Total annual return for the fund over the last 10 years: :ﺔﻴﺿﺎﻤﻟا تاﻮﻨﺳ ﺮﺸﻌﻠﻟ قوﺪﻨﺼﻠﻟ يﻮﻣﻟا ﻲﻟﺎﻤﺟﻹا ﺪﺎﻌﻟا ﺔﺎﻟﻟا. The board of directors consists of the following members, who are appointed by the fund manager and approved by the capital market authority: The following is a summary of the key decisions taken and matters discussed by the fund's management board:
During the year 2018, the fund focused on Murabaha investments. Updating the fund offering documents to include: Information Memorandum, Terms and Conditions, and Summary of Key Information in accordance with the requirements of the amended Investment Fund Regulations. AlAhli Sadaqaat Fund ("the Fund") is an open-end Shariah-compliant investment fund managed by NCB Capital Company ("the Fund Manager"), a subsidiary of The National Commercial Bank ("the Bank"). , for the benefit of the Fund's Unitholders.
The Fund is established under Article 30 of the Investment Funds Regulations (“the Regulations”) issued by the Capital Markets Authority (“CMA”).
BASIS OF ACCOUNTING
The terms and conditions of the Fund were initially approved by the Saudi Arabian Monetary Authority (“SAMA”) and subsequently approved by the CMA through their letter dated 18 Dhul Hijjah 1429H (corresponding to 16 December 2008). The Fund is governed by the Regulations in accordance with the resolution numbered 3 Dhul Hijja 1427H (corresponding to December 24, 2006) as amended by Resolution no. for investments measured at fair value through profit or loss which are measured at fair value.
The fund does not have a clearly identifiable operating cycle and therefore does not present current and long-term assets and liabilities separately in the statement of financial position.
FUNCTIONAL AND PRESENTATION CURRENCY
CHANGES IN FUND’S TERMS AND CONDITIONS
CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)
SIGNIFICANT ACCOUNTING POLICIES (continued)
SIGNIFICANT ACCOUNTING POLICIES (continued) 3 Financial Instruments (continued)
Where dividends represent income from such investments, they continue to be recognized in the statement of comprehensive income when the fund's right to receive payments is exercised. Management can characterize an investment as fair through profit or loss if it eliminates or significantly reduces a measurement or recognition inconsistency (sometimes called an “accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognizing gains and losses on different bases. ; or a group of financial assets, financial liabilities or both is managed and its performance is assessed on a fair value basis in accordance with a documented risk management or investment strategy, and information about the fund is communicated internally on this basis to the fund's key management personnel. Debt instruments are those instruments that meet the definition of a financial liability from the perspective of the issuer, such as Murabaha contracts.
Business model: The business model reflects how the Fund manages assets to generate cash flows. That is, whether the purpose of the Fund is solely to collect the contractual cash flows from the assets or to collect both the contractual cash flows and the cash flows arising from the sale of assets. If neither of these apply (for example if financial assets are held for trading purposes), the financial assets are classified as part of the 'other' business model and valued at FVTPL.
Factors considered by the Fund in determining the business model for a group of assets include past experience, how cash flows have been raised for these assets, how asset performance is assessed internally and reported to key management personnel, how risks are assessed and managed. and how managers are compensated. SPPP: When the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the Fund assesses whether the cash flows of the financial instruments represent only the payment of principal and profit ("SPPP" test). In making this assessment, the Fund considers whether the contractual cash flows are consistent with an underlying lending agreement, i.e.
The Fund reclassifies debt investments when and only when its business model for managing these assets changes. Amortized cost: Assets held to collect contractual cash flows where those cash flows represent only payments of principal and profit (SPPP), and which are not defined in FVTPL, are measured at amortized cost. The fund conducted a detailed analysis of its business models for the management of financial assets and analysis of their cash flow characteristics.
- SIGNIFICANT ACCOUNTING POLICIES (continued) 5 Financial liabilities
- SIGNIFICANT ACCOUNTING POLICIES (continued) 10 Units in issue (continued)
- CASH AND CASH EQUIVALENTS
- RECONCILIATION OF CHANGE IN EQUITY
- RELATED PARTY TRANSACTIONS AND BALANCES
- FINANCIAL RISK MANAGEMENT (continued) 1 Financial risk factors (continued)
- FINANCIAL RISK MANAGEMENT (continued) 1 Financial risk factors (continued)
The Fund is of the opinion that it is unlikely that the debtor will pay its credit obligations to the Fund in full. The Fund classifies its financial obligations at amortized cost, unless it has designated liabilities with FVTPL. The Fund has classified financial instruments issued as financial liabilities or equity instruments in accordance with the content of the contractual provisions of the instruments.
The Fund's issued units are classified as equity in accordance with IAS 32 and are therefore equal to the residual value of the Fund. The Fund Manager is allocated units to settle the administrative expenses on each valuation day. The Fund Manager has the right, at its sole discretion, to reinvest such administrative expenses for the benefit of the charities.
These transactions were carried out on the basis of the fund's approved terms and conditions. The Fund's activities expose it to a number of financial risks: market risk, credit risk, liquidity risk and operational risk. The Fund Board supervises the Fund Manager and is ultimately responsible for the overall management of the Fund.
Currently, all of the Fund's investments are in Murabaha deposits, which have a fixed rate of return. As these investments are classified as investments measured at amortized cost, any change in market rates would not have any impact on the Fund's net income and net asset value. Price risk is the risk that the value of the Fund's financial instruments will fluctuate as a result of changes in market prices caused by factors other than foreign currency and commission rate movements.
The price risk arises mainly from uncertainty about the future prices of financial instruments held by the Fund. The Fund recognizes loss provisions for expected credit losses on the financial assets that are debt instruments not measured at FVTPL.
Lifetime
The Fund also considers forward information in its assessment of significant deterioration of credit risk since inception, as well as the measurement of ECLs.
Lifetime
The fund manager also reviews the credit concentration of the investment portfolio based on the geographic locations of the counterparties. As the fund has all its investments in Saudi Arabia, the fund is not exposed to credit risk due to its geographical distribution. The following table explains the changes in the loss allowance for Murabaha contracts carried at amortized cost:
12-month
Lifetime-
Liquidity risk is the risk that the Fund will not be able to generate sufficient cash resources to meet its obligations in full as they fall due or can only do so on terms that are materially adverse. The Fund's terms and conditions provide for subscription and redemption of units monthly, on the Subscription Day, which will be the last Saudi Business Day of the Gregorian month and it is therefore exposed to the liquidity risk of meeting unitholder redemptions on these days which is short-term in nature. The Fund Manager monitors liquidity requirements by ensuring that sufficient funds are available to meet any obligations as they arise, whether through new subscriptions, liquidation of the investment portfolio or by taking short-term loan facilities obtained by the Fund Manager.
- FIRST-TIME ADOPTION OF IFRS
- STANDARDS ISSUED BUT NOT YET EFFECTIVE
- LAST VALUATION DAY
- APPROVAL OF THE FINANCIAL STATEMENTS
Operational risk is the risk of direct or indirect losses arising from a variety of causes related to the processes, technology and infrastructure that support the Fund's activities, both internal and external to the Fund's service provider, and from other external factors other than credit, liquidity, currency and market. risks arising from legal and regulatory requirements. The objective of the Fund is to manage operational risk in order to strike a balance between limiting financial losses and damage to its reputation and achieving its investment objective of generating returns for unitholders. As stated in Note 2, these are the Fund's first financial statements prepared in accordance with IFRS as adopted in the Kingdom of Saudi Arabia and other standards and pronouncements issued by SOCPA.
When preparing these annual accounts, the opening balance sheet of the Fund was prepared as of January 1, 2017, the date of the Fund's transition to IFRS. In preparing the opening statement of the IFRS financial statements in accordance with IFRS, the Fund has restated amounts previously reported in the financial statements prepared in accordance with prior GAAP. The following explanation explains how the transition from previous GAAP to IFRS has affected the Fund's financial position and financial performance.
For last year's information, the Fund has chosen the exception to apply IFRS 9 and IFRS 15 retrospectively. The Fund has adopted IFRS 9 published by the International Accounting Standards Board in July 2014 with an effective date of January 1, 2018, which resulted in adjustments to previously recognized amounts in the financial statements. As permitted by the transitional provisions of IFRS 9, the Fund elected not to restate the comparative figures.
Any adjustments to the carrying amount of financial assets and financial liabilities at the transition date were included in the opening equity attributable to unitholders (January 1, 2018). Accordingly, the information presented in comparative years reflects the requirements under prior GAAP and is therefore not comparable to the information presented under the requirements of IFRS 9 for the year ended December 31, 2018. The estimates as of January 1, 2017 and as of December 31, 2017 are consistent with those made for the same dates in accordance with prior GAAP.
