Notes to the Consolidated Financial Statements
22
Dar Al-Maal Al-Islami Trust
Annual Report 2013
Structuring fees, commission and
fees arising from negotiating or
participating in the negotiation of an
Islamic transaction for a third party,
are recognised on completion of the
underlying transaction.
Asset management fees related to
investment funds are recognised
over the period the service is
provided and are recorded in fund
management and services income
when capable of being reliably
measured.
Management advisory and technical
service fees are recognised based
on applicable service contracts
usually on a time-apportioned basis
and are recorded in other income.
Distribution to Massaref
account holders
Massaref accounts are included
in the IAS 39 category of “Other
Financial Liabilities” which are
measured at amortised cost and
the resulting expense charged
to the consolidated statement of
income as a distribution to Massaref
account holders represents the
share of the Group’s income from all
sources which is due to customers
of the Group under contractual
arrangements in force.
Sale and repurchase
agreements
Securities sold subject to a linked
repurchase agreement (repos) are
recognised in the consolidated
statement of financial position
and are measured in accordance
with related accounting policies for
trading or investment securities. The
counterparty liability for amounts
received under these agreements
is included in customer investment
accounts. The difference between the
sale and repurchase value is accrued
over the period of the contract
and recorded as expense in the
consolidated statement of income.
Securities purchased under
agreement to resell (reverse
repos) are not recognised in the
consolidated statement of financial
position, as theGroupdoes not obtain
control over the assets. Amounts
paid under these agreements are
included under investments in
financings. The difference between
the contracted price and the resale
price is amortised over the period
of the contract and is recognised
as income in the consolidated
statement of income.
Obligations for the return of securities
or for forward sales, which are a
part of the repurchase agreements,
are recognised as commitments as
disclosed in note 36.
Financial Assets
The Group classifies its financial
assets into the following categories:
financial assets at fair value
through profit or loss; loans and
receivables;
held-to-maturity
investments and available-for-sale
financial assets. The classification
of investments is determined at
initial recognition. Financial assets
are initially recognised at fair
value plus transaction costs for all
financial assets not carried at fair
value through profit or loss (refer
to details below). Financial assets
are derecognised when the rights to
receive cash flows from the financial
assets have expired or when the
Group has transferred substantially
all risks and rewards of ownership.
(a) Financial assets at fair value
through profit or loss
This category includes financial
assets held for trading, including
trading securities. A financial asset
is classified in this category if
acquired principally for the purpose
of selling in the short term or if
so designated by management.
Derivatives are also categorised as
held for trading unless qualifying for
hedge accounting.
Financial assets at fair value
through profit and loss are initially
recognised at fair value (which
excludes transaction costs) and
subsequently carried at fair value
based on quoted bid prices. All
related realised and unrealised
gains and losses are included in
net trading income in the period
in which they arise. Dividends
declared are included in dividend
income.
All purchases and sales of financial
assets held for trading and at fair
value through profit and loss that
require delivery within the time frame
established by regulation or market
convention (‘regular way’ purchases
and sales) are recognised at trade
date, which is the date that the
Group commits to purchase or sell
the asset.
(b) Loans and receivables
Loans and receivables, which
include investments in financings,
are non-derivative financial assets
with fixed or determinable payments
that are not quoted in an active
market other than: (a) those that the
Group intends to sell immediately
or in the short term, which are
classified as held for trading, and
those that the entity upon initial
recognition designates as at fair
value through profit or loss; (b)
those that the entity upon initial
recognition designates as available-
for-sale; or (c) those for which the
holder may not recover substantially
all of its initial investment, other
than because of credit deterioration.
In general, they arise when the
Group provides money, goods or
services directly to a debtor with no
intention of trading the receivable
and also includes purchased loans
and receivables that are not quoted
in an active market. Loans and
receivables are carried at amortised
cost using the effective yield method.
All loans are recognised when cash
is advanced to the customer.
(c) Held-to-maturity
Held-to-maturity investments are
non-derivative financial assets with
fixed or determinable payments
and fixed maturities and there is
the intent and the ability to hold
them to maturity. If more than an
insignificant amount of held-to-
maturity assets is sold, the entire
category will be considered tainted
and reclassified as available-for-
sale.
Held-to-maturity investments are
carried at amortised cost using the
effective yield method, less any
provision for impairment.
(d) Available-for-sale
Available-for-sale investments are
those intended to be held for an
