Our responsibilities under these standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities of the group to express an opinion on the consolidated financial statements. The accompanying notes (1) to (32) form an integral part of these consolidated financial statements. Saudi Arabian Riyals in thousands).
These consolidated financial statements comprise the financial statements of the Company and its subsidiaries (collectively referred to as the "Group"). The Fund has been consolidated as a subsidiary in consolidated financial statements for the year ended 31 December 2020. Consequently, the Group has ceased consolidating the Fund in its consolidated financial statements and has classified its interest in the Fund as fair value through income statement.
ORGANISATION AND ITS ACTIVITIES (CONTINUED) AlJazira Residential Projects Fund (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial instruments (continued)
In assessing whether the contractual cash flows are only payments of principal and profit, the Group considers the contractual terms of the instrument. Dividends are recognized as income in the consolidated income statement, unless the dividend clearly represents a recovery of part of the cost of the investment. Financial assets are not reclassified after their initial recognition, except for the period after the Group changes its business model for managing financial assets.
The Group assesses on a forward-looking basis the expected credit losses ("ECL") associated with its financial assets measured at amortized cost. The Group classifies its financial liabilities at amortized cost, unless it has designated liabilities with FVTIS. The Group derecognises a financial asset (or, if applicable, part of a financial asset or part of a group of similar financial assets) when the contractual rights to receive the cash flows from the financial asset have expired , or the Group transfers the rights to receive the cash flows from the financial asset. the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Group does not transfer or retain substantially all the risks and rewards of ownership and does not retain control over the financial asset.
Any interest in transferred financial assets that qualifies for derecognition and is created or retained by the Group is recognized as a separate asset or liability. Those transactions where the Group does not retain or transfer substantially all the risks and rewards of ownership of a financial asset and where the Group retains control of the asset, the Group continues to recognize the asset to the extent of its continued involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset. The Group derecognises a financial liability when its contractual obligations are fulfilled or canceled or expire.
Financial assets and financial liabilities are offset and the net amount is presented in the consolidated statement of financial position when the Group currently has a legally enforceable right to offset the amounts and it intends to settle them either on a net basis or to realize the asset and settle the liability simultaneously. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement in the entity and has the ability to influence those returns through its power over the entity.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Principles of consolidation (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Property and equipment (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Accrued expenses and other payables
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Provisions
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (o) Revenue from contracts with customers (continued)
Revenue is recognized only when the Group fulfills the performance obligation by transferring control over the promised service to the customer. When a performance obligation is satisfied over time, the Group determines progress under the contract based on the input or output method that best measures the performance achieved to date. Income from brokerage transactions is recognized at the moment when related transactions are executed on behalf of customers at the price agreed in the contract with customers, less discounts and rebates.
The Group's performance obligation is satisfied when the Group completes the transaction, which triggers immediate revenue recognition, as the Group will have no further commitments. . ii) Asset and wealth management fees. Asset management fees are recognized over time based on a fixed percentage of net assets under management (“asset-based”), or a percentage of returns on net assets (“returns-based”) subject to the terms and conditions of applicable and service contracts with clients and funds. The Group attributes management fee income to services provided during the period because the fee is specifically related to the Group's efforts to transfer services for that period.
As asset management fees are not subject to refunds, management does not expect a significant reversal of previously recognized revenue. Margin funding fees are recognized over time based on the customer's use of margin funding at the applicable rates agreed in the customer contract. The commission is recognized over the lifetime of the facility using the effective commission method. . iv) Income from consulting and investment banking services.
Revenue from advisory and investment banking services is recognized on a point-in-time basis based on the services rendered under applicable service agreements using the five-step revenue recognition approach above. v) Special fees from fixed deposits. Income from dividends is recognized at the moment when the right to receive dividends is exercised. . vii).
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Expenses
NEW AND AMENDED STANDARDS AND INTERPRETATIONS 1 New and amended standards and interpretations
New and amended standards issued but not yet effective and not early adopted
NEW AND AMENDED STANDARDS AND INTERPRETATIONS (CONTINUED) 4.2 New and amended standards issued but not yet effective and not early adopted (continued).
NEW AND AMENDED STANDARDS AND INTERPRETATIONS (CONTINUED) 2 New and amended standards issued but not yet effective and not early adopted (continued)
CASH AND CASH EQUIVALENTS
INVESTMENTS
Investment at FVOCI
During the year, the company in which it invested issued bonus shares, which increased the number of shares owned by the company.
MARGIN FINANCE RECEIVABLES
PREPAYMENTS AND OTHER CURRENT ASSETS
INTANGIBLE ASSETS, NET
RIGHT-OF-USE ASSETS AND LEASE LIABILITES
The short-term borrowing is an unsecured Murabaha loan of SAR 2.3 billion (31 December 2020: SAR 1.7 billion) from AlJazira Bank to finance margin financing and working capital needs.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
EMPLOYEES’ END OF SERVICE BENEFITS
Re-measurement gain recognised in other comprehensive income is as follows
Sensitivity analysis
Maturity profile
SHARE CAPITAL
COMMITMENTS
ASSET MANAGEMENT FEES, NET
TRADING INCOME, NET
GENERAL AND ADMINISTRATIVE EXPENSES
ASSETS HELD UNDER FIDUCIARY CAPACITY
The Group's Board of Directors has overall responsibility for establishing and overseeing the Group's risk management framework. Risk management policies and systems are regularly reviewed to reflect changes in market conditions and the Group's activities. As the SAR is pegged to the USD, the Group is not exposed to any significant foreign exchange risk.
The group's commission-bearing financial instruments are receivables in margin financing and short-term deposits in the bank and short-term loans. Price risk is the risk that the value of the Group's financial instruments will fluctuate as a result of changes in market prices caused by factors other than currency and commission fluctuations. The Group's price risk exposure relates to its investment in listed shares and mutual funds, the value of which will fluctuate as a result of changes in market prices.
The Investment Committee ensures that the property investments are diverse and balanced, and looks for investment opportunities that match the investment strategy and risk appetite of the Group. The Group manages this risk through diversification of its investment portfolio in terms of industry concentration. The Group is exposed to credit risk mainly arising from cash and cash equivalents, margin financing debtors and other current assets.
The Group's risk management policies and processes are designed to identify and analyze risks, establish appropriate limits and controls, and monitor risk and limit compliance through timely and reliable management information. Other current assets represent asset management fees receivable primarily from mutual funds and portfolios managed by the Company, advances on investments and receivables from corporate clients, which the Group considers to be of low credit risk.
The table below summarizes the maturity profile of the Group's financial liabilities at the end of the year based on contractual post-discount repayment obligations. The objective of operational risk management is to ensure control of the Group's resources while protecting the Group's assets and minimizing the potential for financial loss. The Group's risk management approach includes the identification, assessment, management, mitigation, monitoring and measurement of risks related to operations.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants at the measurement date. The basis of the definition of fair value is the assumption that the Group is a going concern and that there is no intention or requirement to significantly reduce the volume of its business or to carry out a transaction under unfavorable terms. The fair value of financial instruments traded in active markets is based on published market prices at the end of trading on the financial reporting date.
When measuring the fair value, the group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. The following table shows the carrying amount and fair value of financial instruments, including their levels in the fair value hierarchy.
It does not include the fair value hierarchy for financial assets and financial liabilities that are not measured at fair value if the carrying amount is a reasonable approximation of the fair value. Book value of other financial assets, such as cash and cash equivalents, receivables for margin financing, receivables from related parties, other current assets and financial liabilities approximate their fair value and are classified as level 3.
RELATED PARTY TRANSACTIONS AND BALANCES
At the date of the consolidated statement of financial position, all financial liabilities are measured at amortized cost.
RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED) 1 Related party transactions (continued)
According to the Rules, the CMA has defined the framework and guidelines regarding the minimum regulatory capital requirement and its calculation methodology. In accordance with this methodology, the Company has calculated the required minimum capital and capital adequacy ratios as follows: Minimum capital requirements for market, credit and operational risk are calculated according to the requirements specified in the Rules.
IMPACT OF COVID-19 ON BUSINESS AND OPERATIONS
EVENTS AFTER THE END OF REPORTING PERIOD
APPROVAL OF FINANCIAL STATEMENTS
