Al Rajhi Commodities Mudaraba Fund – Saudi Riyal
(Managed by Al Rajhi Capital)
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REVIEW REPORT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2019
Interim condensed statement of financial position (unaudited)
As at 30 June 2019
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
2
Note
30 June 2019 (Unaudited)
SR
31 December 2018 (Audited)
SR
ASSETS
Cash and cash equivalents 4 912,000,381 1,923,112,112
Murabaha placements measured at amortised cost 5 7,640,000,000 4,710,000,000 Financial assets measured at amortised cost 6 204,258,580 204,264,978
Accrued special commission 57,928,671 55,807,230
──────── ────────
TOTAL ASSETS 8,814,187,632 6,893,184,320
════════ ════════
LIABILITIES
Management fee payable 7 2,887,513 2,356,399
Accrued expenses 196,033 197,219
──────── ────────
TOTAL LIABILITIES 3,083,546 2,553,618
──────── ────────
EQUITY
Net assets attributable to unitholders of redeemable units 8,811,104,086 6,890,630,702
──────── ────────
TOTAL LIABILITIES AND EQUITY 8,814,187,632 6,893,184,320
════════ ════════
Redeemable units in issue 56,196,726 44,583,419
════════ ════════
Net asset value attributable to each per unit 156.79 154.56
════════ ════════
AL RAJHI COMMODITIES MUDARABA FUND – SAUDI RIYAL Interim condensed statement of comprehensive income (unaudited)
For the six-month period ended 30 June 2019
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
3
Note 2019
SR 2018
SR INCOME
Special commission income 140,949,251 107,316,253
──────── ────────
TOTAL INCOME 140,949,251 107,316,253
──────── ────────
EXPENSES
Management fees 7 (17,734,920) (13,520,175)
Others (166,312) (109,079)
──────── ────────
TOTAL EXPENSES (17,901,232) (13,629,254)
──────── ────────
NET INCOME FOR THE PERIOD 123,048,019 93,686,999
OTHER COMPREHENSIVE INCOME FOR THE PERIOD - -
──────── ────────
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 123,048,019 93,686,999
════════ ════════
Interim condensed statement of changes in equity (unaudited)
For the six-month period ended 30 June 2019
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
4
2019
SR 2018
SR EQUITY AT THE BEGINNING OF THE PERIOD 6,890,630,702 8,579,015,537
────────── ──────────
Net income for the period 123,048,019 93,686,999
Other comprehensive income for the period - -
────────── ──────────
Total comprehensive income for the period 123,048,019 93,686,999
Issue of units during the period 7,193,033,051 5,270,699,535
Redemption of units during the period (5,395,607,686) (5,095,796,422)
────────── ──────────
EQUITY AT THE END OF THE PERIOD 8,811,104,086 8,847,605,649
══════════ ══════════
Units Units
REDEEMABLE UNIT TRANSACTIONS
Transactions in redeemable units during the period are summarised as follows:
UNITS AT THE BEGINNING OF THE PERIOD 44,583,419 56,803,141
───────── ─────────
Issue of units during the period 46,261,019 34,776,424
Redemption of units during the period (34,647,712) (33,585,255)
───────── ─────────
Net increase in units 11,613,307 1,191,169
───────── ─────────
UNITS AT THE END OF THE PERIOD 56,196,726 57,994,310
═════════ ═════════
AL RAJHI COMMODITIES MUDARABA FUND – SAUDI RIYAL Interim condensed statement of cash flows (unaudited)
For the six-month period ended 30 June 2019
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
5
2019
SR 2018
SR
Operating activities
Net income for the period 123,048,019 93,686,999
Working capital adjustments:
Decrease in accrued special commission (2,121,441) (8,328,231)
Increase (decrease) in management fee payable (1,186) (579)
Increase in accrued expenses 531,114 544,508
────────── ──────────
Net cash flows from operating activities 121,456,506 85,902,697
────────── ──────────
Investing activities
Increase in murabaha placements measured at amortised cost (2,930,000,000) (80,000,000) Decrease in financial assets measured at amortised cost 6,398 6,398
────────── ──────────
Net cash flows used in investing activities (2,929,993,602) (79,993,602)
────────── ──────────
Financing activities
Proceeds from issuance of units 7,193,033,051 5,270,699,535
Payment on redemption of units (5,395,607,686) (5,095,796,422)
────────── ──────────
Net cash flows from financing activities 1,797,425,365 174,903,113
────────── ──────────
Net (decrease) increase in cash and cash equivalents (1,011,111,731) 180,812,208 Cash and cash equivalents at the beginning of the period 1,923,112,112 5,377,919,541
────────── ──────────
Cash and cash equivalents at the end of the period 912,000,381 5,558,731,749
══════════ ══════════
Operational cash flows from special commission income:
Special commission income received 138,827,810 98,988,022
══════════ ══════════
Notes to interim condensed financial statements (unaudited)
At 30 June 2019
6 1. INCORPORATION AND ACTIVITIES
Al Rajhi Commodities Mudaraba Fund - Saudi Riyal (“the Fund”) is an open-ended investment fund created by an agreement between Al Rajhi Capital (the “Fund Manager”), a wholly owned subsidiary of the Al Rajhi Banking and Investment Corporation (the “Bank”) and investors (the “Unitholders”) in the Fund. The address of the Fund Manager is as follows:
Al Rajhi Capital P.O. Box 5561 Riyadh 11432
Kingdom of Saudi Arabia
The Fund is designed for investors seeking current income consistent with the preservation of capital and liquidity.
The assets of the Fund are invested in Murabaha funds and in Murabaha transactions executed in accordance with Sharia principles. Murabaha comprises purchases of goods and commodities from approved suppliers against immediate payment and selling them to reputed organisations on deferred payment terms, thereby generating a profit.
All the trading profits are reinvested in the Fund. The Fund was established on 28 June 1999.
The Fund has appointed AlBilad Investment Company (the “Custodian”) to act as its custodian and registrar. The fees of the custodian and registrar’s services are paid by the Fund.
The Fund Manager is responsible for the overall management of the Fund's activities. The Fund Manager can also enter into arrangements with other institutions for the provision of investment, custody or other administrative services on behalf of the Fund.
2. REGULATING AUTHORITY
The Fund is governed by the Investment Fund Regulations (the “Regulations”) issued by the Capital Market Authority (“CMA”) on 3 Dhul Hijja 1427H (corresponding to 24 December 2006) and effective from 6 Safar 1438H (corresponding 6 November 2016) by the New Investment Fund Regulations (“Amended Regulations”) published by the CMA on 16 Sha’aban 1437H (corresponding to 23 May 2016) detailing requirements for all funds within the Kingdom of Saudi Arabia.
3. BASIS OF PREPARATION AND CHANGES TO ACCOUNTING POLICIES 3.1. Basis of preparation
These interim condensed financial statements for the six-month period ended 30 June 2019 have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”).
The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Fund’s annual financial statements as at 31 December 2018.
The interim condensed financial statements have been prepared on a historical cost basis, using the accrual basis of accounting. These interim condensed financial statements are presented in Saudi Arabian Riyals (“SR”), which is the Fund’s functional currency. All financial information presented has been rounded to the nearest SR.
3.2 New standards, interpretations and amendments
The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Fund’s annual financial statements for the year ended 31 December 2018. There are new standards, amendments and interpretations apply for the first time in 2019, but do not have an impact on the interim condensed financial statements of the Fund.
There are other several amendments and interpretations that are issued, but not yet effective, up to the date of issuance of the Fund’s interim condensed financial statements. In the opinion of the Board, these will have no significant impact on the interim condensed financial statements of the Fund. The Fund intends to adopt those amendments and interpretations, if applicable.
AL RAJHI COMMODITIES MUDARABA FUND – SAUDI RIYAL Notes to interim condensed financial statements (unaudited) (continued)
At 30 June 2019
7 4. CASH AND CASH EQUIVALENTS
30 June 2019 (Unaudited)
31 December 2018 (Audited)
SR SR
Bank balances - current account 17,000,381 13,112,112
Short term murabaha placements with the other banks
with original maturity of three months or less 895,000,000 1,910,000,000
───────── ─────────
912,000,381 1,923,112,112
═════════ ═════════
5. MURABAHA PLACEMENTS MEASURED AT AMORTISED COST 30 June
2019 (Unaudited)
31 December 2018 (Audited)
SR SR
Murabaha placements with the other banks 7,640,000,000 4,710,000,000
────────── ─────────
7,640,000,000 4,710,000,000
══════════ ═════════
Murabaha placements with the other banks are composed of the following:
30 June 2019
% of Cost
Remaining maturity Value SR
Up to 1 month 24.35 1,860,000,000
1-3 months 47.77 3,650,000,000
3-6 months 7.98 610,000,000
6-9 months 12.43 950,000,000
9-12 months 7.47 570,000,000
───────── ──────────
100.00 7,640,000,000
═════════ ══════════
31 December 2018
% of Cost
Remaining maturity Value SR
Up to 1 month 9.55 450,000,000
1-3 months 43.31 2,040,000,000
3-6 months 19.53 920,000,000
6-9 months 8.49 400,000,000
9-12 months 5.31 250,000,000
More than 12 months 13.81 650,000,000
───────── ──────────
100.00 4,710,000,000
═════════ ══════════
The management has conducted an impairment assessment based on the expected credit loss (ECL) as required under IFRS 9, which included taking into account numerous variables. Based on the assessment, the management has assessed that the impairment loss under ECL is not significant against the carrying value of investment held at amortised cost at the reporting date.
Notes to interim condensed financial statements (unaudited) (continued)
At 30 June 2019
8
6. FINANCIAL ASSETS MEASURED AT AMORTISED COST The composition of investments measured at amortised cost are summarised below:
As at 30 June 2019 (Unaudited) Maturity date SR
Bank Aljazira Sukuk 2 June 2026 61,500,000
Advanced Sukuk 17 November 2019 42,000,000
Bahri-Sukuk 30 July 2022 40,000,000
Almarai Sukuk 16 September 2022 36,000,000
Najran Cement Sukuk 8 June 2020 20,000,000
Sharjah Government Sukuk 17 September 2024 4,758,580
─────────
204,258,580
═════════
As at 31 December 2018 (Audited) Maturity date SR
Bank Aljazira Sukuk 2 June 2026 61,500,000
Advanced Sukuk 17 November 2019 42,000,000
Bahri-Sukuk 30 July 2022 40,000,000
Almarai Sukuk 16 September 2022 36,000,000
Najran Cement Sukuk 8 June 2020 20,000,000
Sharjah Government Sukuk 17 September 2024 4,764,978
─────────
204,264,978
═════════
The management has conducted an impairment assessment based on the expected credit loss (ECL) as required under IFRS 9, which included taking into account numerous variables. Based on the assessment, the management has assessed that the impairment loss under ECL is not significant against the carrying value of investment held at amortised cost at the reporting date.
7. TRANSACTIONS WITH RELATED PARTIES
In the ordinary course of its activities, the Fund transacts business with related parties.
The Fund pays a management fee at a maximum rate of 16% per annum (2017: 16%) calculated on the Fund’s special commission. The fee is intended to compensate the Fund Manager for administration of the Fund.
The management fees amounting to SR 17,734,920 (30 June 2018: SR 13,520,175) reflected in the interim condensed statement of comprehensive income, represent the fees charged by the Fund Manager during the period as described above.
As at 30 June 2019, management fees amounting to SR 2,887,513 (31 December 2018: SR 2,356,399) are payable to the Fund Manager.
In the normal course of business, the Fund places Murabaha investments with the Bank at prevailing market rates.
Murabaha investments involve typically the purchase of a commodity by the Fund for the purpose of its re-sale. The re-sale and the related mark up over cost are agreed with the counter party at the inception of the Murabaha transaction. At the period end, Murabaha investments placed with the Bank amounted to SR Nil (30 June 2018: SR Nil).
Board of Directors’ fees amounting to SR 9,174 (30 June 2018: SR 9,069) was charged during the period. As at 30 June 2019, Board of Directors’ fees amounting to SR 9,174 (31 December 2018: SR 18,287) is payable to the Fund’s Board of Directors.
The units in issue at 30 June 2019 include 34,999 units held by the employees of the Fund Manager (31 December 2018: 21,742 units).
The units in issue at 30 June 2019 include 5,015,274 units held by the Fund Manager (31 December 2018: 2,670,009 units).
At the end of the period, the cash balance with the Bank is SR 17,000,381 (31 December 2018: SR 11,811,368).
AL RAJHI COMMODITIES MUDARABA FUND – SAUDI RIYAL Notes to interim condensed financial statements (unaudited) (continued)
At 30 June 2019
9 8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Fund. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The fund’s financial assets consist of cash and cash equivalents, murabaha placements measured at amortised cost, financial assets measured at amortised cost. The Fund’s financial liabilities consist of management fee payable Management believes that the fair value of all financial assets and liabilities at the reporting date approximate their carrying values owing to their short-term tenure and the fact that these are readily liquid. These are all classified within level 2 of the fair value hierarchy. There were no transfers between various levels of fair value hierarchy during the current period or prior year.
9. MATURITY ANALYSIS OF ASSETS AND LIABILITIES
The table below shows an analysis of assets and liabilities according to when they are expected to be recovered or settled respectively:
As at 30 June 2019 (Unaudited)
Within 12 months
After
12 months Total
SR SR SR
ASSETS
Cash and cash equivalents 912,000,381 - 912,000,381
Murabaha placements measured at amortised cost 7,640,000,000 - 7,640,000,000 Financial assets measured at amortised cost 42,000,000 162,258,580 204,258,580
Accrued special commission 57,928,671 - 57,928,671
────────── ───────── ─────────
TOTAL ASSETS 8,651,929,052 162,258,580 8,814,187,632
══════════ ══════════ ══════════
LIABILITIES
Management fee payable 2,887,513 - 2,887,513
Accrued expenses 196,033 - 196,033
──────── ───────── ────────
TOTAL LIABILITIES 3,083,546 - 3,083,546
══════════ ═════════ ═════════
As at 31 December 2018 (Audited)
Within 12 months
After
12 months Total
SR SR SR
ASSETS
Cash and cash equivalents 1,923,112,112 - 1,923,112,112
Murabaha placements measured at amortised cost 4,060,000,000 650,000,000 4,710,000,000 Financial assets measured at amortised cost 42,000,000 162,264,978 204,264,978
Accrued special commission 55,807,230 - 55,807,230
──────── ───────── ────────
TOTAL ASSETS 6,080,919,342 812,264,978 6,893,184,320
══════════ ══════════ ══════════
LIABILITIES
Management fee payable 2,356,399 - 2,356,399
Accrued expenses 197,219 - 197,219
───────── ───────── ─────────
TOTAL LIABILITIES 2,553,618 - 2,553,618
═════════ ═════════ ═════════
Notes to interim condensed financial statements (unaudited) (continued)
At 30 June 2019
10 10. LAST VALUATION DAY
The last valuation day of the period/year was 30 June 2019 (year ended 31 December 2018: 31 December 2018).
11. APPROVAL OF THE INTERIM CONDENSED FINANCIAL STATEMENTS
These interim condensed financial statements were approved by the Fund’s management on 28 Dhul-Qadah 1440H (corresponding to 31 July 2019).
