920)

                               Profit/(loss) before tax
                                of discontinued operations                                -              (629)
                               Operating income tax                                       -               (34)
                               Capital gains tax                                          -               (66)
                               Loss on sale of discontinued operations                    -            (1,040)

                                                                                          -            (1,769)

                               Attributable to:
                               Equity participants                                        -            (1,656)
                               Non-controlling interests                                  -              (113)

                                                                                          -            (1,769)




18. Accounts payable                                                              2010                2009

                               Accounts payable and other provisions             48,750                  515
                               Advance received from customers                   36,842                    -
                               Demand drafts                                     53,541                    -
                               Accruals                                          25,485                7,887
                               Security deposits on consumer leases              34,195                    -
                               Funds under management                           390,750                1,715
                               Dividends payable                                 17,591               19,297
                               Payables to associated
                                companies (note 35)                                    -                6,883
                               Derivative financial instruments                   44,698                    -
                               Employee payables                                  38,119                5,543
                               Deferred income                                        40                   58


                                                                                690,011               41,898


                               There were no liabilities against assets subject to finance leases at
                               31 December 2010 (2009: $Nil).


                               Derivative financial instruments
                                                                                              2010
                                                                             Contractual amount      Fair value


                               Foreign exchange derivatives
                                held for trading:
                                  Currency forwards                             621,505                44,698




                              61     Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)


19. Tax liability                                                            2010             2009
                                Current tax (receivable)/payable
                                At 1 January                                     (31)              (30)

                                Conversion of associate
                                 to a subsidiary                              (1,169)                -
                                Charge for the period                          2,604                 -
                                Adjustment                                     7,459                 -
                                Payments made                                (16,924)                -
                                Refund                                             5                 -
                                Exchange differences                             182                (1)

                                At 31 December                                (7,874)              (31)



                                Deferred tax (asset)/liability
                                At 1 January                                        -                -

                                Conversion of associate to a subsidiary       (7,301)                -
                                Charge for the period                        (11,204)                -
                                Acquisition of a subsidiary                  (23,500)                -
                                Changes due to fair value reserve              3,125                 -
                                Adjustment                                   (12,787)                -
                                Refund                                         3,181                 -
                                Exchange differences                               -                 -

                                At 31 December                               (48,486)                -




20. Massaref accounts                                                        2010             2009
                                Customer current accounts
                                Individuals                                  373,802                 -
                                Corporate institutions                       307,794                 -
                                Financial institutions                         2,588                 -

                                Customer investment accounts
                                Individuals                                  892,759                 -
                                Corporate institutions                     1,026,547                 -
                                Financial institutions                        57,019                 -

                                Due to associated companies
                                  (note 35)                                   20,000          235,616
                                Investments from off balance
                                  sheet funds                                223,980          219,511
                                Due to banks and financial
                                  institutions                             1,698,997                 -


                                                                           4,603,486          455,127


                                Included in investments from off balance sheet funds at 31 December 2010
                                is an amount of $102.2 million (2009: $100.2 million), which relates
                                to investments received from off balance sheet funds and which was
                                subsequently reinvested in investments in financings outside of the Group.
                                The remaining amount represents off balance sheet funds invested with the
                                Group’s subsidiaries.



                               62     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                     NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

20. Massaref accounts            Due to banks and financial institutions include short and medium term
    (continued)                  borrowings by the Group under bilateral and multilateral arrangements with
                                 maturities ranging from one year to five years. Also included are deposits
                                 totalling $878.1 million from three counterparties having contractual maturity of
                                 less than six months.



21. Provisions                   Included under liabilities are provisions of $55.0 million relating to a guarantee
                                 issued to certain funds under management. The same amount appears as
                                 provisions on the consolidated statement of income. Additionally included under
                                 non operating expenses are $35.0 million of provisions relating to project
                                 receivables.



22. Collateralised               Financial assets pledged to secure liabilities:
    borrowings
                                 At 31 December 2010, there were collateralised borrowings in aggregate
                                 $188.8 million (2009: Nil).

                                 Cash dividends amounting to $3.8 million (2009: Nil) on certain shares
                                 pledged as collateral was directly received by the lender during the year and
                                 adjusted against the outstanding facility amount as per the agreed terms.

                                 Assets, which are pledged as collateral, are conducted under terms that are
                                 usual and customary to standard lending and securities borrowing and lending
                                 activities.



23. Net trading income                                                             2010               2009
                                 Income from foreign exchange trading                4,427                  -
                                 Gains/(losses) on trading securities               (3,335)                 5
                                 Gains/(losses) from revaluation                     7,265                  -

                                                                                     8,357                  5



                                 Foreign exchange trading includes gains and losses from spot and forward
                                 contracts translated from foreign currency assets and liabilities.




24. Income from                                                                    2010               2009
    investments in
    financings                   Income from investments in financings             142,450             1,992
                                 Present value adjustment                            4,986            10,714
                                 Provision for bad and doubtful debts              (23,021)              (67)
                                 Reversal of provision for bad and
                                   doubtful debts                                         -                66

                                                                                   124,415            12,705



                                 Included in the present value adjustment is an upward adjustment of
                                 $5.2 million (2009: $10.7 million) which represents the credit required to
                                 adjust the carrying value of the Kard Hassan, which was retired in full on
                                 28 June 2010 (2009: $167.9 million) (note 7).



                                63     Dar Al-Maal Al-Islami Trust
                                       Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)


25. Fee and commission                                                      2010            2009
    income
                               Arrangement fees                               1,884              -
                               Guarantee fees                                   910              -
                               Documentary credit fees                        2,198              -
                               Structuring fees and commissions              14,836          3,278
                               Fees from associated companies (note 35)           -             20
                               Other fees                                    16,022             45
                               Fees and commissions expense                    (544)             -

                                                                             35,306          3,343



26. Dividend income                                                         2010            2009
                               Investment securities available for sale      51,611            156

                                                                             51,611            156



27. Other income                                                            2010            2009
                               Fair value loss on investment properties     (12,314)             -
                               Rental income from investment properties       2,392            104
                               Gain on liquidation of a subsidiary            1,051              -
                               Loss on sale of a subsidiary                    (868)          (644)
                               Acquisition of a subsidiary (note 42)         38,746              -
                               Other                                          4,742             68

                                                                             33,749           (472)



28. Staff costs                                                             2010            2009
                               Salaries                                      69,895         17,258
                               Social security and other statutory costs      2,984          1,228
                               Pension and end of service                     3,103              -
                               Other benefits                                15,301          4,989

                                                                             91,283         23,475


                               Other benefits include housing allowance, home leave, relocation expense,
                               medical and health expense, training, severance costs and end of service
                               benefit costs.

29. General and                                                             2010            2009
    administrative expenses
                               Office expenses                               31,853          3,525
                               Professional fees                             33,895          3,083
                               Other                                         15,657          1,996

                                                                             81,405          8,604


                               Included in professional fees are fees amounting to $24.0 million paid to
                               IICG Funds under Management for services rendered in connection with the
                               acquisition of 400 million shares of Ithmaar Bank B.S.C. on 31 March 2010
                               (note 42).


30. Proposed dividend          No dividend has been proposed for 2010 (2009: Nil).



                              64     Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                      (Thousands of US dollars)

31. Taxes
                                                                                                2010               2009
                                 Current taxes                                                 2,604                      -
                                 Gain on deferred taxes                                      (11,204)                     -

                                                                                                (8,600)                   -


                                 The expected income tax expense for the Group is an aggregate of individual
                                 amounts representing the mix of profits and losses and the applicable tax rates
                                 in each jurisdiction. Consequently, the effective tax rate on consolidated income
                                 may vary from year to year, according to the source of earnings. Most affiliates
                                 of the Group operate in tax free jurisdictions.

                                 A reconciliation between the reported income tax and the amount computed,
                                 using the weighted average of applicable domestic corporate tax rates, is as
                                 follows:

                                                                                                2010               2009
                                 Net accounting profit                                          68,794                    -
                                 Weighted average applicable domestic
                                   corporate tax rate                                        (12.9)%                      -
                                 Weighted average applicable domestic
                                   corporate tax                                                12,404                    -
                                 Effect of revenue taxed at a different rate
                                   than domestic corporate tax rate                          (21,004)                     -

                                                                                                (8,600)                   -


                                 The relationship between profit before taxes and non-controlling interests and
                                 the expected current income tax expense reflects the mix of profits earned in
                                 jurisdictions with relatively high tax rates and those with relatively low tax rates.



32. Non-controlling interests    The consolidated financial statements include 100% of the assets, liabilities
                                 and earnings of consolidated companies. The ownership interests of the other
                                 shareholders are called non-controlling interests.

                                 The following table summarises the non-controlling shareholders' interests in
                                 the equity of consolidated subsidiaries.


                                                                                         2010                   2009
                                                                             Non-                             Non-
                                                                         controlling %                    controlling %

                                 Ithmaar Bank B.S.C. and wholly
                                   owned subsidiaries                          47         325,227              -              -
                                 Faysal Bank Limited                           34          92,459              -              -
                                 Health Island B.S.C. (C)                      50         111,342              -              -
                                 Ithmaar Aviation Lease One
                                   (Dublin) Ltd.                                5            341               -              -
                                 Cityview Real Estate
                                   Development B.S.C. (C)                      49           1,574              -              -
                                 Marina Reef Real Estate
                                   Development B. S.C. (C)                     49           4,862              -              -
                                 Sakana Holistic Housing
                                   Solutions B. S.C. (C)                       50          27,114              -              -

                                                                                          562,919                             -


                                 The non-controlling interest appropriation in the consolidated statement of
                                 income of $52.8 million represents the non-controlling shareholders' share of
                                 the loss of these subsidiaries for 2010 (2009: Banque Islamique du Guinée
                                 $(0.1) million).



                                65     Dar Al-Maal Al-Islami Trust
                                       Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

33. Funds                       Funds under management aggregated $4.0 billion (2009: $2.1 billion) and
    under management            represented amounts invested by clients and placed with funds managed by the
                                Group. These funds are invested without recourse to the Group. The Group
                                earned fees of approximately $23.5 million associated with such funds in 2010
                                (2009: $20.1 million).

                                At 31 December 2010, the Group had amounts due to funds under
                                management of $613.0 million (2009: $221.2 million) and due from of
                                $442.7 million (2009: $193.1 million).



34. Retirement benefit plans    Substantially all employees of the Group’s European incorporated subsidiaries
                                are covered either by insured or state pension plans. In accordance with local
                                practice, no pension plans exist in certain countries in which the Group
                                operates.

                                The Group’s principal retirement benefit plans are in Switzerland and are
                                defined benefit plans. The assets of the funded plans are held in separate trustee
                                administered funds. These plans are valued by independent actuaries every year
                                using the projected unit credit method.

                                The assumptions used in the actuarial valuations for 2010 are the best
                                estimates of the main parameters influencing the pension liability and are
                                detailed as follows:

                                                                                                          2010
                                Standard financial cost rate                                                2.8 %
                                Expected long-term rates of return on plan assets                           3.8 %
                                Rate of increase in compensation                                            2.0 %

                                The funded status of the Group’s pension plans is as follows:
                                Projected benefits obligations                                             70,098
                                Plan assets at fair values                                                (66,712)


                                Funded status                                                               3,386
                                Unrecognised actuarial loss/(gain)                                         (3,046)


                                Liability in the statement of financial position                              340


                                Net periodic pension cost consists of the following:
                                Service costs                                                               2,129
                                Financial costs                                                             2,038
                                Expected return on assets                                                  (2,283)


                                Total cost                                                                  1,884
                                Employee contributions                                                       (557)


                                Net periodic pension cost                                                   1,327


                                Movement in the liability recognised in the statement of financial position:
                                Conversion of an associate to subsidiary                                        484
                                Exchange differences                                                            587
                                Net periodic pension cost                                                     1,327
                                Employer contributions                                                       (2,058)


                                At 31 December                                                                340




                               66     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

34. Retirement benefit plans    The movement in the defined benefit obligation over the year is as follows:
    (continued)
                                                                                                           2010
                                Conversion of an associate to a subsidiary                                 57,627
                                Service costs                                                               2,129
                                Financial costs                                                             2,038
                                Employee contributions                                                        557
                                Actuarial gain                                                              5,342
                                Benefits paid                                                              (3,040)
                                Premiums paid                                                                (430)
                                Exchange differences                                                        5,875


                                At 31 December                                                             70,098


                                The movement in the fair value of plan assets of the year is as follows:

                                Conversion of an associate to a subsidiary                                 60,671
                                Expected return on plan assets                                              2,283
                                Actuarial loss/(gain)                                                      (1,583)
                                Employer contributions                                                      2,058
                                Employee contributions                                                        557
                                Benefits paid                                                              (3,040)
                                Premiums paid                                                                (430)
                                Exchange differences                                                        6,196


                                At 31 December                                                             66,712


                                Actual return on plan assets                                                 854



                                The expected return on plan assets is determined by considering the expected
                                returns available on the assets underlying the current investment policy.
                                Expected returns on fixed rate investments are based upon gross redemption
                                yields as at the date of the statement of financial position. Expected returns on
                                equity and property investments reflect long-term real rates of return experienced
                                in the respective markets. The expected return for each asset class was
                                weighted based on the target asset allocation to develop the expected long-term
                                rate of return on assets assumption for the portfolio.

                                Expected contributions to post employment benefit plans for the year ending
                                31 December 2011 is $1.5 million.

                                As at 31 December                                                          2010
                                Present value of defined benefit obligation                                70,098
                                Fair value of plan assets                                                  66,712


                                Surplus/(deficit)                                                           3,386
                                Experience adjustments on plan assets                                      (1,583)
                                Experience adjustments on plan liabilities                                  2,298
                                Plan assets invested in real estate currently
                                 used by a subsidiary of the Group                                         13,932




                               67     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (Thousands of US dollars)

35. Related party            Related parties include equity participation holders, directors, associated
    transactions and         companies and other companies, whose ownership and management is
    balances                 common with DMI or its subsidiaries and associates. A number of transactions
                             are entered into with related parties in the normal course of business. These
                             include loans, current and investment accounts. Transactions and balances
                             disclosed as with associated companies are those with companies in which the
                             Bank owns 20% to 50% of the voting rights and over which it exerts significant
                             influence, but does not have control. The volumes of related party transactions,
                             outstanding balances at the year end, and relating income and expense for the
                             year are as follows.

                             a) Loans to key management personnel


                                                                              2010              2009
                             Loans

                             Loans outstanding at 1 January                          -             198
                             Conversion of an associate
                              to a subsidiary                                    945                 -
                             Loans issued during the year                      1,983                 -
                             Loan repayments during the year                  (1,948)             (203)
                             Foreign exchange                                     34                 5


                             Loans outstanding at 31 December                   1,014                 -


                             No provisions were recognised in respect of loans given to related parties
                             (2009: $Nil).

                             Loans advanced to key management personnel bear no return and are
                             unsecured.

                             b) Loans to employees

                             All employees of the Group are entitled to receive employee loans on favourable
                             terms not equivalent to those of transactions made on an arm’s length basis.
                             Included in accounts receivable are amounts due from employees at
                             31 December 2010 of $43.2 million (2009: $1.6 million).




                            68    Dar Al-Maal Al-Islami Trust
                                  Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (Thousands of US dollars)

35. Related party            c) Current and investment accounts
    transactions and
    balances                                                             Associated companies
    (continued)
                             Period ended                               2010            2009

                             Amounts payable to:

                             Ithmaar Bank B.S.C.                             -            9,929
                             Shamil Bank of Bahrain B.S.C.                   -          205,348
                             MFAI (Jersey) Limited                           -            7,218
                             DMI (Jersey) Limited                            -                4
                             Faisal Islamic Bank of Egypt               20,000           20,000

                             Amounts receivable from:

                             Ithmaar Bank B.S.C.                              -              436
                             Shamil Bank of Bahrain B.S.C.                    -            3,241
                             Faisal Private Bank (Switzerland) S.A.           -              303
                             MFAI (Jersey) Limited                            -            2,558
                             DMI Administrative Services S.A.                 -               16
                             Faysal Bank Limited                              -                2
                             Faisal Islamic Bank of Egypt                     7                -

                             Expense on current
                              and investment accounts:

                             Ithmaar Bank B.S.C.                         3,845           11,217
                             Shamil Bank of Bahrain B.S.C.                   -            5,524

                             Revenue on current
                              and investment accounts:

                             Ithmaar Bank B.S.C.                              8               -
                             Shamil Bank of Bahrain B.S.C.                    -             352



                             Related party transactions pertaining to acquisitions and disposals are
                             described in note 42.


                             d) Key management compensation


                                                                        2010            2009
                             Salaries and other short-term benefits      19,909         12,661
                             Post-employment benefits                       996            534
                             Other long-term benefits                       493              -


                                                                         21,398         13,195




                            69    Dar Al-Maal Al-Islami Trust
                                  Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Thousands of US dollars)

36. Contingent liabilities
    and commitments                                                              2010               2009
                               Contingent liabilities

                               Acceptances and endorsements                      31,964                   -
                               Performance bid bonds                             23,992                   -
                               Customer claims                                  103,034                   -
                               Guarantees and irrevocable
                                letters of credit                               566,720            11,164


                                                                                725,710            11,164


                               The Group operates in certain countries which have tax regimes, but for which
                               no provision for income tax has been recorded in these financial statements.
                               It is believed that the Group’s potential tax liability arising in respect of its
                               operations in those countries is remote at the present time.

                               Faisal Islamic Bank of Egypt carried at 31 December 2010 contingent liabilities
                               of $32.2 million (December 2009: $37.2 million), of which the Group’s
                               share was $15.8 million (December 2009: $18.2 million). These related
                               to guarantees and letters of credit issued as part of their normal banking
                               operations.

                               Ithmaar Bank B.S.C. carried at 31 December 2009 contingent liabilities
                               of $447.1 million, of which the Group’s share was $200.9 million. These
                               related to guarantees and letters of credit issued as part of their normal banking
                               operations.

                               BBK carried at 31 December 2010 contingent liabilities of $1,428.5 million
                               (December 2009: $Nil), of which the Group’s share was $190.3 million
                               (December 2009: $Nil). These related to guarantees and letters of credit issued
                               as part of their normal banking operations.

                               First Leasing Bank carried at 31 December 2010 contingent liabilities of
                               $2.3 million (December 2009: $Nil), of which the Group’s share was
                               $0.4 million (December 2009: $Nil). These related to guarantees and letters
                               of credit issued as part of their normal banking operations.



                                                                                 2010               2009
                               Commitments

                               Undrawn facilities, financing lines              998,473                   -
                               Other commitments to finance                      44,233                   -
                               Repurchase and resale transactions               129,837                   -


                                                                              1,172,543                   -




                              70    Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Thousands of US dollars)

36. Contingent liabilities     Operating lease commitments
    and commitments
    (continued)                Commitments for operating leases included cars and office equipment.

                               The future minimum lease payments under non cancellable operating leases
                               are as follows:


                                                                           2010            2009


                               Not later than one year                          91               -
                               Later than one year and not
                                later than five years                           46               -


                                                                              137                -


                               Significant net open foreign
                                 currency position                         88,556                -




                              71    Dar Al-Maal Al-Islami Trust
                                    Annual Report 2010
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

37. Current and non-current    At 31 December 2010
    assets and liabilities
                                                               Current    Non-current       Total

                               Cash and cash
                                 equivalents                 792,395            -         792,395
                               Due from banks                146,406          196         146,602
                               Trading securities             37,832        3,511          41,343
                               Investments in financings   1,241,084      702,229       1,943,313
                               Investment securities         797,192      421,791       1,218,983
                               Accounts receivable            87,042      106,787         193,829
                               Current tax receivable         14,476            -          14,476
                               Investment property            57,525      335,295         392,820
                               Investments in associates           -      916,675         916,675
                               Property, plant and
                                 equipment                     3,029      146,689        149,718
                               Intangible assets                 181      604,499        604,680
                               Non-current assets held
                                 for sale                            -      2,104          2,104
                               Deferred tax assets                   -     53,401         53,401


                               Total assets                3,177,162     3,293,177      6,470,339


                               Customer current accounts   684,184                -      684,184
                               Customer investment
                                 accounts                1,838,808        137,516       1,976,324
                               Due to banks and other
                                 financial institutions  1,682,899         36,099       1,718,998
                               Investments from off
                                 balance sheet funds        28,057        195,923        223,980
                               Provisions                        -         78,000         78,000
                               Non-current liabilities
                                 held for sale                   -             21             21
                               Accounts payable            597,562         92,449        690,011
                               Current tax payable           6,602              -          6,602
                               Deferred tax liabilities          -          4,915          4,915


                               Total liabilities           4,838,112      544,923       5,383,035


                               Net assets                  (1,660,950)   2,748,254      1,087,304




                               At 31 December 2009

                               Total assets                  195,980      635,645        831,625


                               Total liabilities             104,905      392,132        497,037


                               Net assets                     91,075      243,513        334,588




                              72      Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                       (Thousands of US dollars)

38. Concentration of           Assets and liabilities of the Group are located in the following geographical
    assets and liabilities     regions and industry sectors:

                                                                         Asia/         Middle                     North
                               Geographical regions                     Pacific         East        Europe       America   Others         Total


                               At 31 December 2010
                               Cash and cash
                                 equivalents                            243,343        408,236      130,368         140     10,308       792,395
                               Due from banks                                 -        146,602            -           -          -       146,602
                               Trading securities                        41,340              3            -           -          -        41,343
                               Investments
                                 in financings                         1,623,257        93,832      124,323      15,971     85,930      1,943,313
                               Investment securities                     991,822       178,685        9,072      35,264      4,140      1,218,983
                               Accounts receivable                        80,042       107,541        5,388         858          -        193,829
                               Current tax receivable                      5,935         7,962          579           -          -         14,476
                               Investment property                             -       285,204      107,532           -         84        392,820
                               Investments in associates                  68,205       848,296          174           -          -        916,675
                               Property, plant and equipment              68,566        80,391          761           -          -        149,718
                               Intangible assets                          31,528       568,306        4,846           -          -        604,680
                               Non-current assets
                                 held for sale                            2,104                 -            -        -             -      2,104
                               Deferred tax assets                       53,401                 -            -        -             -     53,401



                               Total assets                            3,209,543      2,725,058     383,043      52,233    100,462      6,470,339



                               Customer current accounts                 492,905       138,718       23,196       3,159     26,206        684,184
                               Customer investment accounts            1,855,120        61,734       50,747       8,701         22      1,976,324
                               Due to banks                              587,314       853,692      238,398      15,026     24,568      1,718,998
                               Investments from off balance
                                 sheet funds                                  -         25,001      102,243      96,736             -    223,980
                               Provisions                                     -         23,000       55,000           -             -     78,000
                               Non-current liabilities held for sale         21              -            -           -             -         21
                               Accounts payable                         265,515        400,884       23,063         549             -    690,011
                               Current tax payable                        6,034             11          557           -             -      6,602
                               Deferred tax liabilities                       -              -        4,915           -             -      4,915



                               Total liabilities                       3,206,909      1,503,040     498,119 124,171         50,796      5,383,035



                               Net on-balance sheet position              2,634       1,222,018     (115,076) (71,938)      49,666      1,087,304



                               Contingent liabilities
                                and commitments                        1,701,345       121,888       20,265      14,191     40,701      1,898,390




                               At 31 December 2009

                               Total assets                                   2        725,116      106,292         215             -    831,625



                               Total liabilities                                  -    292,984      109,753      94,300             -    497,037



                               Net on-balance sheet position                  2        432,132        (3,461) (94,085)              -    334,588



                               Contingent liabilities
                                and commitments                                   -      4,164               -    7,000             -     11,164




                              73         Dar Al-Maal Al-Islami Trust
                                         Annual Report 2010
                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                       (Thousands of US dollars)

38. Concentration of                                       Banks and
                                                            financial
                                                                          Trading
                                                                            and
                                                                                        Property
                                                                                          and          Private
    assets and liabilities     Industry sectors            institutions manufacturing construction   individuals   Services        Textile         Other         Total

    (continued)
                               As at 31 December 2010
                               Cash and cash
                                equivalents                725,414                -             -             -     66,772                   -       209       792,395

                               Due from banks              146,602                -             -             -               -              -             -   146,602

                               Trading securities           41,343                -             -             -               -              -             -    41,343

                               Investments in
                               financings                  166,217      350,477       193,604        194,390       230,666        335,316        472,643 1,943,313

                               Investment securities       955,283        26,408      100,383           5,372       37,842          4,154         89,541 1,218,983

                               Accounts receivable          73,240        11,120        28,147        40,457         3,067                   -    37,798       193,829

                               Current tax receivable               -             -             -             -     14,476                   -             -    14,476

                               Investment property                  -             -   392,820                 -               -              -             -   392,820

                               Investments in
                                 associates                900,722        13,923         2,030                -               -              -             -   916,675

                               Property, plant
                                and equipment                 2,306               -   147,412                 -               -              -             -   149,718

                               Intangible assets           604,680                -             -             -               -              -             -   604,680

                               Non-current assets
                                held for sale                 2,104               -             -             -               -              -             -     2,104

                               Deferred tax assets                  -             -             -             -     53,401                   -             -    53,401


                               Total assets               3,617,911     401,928       864,396        240,219       406,224        339,470        600,191 6,470,339


                               Customer current
                                accounts                    15,476      180,818         14,798       310,504        86,572         11,032         64,984       684,184

                               Customer investment
                                accounts                   173,752      269,290         24,891 1,124,860           139,094         11,327        233,110 1,976,324

                               Due to banks               1,460,338               -   228,946           6,421       10,658                   -    12,635 1,718,998

                               Investments from
                                 off balance
                                 sheet funds               223,980                -             -             -               -              -             -   223,980

                               Provisions                   23,000                -     55,000                -               -              -             -    78,000

                               Non-current liabilities
                                held for sale                     21              -             -             -               -              -             -         21

                               Accounts payable             41,930         5,090        48,288        54,331        15,690         11,704        512,978       690,011

                               Current tax payable                  -             -             -             -      6,602                   -             -     6,602

                               Deferred tax liabilities             -             -      4,915                -               -              -             -     4,915


                               Total liabilities          1,938,497      455,198      376,838 1,496,116            258,616         34,063        823,707 5,383,035


                               Net on-balance
                                position                  1,679,414      (53,270) 487,558 (1,255,897) 147,608                     305,407 (223,516) 1,087,304


                               Contingent liabilities
                                and commitments            274,787      886,767         98,872        83,815       238,597        119,386        196,166 1,898,390




                               At 31 December 2009
                               Total assets                825,521         1,731         3,938              23         259                   -       153       831,625


                               Total liabilities           475,091            280               -     19,297         1,070                   -     1,299       497,037


                               Net on-balance sheet
                                position                   350,430         1,451         3,938       (19,274)         (811)                  -    (1,146) 334,588


                               Contingent liabilities
                                and commitments               2,667               -      7,000                -      1,497                   -             -    11,164




                              74         Dar Al-Maal Al-Islami Trust
                                         Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

39. Maturities of assets      The maturity profiles of assets and liabilities of the Group are as follows:
    and liabilities
                                                                         Up to     One-three Three-twelve   One-five       Over five
                                                                       one month    months     months        years          years             Total


                              At 31 December 2010

                              Cash and cash equivalents                 760,314     32,081             -               -               -    792,395
                              Due from banks                             86,213            -    60,193           196                   -    146,602
                              Trading securities                         18,097     10,069        9,665       3,512                    -     41,343
                              Investments in financings                 468,178    352,610     420,296      479,479        222,750         1,943,313
                              Investment securities                     235,992    407,147     154,053      284,144        137,647         1,218,983
                              Accounts receivable                        68,800      2,211      16,032       67,633         39,153          193,829
                              Current tax receivable                     11,436        290        2,750                -               -     14,476
                              Investment property                        55,245      2,280             -    210,439        124,856          392,820
                              Investments in associates                        -           -           -      1,046        915,629          916,675
                              Property, plant and equipment                 256        390        2,382      70,471         76,219          149,718
                              Intangible assets                                -         16         165       3,061        601,438          604,680
                              Non-current assets held for sale                 -           -           -               -      2,104            2,104
                              Deferred tax assets                           333        698        3,139      16,741         32,490           53,401




                              Total assets                             1,704,864   807,792     668,675 1,136,722 2,152,286                 6,470,339




                              Customer current accounts                 684,184            -           -               -               -    684,184

                              Customer investment accounts            1,085,736    190,216     562,856       88,879         48,637         1,976,324

                              Due to banks                            1,077,690    132,730     472,479       19,224         16,875         1,718,998

                              Investments from off balance
                                sheet funds                                    -           -    28,057      194,386           1,537         223,980

                              Provisions                                       -           -           -               -    78,000           78,000
                              Non-current liabilities held for sale            -           -           -               -          21                  21
                              Accounts payable                          498,758     22,889      75,915       89,826           2,623         690,011
                              Current tax payable                         6,389            -        213                -               -       6,602
                              Deferred tax liabilities                         -           -           -               -      4,915            4,915




                              Total liabilities                       3,352,757    345,835 1,139,520        392,315        152,608         5,383,035




                              Net liquidity gap                       (1,647,893) 461,957 (470,845) 744,407 1,999,678                      1,087,304




                              At 31 December 2009


                              Total assets                               43,021     99,887      53,071      140,334        495,312          831,625




                              Total liabilities                              41     19,632      85,233      201,226        190,905          497,037




                              Net liquidity gap                          42,980     80,255     (32,162)     (60,892) 304,407                334,588




                             75        Dar Al-Maal Al-Islami Trust
                                       Annual Report 2010
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

40. Currency exposure                                    United
                                                         States       Pakistan   Bahrain               Swiss       Saudi       Egyptian
                                                         Dollar        Rupee      Dinar     Euro       Franc       Riyal        Pound      Other       Total



                            As at 31 December 2010
                            Cash and cash
                             equivalents                197,825       156,933    140,785   236,329      3,474      31,269          486     25,294 792,395
                            Due from banks              146,423              -         -           -           -           -       179             - 146,602
                            Trading securities                    -    41,340          -           -           -           -         3             -   41,343
                            Investments
                              in financings             317,183 1,526,066         40,054    54,731             -    4,982          109        188 1,943,313
                            Investment securities       217,781       968,120      5,271    10,336       560               -     2,038     14,877 1,218,983
                            Accounts receivable          44,317        76,760     34,410    25,188      4,372       2,105          127      6,550 193,829
                            Current tax receivable                -     7,817      3,619     2,606       434               -          -            -   14,476
                            Investment property          49,157         8,832    226,267    55,245     50,007              -       948      2,364 392,820
                            Investments in
                              associates                842,545         1,046      2,020           -           -    4,604             -    66,460 916,675
                            Property, plant and
                             equipment                     6,907       70,318     71,693           9     752               -        39             - 149,718
                            Intangible assets           572,364        31,528          -           7     781               -          -            - 604,680
                            Non-current assets
                             held for sale                        -     2,104          -           -           -           -          -            -    2,104
                            Deferred tax assets                   -    53,401          -           -           -           -          -            -   53,401



                            Total assets               2,394,502 2,944,265       524,119   384,451     60,380      42,960        3,929    115,733 6,470,339


                            Customer current
                             accounts                    94,051       440,023    106,925    30,707       960        1,348             -    10,170 684,184
                            Customer investment
                             accounts                   155,038 1,690,157         50,163    59,329             -           -          -    21,637 1,976,324
                            Due to banks                189,306       408,211    428,813   371,897             -    4,791             -   315,980 1,718,998
                            Investments from
                              off balance
                              sheet funds               223,980              -         -           -           -           -          -            - 223,980
                            Provisions                   23,000              -         -    55,000             -           -          -            -   78,000
                            Non-current liabilities
                             held for sale                        -        21          -           -           -           -          -            -       21
                            Accounts payable            498,614       104,103     72,073     7,293      6,629        315           342        642 690,011
                            Current tax payable                   -     6,591          -           -           -           -        11             -    6,602
                            Deferred tax liabilities              -          -         -           -    4,915              -          -            -    4,915



                            Total liabilities          1,183,989 2,649,106       657,974   524,226     12,504       6,454          353    348,429 5,383,035


                            Net on-balance sheet
                             position                  1,210,513      295,159 (133,855) (139,775)      47,876      36,506        3,576 (232,696) 1,087,304


                            Contingent liabilities
                             and commitments            302,873 1,377,488        100,999    76,487     15,812       5,561             -    19,170 1,898,390




                            At 31 December 2009

                            Total assets                802,006              -         -           -      48       26,011        3,494         66 831,625


                            Total liabilities           495,670              -         -           -     141         688           529             9 497,037


                            Net on-balance sheet
                             position                   306,336              -         -           -     (93)      25,323        2,965         57 334,588


                            Contingent liabilities
                             and commitments               7,000             -         -           -           -    4,164             -            -   11,164




                           76          Dar Al-Maal Al-Islami Trust
                                       Annual Report 2010
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

41. Trust capital               As at 31 December 2010 an amount of $125.0 million has been appropriated
                                from net profit to fiduciary reserve to cover potential fiduciary risks which might
                                arise in the Group’s capacity as fund manager. As at 31 December 2009,
                                $20.0 million was transferred from paid in capital.



42. Acquisitions                Ithmaar Bank B.S.C.
    and disposals
                                On 31 March 2010 DMI acquired an additional 400 million shares of Ithmaar
                                Bank B.S.C. by participation in a rights issue at a price of $0.25 per share for
                                a total consideration of $100 million. As a result, DMI’s interest in the equity of
                                Ithmaar Bank B.S.C. increased from 44.9% to 52.6% converting it from an
                                associate to a subsidiary (note 14).

                                Ithmaar Bank B.S.C. owns the following subsidiaries which are now included in
                                the consolidated financial statements:

                                Subsidiary                                           % owned   Country of incorporation


                                Faysal Bank Limited                                    66                   Pakistan
                                Faisal Private Bank (Switzerland) S.A.                100                 Switzerland
                                Faisal Finance (Jersey) Limited                       100                      Jersey
                                Cantara (Switzerland) S.A.                            100                 Switzerland
                                DMI Administrative Services S.A.                      100                 Switzerland
                                DMI (Jersey) Limited                                  100                      Jersey
                                MFAI (Jersey) Limited                                 100                      Jersey
                                Faisal Finance (Luxembourg) S.A.                      100                Luxembourg
                                Faisal Finance (Netherlands Antilles) NV              100         Netherlands Antilles
                                Rayten Holdings Limited                               100                      Jersey
                                Ithmaar Development Company Limited                   100             Cayman Islands
                                Shamil Finance (Luxembourg) S.A.                      100                Luxembourg
                                City View Real Estate Development Co. B.S.C. (C)       51         Kingdom of Bahrain
                                Marina Reef Real Estate Development Co. B.S.C. (C)     51         Kingdom of Bahrain
                                Health Island B.S.C. (C)                               50         Kingdom of Bahrain
                                Sakana Holistic Housing Solutions B.S.C. (C)          63          Kingdom of Bahrain



                                The details of the purchase consideration given, fair value of the net assets
                                acquired and goodwill arising on the acquisition are as follows:


                                Fair value of consideration                                          100,000
                                Fair value of previously held equity interest                        587,125
                                Less
                                100% of identifiable net assets                                  (1,040,308)
                                Non-controlling interests                                           612,007


                                Goodwill recognised                                                  258,824




                               77     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

42. Acquisitions                The details of the assets and liabilities acquired are as follows:
    and disposals                                               Acquirees’         Fair value           Fair value
    (continued)                                              carrying amount     adjustments/             as at
                                                            on 31 March 2010      intangibles        31 March 2010
                                                                                  recognised


                                Cash and cash
                                  equivalents                 487,334                  -           487,334
                                Investments                    10,666                  -            10,666
                                Trading securities             40,215                  -            40,215
                                Investments in financings   1,804,249                  -         1,804,249
                                Investment securities         838,453             (7,000)          831,453
                                Investment property           401,056             13,768           414,824
                                Accounts receivable           217,299                  -           217,299
                                Investments in associate      697,882             (1,678)          696,204
                                Property, plant and
                                  equipment                   105,391             (2,300)            103,091
                                Acquired goodwill
                                  & intangibles               255,068                (506)           254,562
                                Customer related
                                  intangible assets                   -            8,120                8,120
                                Core deposit
                                  intangible assets                  -             5,680              5,680
                                Other assets                     1,537                 -              1,537
                                Massaref accounts           (3,415,216)                -         (3,415,216)
                                Accounts payable              (424,749)                -           (424,749)
                                Other liabilities                5,039                 -              5,039

                                Total assets and
                                 liabilities acquired       1,024,224             16,084         1,040,308

                                Non-controlling interests    (226,048)                    -          (226,048)

                                Net identifiable assets       798,176             16,084             814,260




                                Intangibles acquired in the business combination

                                Following the purchase price allocation of Ithmaar Bank B.S.C., the following
                                intangible assets were recognised:


                                Customer relations                                                     8,120
                                Core deposits                                                          5,680

                                                                                                      13,800
                                Non-controlling interests                                             (6,541)

                                Net intangible assets                                                  7,259



                                The fair value of these identifiable intangible assets has been determined
                                using an income approach, by an independent valuer. The income approach
                                begins with an estimation of the annual cash flows, which a market participant
                                acquirer would expect the asset to generate over a discrete projection period.
                                The estimated cash flows for each of the years in the discrete projection period
                                are then converted to their present value equivalent using a rate of return
                                appropriate for the risk of achieving the assets’ projected cash flows. The
                                present value of the estimated cash flows are then added to the present value
                                equivalent of the residual value of the asset (if any) at the end of the discrete
                                projection period to arrive at an estimate of the fair value of the specific asset.



                               78     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

42. Acquisitions                The excess earnings methodology states that the value of an intangible asset is
    and disposals               given by the present value of the earnings it generates, net of a reasonable return
    (continued)                 on other assets also contributing to that stream of earnings.

                                The valuations are based on information at the time of acquisition and the
                                expectations and assumptions that have been deemed reasonable by the
                                Group’s management. It has been assumed that the underlying assumptions or
                                events associated with such assets will occur as projected.

                                On 30 September 2010, DMI acquired an additional 18,926,276 shares in
                                Ithmaar Bank B.S.C. at a price of $0.31 per share for a total purchase price of
                                $5,867,146, further increasing the equity ownership to 53.28%.

                                The profit of Ithmaar Bank B.S.C. prior to 31 March 2010, the date of its
                                conversion from an associate to a subsidiary, amounted to $1.6 million which
                                is included in the share of profit/(loss) of associated companies in the
                                consolidated statement of income. The loss of Ithmaar Bank B.S.C. since
                                31 March 2010 included in the Group’s consolidated statement of income for
                                the twelve month period ended 31 December 2010 amounted to $77.5 million,
                                net of non-controlling interests. If the conversion had occurred on
                                1 January 2010, the consolidated loss after taxes for the twelve months ended
                                31 December 2010 would have been $73.9 million, net of non-controlling
                                interests.

                                On 14 April 2010 the Central Bank of Bahrain approved the reorganisation of
                                Ithmaar Bank B.S.C. and its wholly owned subsidiary Shamil Bank of Bahrain
                                B.S.C. into one entity under Ithmaar Bank B.S.C. with an Islamic retail banking
                                license. As a result Shamil Bank has transferred its entire business, assets and
                                liabilities to Ithmaar.

                                On 30 September 2010 Islamic Investment Company of the Gulf (Bahamas)
                                Limited purchased 100% equity interests in four subsidiaries DMI Jersey
                                Limited, MFAI Jersey Limited, Faisal Finance Jersey Limited and Rayten Limited
                                from Ithmaar Bank B.S.C. for a total consideration of $4.9 million. This
                                transaction from the Group level resulted in the purchase of non-controlling
                                interests in the consolidated financial statements.

                                Pakistan operations of Royal Bank of Scotland

                                During the year, one of the Group’s subsidiaries, Faysal Bank Limited (FBL),
                                acquired the Pakistan operations of Royal Bank of Scotland (RBS).
                                FBL acquired the majority shareholding of 99.37% of RBS for cash
                                consideration of approximately €41.0 million on the acquisition date of
                                15 October 2010 and RBS became a subsidiary of FBL as at the
                                aforementioned date. The remaining 0.63% non-controlling interest was
                                acquired subsequently by FBL through issuance of ordinary shares. Effective
                                31 December 2010, RBS has been consolidated with FBL.




                               79     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

42. Acquisitions                The details of the purchase consideration given, fair value of the net assets
    and disposals               acquired and gain on bargain purchase arising on the acquisition are as
    (continued)                 follows:


                                Fair value of identifiable net assets of RBS
                                 as on 15 October 2010                                                97,136

                                Percentage of identifiable net assets acquired                       99.37%


                                Fair value of identifiable net assets of RBS
                                acquired as on 15 October 2010                                        96,524
                                Less
                                Purchase consideration paid in cash                                  (58,113)


                                Gain on bargain purchase                                              38,411




                                The details of the assets and liabilities acquired are as follows:
                                                                   Acquirees’         Fair value        Fair value
                                                               carrying amount      adjustments/          as at
                                                            as at 15 October 2010    intangibles     15 October 2010
                                                                                     recognised


                                Cash and balances
                                  with treasury banks            68,086                      -         68,086
                                Balances with other banks        22,091                      -         22,091
                                Lending to financial
                                  institutions                   17,586                   -            17,586
                                Investments                     341,980                   -           341,980
                                Advances                        447,259             (16,483)          430,777
                                Operating fixed assets
                                  (excluding intangibles
                                  recognised on business
                                  combination)                   42,491               1,671            44,162
                                Intangible assets                   377              29,773            30,149
                                Deferred tax assets - net        33,455             (10,021)           23,434
                                Other assets - net               26,310              14,407            40,717
                                Bills payable                   (12,842)                  -           (12,842)
                                Borrowings                      (48,837)                  -           (48,837)
                                Deposits and other
                                  accounts                     (782,454)                (187)        (782,641)
                                Subordinated accounts            (6,973)                  27           (6,946)
                                Other liabilities               (70,581)                   -          (70,581)

                                Net identifiable assets          77,949              19,187            97,136




                               80     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                    (Thousands of US dollars)

42. Acquisitions                Intangibles acquired in the business combination
    and disposals
    (continued)                 Following the purchase price allocation of RBS, the following intangible assets
                                were recognised:


                                                                                     As at 15 October 2010

                                Customer relationship                                                29,773


                                This intangible asset comprises of core deposits of the RBS and represents the
                                funding benefit that would be available to the Group on account of availability
                                of funding through deposit customers rather than from the wholesale or
                                inter-bank markets. This benefit also considers the fact that the economic
                                lifetime of these deposits is longer than their contractual life. Based on this
                                assumption, this intangible asset has been valued using certain valuation
                                techniques and is being amortised keeping in view the life expectancy of the
                                core deposits.

                                The fair value of this identifiable intangible asset has been determined using an
                                income approach, by an independent valuer. The income approach begins with
                                an estimation of the annual cash flows, which a market participant acquirer
                                would expect the asset to generate over a discrete projection period. The
                                estimated cash flows for each of the years in the discrete projection period
                                are then converted to their present value equivalent using a rate of return
                                appropriate for the risk of achieving the asset’s projected cash flows. The
                                present value of the estimated cash flows are then added to the present value
                                equivalent of the residual value of the asset (if any) at the end of the discrete
                                projection period to arrive at an estimate of the fair value of the specific asset.

                                In applying the income approach, the Group used the Multiple-period Excess
                                Earnings Method ("MEEM") to determine the value of the above intangibles.
                                Under this method the value of a specific intangible asset is estimated from the
                                residual earnings after fair returns on all other assets employed (including
                                other intangible assets) have been deducted from the asset’s after-tax operating
                                earnings.

                                The valuations are based on information at the time of acquisition and the
                                expectations and assumptions that have been deemed reasonable by the
                                Group’s management. It has been assumed that the underlying assumptions or
                                events associated with such assets will occur as projected.




                               81     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                     (Thousands of US dollars)

42. Acquisitions                Disposal of discontinued operations
    and disposals
    (continued)                 On 10 August 2009, DMI sold to Islamic Development Bank all its investments
                                in the three West African entities as listed below:

                                      Entity                Number of     Ownership       Price per       Total
                                                            shares sold   percentage       share      consideration


                                Banque Islamique
                                 de Guinée (BIG)            500,100         50.1%         $3.01         1,506

                                Banque Islamique
                                 du Sénégal (BIS)           120,407         44.5%        $27.97         3,368

                                Banque Islamique
                                 du Niger pour le
                                 commerce et
                                 l’Investissement
                                 (BINCI)                      60,000        33.2%        $17.35         1,041



                                                                                                        5,915




                                The details of the assets and liabilities sold are as follows:

                                Cash and cash equivalents                                             11,812
                                Trading securities                                                     1,250
                                Investment securities                                                     32
                                Accounts receivable                                                    1,295
                                Investments in associates                                              6,277
                                Property, plant and equipment                                            416
                                Investment accounts                                                   (9,427)
                                Accounts payable                                                      (2,547)
                                Non-controlling interests                                             (1,415)


                                Total assets and liabilities sold                                      7,693


                                Cash and cash equivalents transferred                                 11,812
                                Sale consideration settled in cash                                     5,915
                                Capital gain tax (BIS) paid                                               66


                                Cash outflow on disposal                                               5,963


                                This transaction resulted in a loss on sale of discontinued operations of
                                $1.0 million which is included in the consolidated statement of income.




                               82     Dar Al-Maal Al-Islami Trust
                                      Annual Report 2010
                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Thousands of US dollars)

43. Date of authorisation     These consolidated financial statements have been approved for issue by the
    for issue                 Board of Supervisors on 26 May 2011 and are subject to approval at the
                              Annual General Meeting.



44. Principal subsidiaries                                                 % owned
                                                                                                 Country of
    included in the                                                Subsidiary        DMI       incorporation
    consolidated financial
    statements                Islamic Investment Company
                                of the Gulf (Bahamas) Limited        100             100            Bahamas
                              Ithmaar Bank B.S.C.                     53              53   Kingdom of Bahrain
                              Faysal Bank Limited                     66              35             Pakistan
                              Faisal Private Bank
                                (Switzerland) S.A.                   100             53            Switzerland
                              Faisal Finance (Jersey) Limited        100             100                Jersey
                              Ithmaar Development Company
                                Limited                              100             53       Cayman Islands
                              Sakana Holistic Housing
                                Solutions B.S.C. (C)                  63             33    Kingdom of Bahrain
                              Cantara (Switzerland) S.A.             100             53           Switzerland
                              DMI Administrative Services S.A.       100             53           Switzerland



                              Ithmaar Bank B.S.C. is subject to the consolidated supervision of the Central
                              Bank of Bahrain.




                             83      Dar Al-Maal Al-Islami Trust
                                     Annual Report 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                (Thousands of US dollars)




           84   Dar Al-Maal Al-Islami Trust
                Annual Report 2010
Dar Al-Maal Al-Islami Trust
Annual Report 2010
Dar Al-Maal Al-Islami Trust
Annual Report 2010

				
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