Al Madina Takaful: Unaudited Condensed Interim Financial Statements - 30 June 2020

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1. Dear Shareholders , Assalamu alaikum wa rahamatullahi wa Barakatuh! (May the Peace, Mercy and Blessing of Allah be with you!) On behalf of the Board of Directors, and Management team of Al Madina Insurance Co SAOG (“the Company”), I am pleased to present to you a report on the performance of the Company for the period ending on 30th June 2020. Global economies are facing difficult times due to the COVID19 pandemic, which has disrupted businesses in an unprecedented manner. The Company however managed to maintain continuity of its operations under these extraordinary circumstances and provided seamless customer service through its digital platforms. Operating Environment The insurance environment has been both volatile & turbulent. The global insurance & reinsurance market witnessed continuing hardening of rates due to Insurers’ performance being under considerable pressure. There are clear signs of price correction across all regions. The COVID related claim liabilities have added to the difficult situation in Insurance market. However, despite these conditions, your company has been able to show an impressive growth of 9% in the Gross written contributions as compared to the corresponding period last year with a Gross written contribution of RO 16.3 million as of second quarter of 2020 as against RO 15 million during the same period of 2019. Results from Operations The Company continues to deliver stable growth across all product lines while strengthening its reserves by adopting quarterly actuarial validation of Company’s reserves. The underwriting surplus from Takaful operations before investment income, mudarib share and Wakala fees registered an 19% growth amounting to RO 2.7mn for the second quarter of 2020 as against RO 2.3mn in the corresponding period of 2019. The growth in underwriting surplus is a result of prudent underwriting, best risk selection policy and ability to react to emerging difficult situation. Al Madina continues to maintain a healthy and well-balanced portfolio across all lines of business supported by high-quality global Reinsurance arrangements. The Company is constantly enhancing its customer experience through process automation, professional expertise and top of the line claims servicing. Investment Income The Company continues to monitor its investment book well while ensuring that investments are diversified and remain compliant to Sharia Principles. The investment environment remains challenging with equity and real estate yields being under pressure. However, your Company has been prudently managing its investments and increased its investment income by 23% to RO 718 K as at June 2020 as against RO 585 K in the corresponding period of 2019. Profitability of the company Your Company achieved growth in all operating parameters and reported a 63% increase in total profit after tax of RO 928K, compared to RO 568K for the corresponding period of 2019.
2. Risk Management The company constantly evaluates its risks associated with the insurance business as well as its Investments and adopts necessary measures to manage these risks . Company’s Outlook & Vision The operating environment is expected to remain challenging due to Pandemic induced global economic slowdown, low oil prices and hardening Reinsurance market. Your Company will aim to maintain its market position and is fully focused on GWC growth, despite the challenges. The Company also expects to increase its profitability in 2020 through well-planned sales initiatives, expansion of Direct sales distribution channel, disciplined underwriting & efficient claims administration. The Company will continue to invest on IT upgrades, Process automations and digitization of Insurance processes for a positive engagement with customers. The Company will explore every possible growth opportunity within the Islamic finance space for optimizing the Investment Income in line with the Company’s risk appetite. The Company continues to maintain its steady track record of having always been driven by and supportive of national objectives, such as in job creation and Omanization. Acknowledgements On behalf of the Board, we extend our thanks to our customers, business partners, shareholders, and staff members for their support. We also thank and appreciate the Capital Market Authority for their constant support and their initiatives oriented towards the Insurance Market, with special emphasis on the development of Takaful Insurance in the country. We wish all of you good health and safety. We extend our gratitude and appreciation to His Majesty Haitham bin Tariq Al Said for his vision and leadership. May God Bless you all. Dr. Mohammed Ali Al Barwani Chairman
3. 1 AL MADINA INSURANCE COMPANY SAOG UNAUDITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 Shareholders ’ fund Participants’ fund Grand total General takaful Family takaful Total participants’ fund Audited Audited Audited Audited Audited Note Unaudited 31 December Unaudited 31 December Unaudited 31 December Unaudited 31 December Unaudited 31 December 2019 2019 2019 2019 2019 30 June 2020 30 June 2020 30 June 2020 30 June 2020 30 June 2020 RO RO RO RO RO RO RO RO RO RO ASSETS Cash and cash equivalents Investments carried at fair value through profit or loss Takaful balance receivable Retakaful / reinsurance balance receivable Receivable from participants’ fund family takaful Receivable from shareholders’ fund Receivable from participants’ fund Due from retakaful / reinsurance companies in connection with takaful liabilities Deferred policy acquisition cost Other receivables and takaful assets Investments at fair value through equity Bank deposits Investments carried at amortised cost Deferred tax asset Investment in real estate Property and equipment Total assets 5 1,688,335 1,340,320 2,334,002 4,450,957 60,486 181,695 2,394,488 4,632,652 4,082,823 5,972,972 7 8 1,158,699 1,308,445 - 11,557,085 12,181,562 684,024 965,173 12,241,109 13,146,735 1,158,699 12,241,109 1,308,445 13,146,735 8 - 915,900 187,049 15,237 40,195 931,137 227,244 931,137 227,244 9 1,630,887 1,524,565 714,394 196,659 - 1,598,675 - - - 714,394 196,659 - 1,598,675 - 714,394 196,659 1,630,887 1,598,675 1,524,565 10 11 12 819,787 763,185 46,461,725 920,883 655,635 42,900,049 732,398 628,684 1,203,474 52,044 409,822 1,198,529 55,852 395,374 47,665,199 972,927 1,065,457 44,098,578 788,250 1,024,058 47,665,199 972,927 1,885,244 44,098,578 788,250 1,787,243 13 6 14 2,517,204 5,576,500 5,379,903 75,545 5,946,675 785,039 25,578,574 2,282,799 5,526,500 5,261,228 75,545 5,946,675 847,511 24,876,773 4,876,416 68,632,699 4,876,416 67,555,790 1,247,084 3,672,171 1,247,084 4,083,902 6,123,500 72,304,870 6,123,500 71,639,692 2,517,204 11,700,000 5,379,903 75,545 5,946,675 785,039 97,883,444 2,282,799 11,650,000 5,261,228 75,545 5,946,675 847,511 96,516,465 15 16 The notes on pages 8 to 22 form an integral part of this unaudited condensed interim financial information.
4. 2 AL MADINA INSURANCE COMPANY SAOG UNAUDITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (CONTINUED) AS AT 30 JUNE 2020 Shareholders’ fund Participants’ fund Family takaful General takaful LIABILITIES, PARTICIPANTS’ FUND AND SHAREHOLDERS’ EQUITY Audited Note Total liabilities, participants’ fund and shareholders’ equity 10 18 9 17 Audited Audited Audited Unaudited 31 December Unaudited 31 December Unaudited 31 December Unaudited 31 December Unaudited 31 December 2019 2019 2019 2019 2019 30 June 2020 30 June 2020 30 June 2020 30 June 2020 30 June 2020 RO RO LIABILITIES Takaful liabilities Unearned retakaful commission Retakaful/reinsurance payables Accounts and other payables Charity fund payable Payable to shareholders Payable to participants’ fund - general takaful Employees’ end of service benefits Total liabilities PARTICIPANTS’ FUND Deficit in participants’ fund Contingency reserve Total participants’ fund SHAREHOLDERS’ EQUITY Capital and reserves Share capital Share premium Legal reserve Investment fair value reserve Property fair value reserve Retained earnings Total shareholders’ equity Audited Grand total Total participants’ fund RO RO RO RO RO RO RO RO 873,248 18,970 - 59,053,072 189,354 7,600,469 2,293,130 1,183,956 55,390,384 165,014 9,137,624 2,936,961 1,282,079 1,570,548 853,124 826,738 446,931 1,554,168 601,309 713,220 242,486 60,623,620 189,354 8,453,593 3,119,868 1,630,887 56,944,552 165,014 9,738,933 3,650,181 1,524,565 60,623,620 189,354 8,453,593 3,884,974 13,970 1,630,887 56,944,552 165,014 9,738,933 4,523,429 18,970 1,524,565 196,659 499,324 1,475,059 438,079 1,330,297 70,319,981 68,912,062 714,394 4,411,735 1,598,675 4,709,858 714,394 74,731,716 1,598,675 73,621,920 911,053 499,324 76,206,775 1,598,675 438,079 74,952,217 - - (5,767,736) 4,080,454 (1,687,282) (5,436,726) 4,080,454 (1,356,272) (921,042) 181,478 (739,564) (807,434) 181,478 (625,956) (6,688,778) 4,261,932 (2,426,846) (6,244,160) 4,261,932 (1,982,228) (6,688,778) 4,261,932 (2,426,846) (6,244,160) 4,261,932 (1,982,228) 17,500,000 1,380,151 1,137,839 654,517 130,976 3,300,032 24,103,515 17,500,000 1,380,151 1,000,576 420,112 130,976 3,114,661 23,546,476 - - - - - - 17,500,000 1,380,151 1,137,839 654,517 130,976 3,300,032 24,103,515 17,500,000 1,380,151 1,000,576 420,112 130,976 3,114,661 23,546,476 25,578,574 24,876,773 68,632,699 67,555,790 3,672,171 4,083,902 72,304,870 71,639,692 97,883,444 96,516,465 765,106 13,970 - - _________________ Director The notes on pages 8 to 22 form an integral part of this unaudited condensed interim financial information. ____________________ Director
5. 3 AL MADINA INSURANCE COMPANY SAOG UNAUDITED CONDENSED INTERIM STATEMENT OF PARTICIPANTS ’ REVENUE AND EXPENSES FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 Note Takaful revenue Gross contributions Retakaful/reinsurance share Retained contributions Movement in unearned contributions reserve Net earned contributions Income earned from retakaful contracts Takaful expenses Gross claims settled Claims recovered from retakaful/reinsurance Net claims settled Net movement in outstanding claims Net claims incurred Commission expense 10 10 19 Surplus from Takaful operations before wakala/mudarib fees and other income/expenses Takaful income Provision for impairment of receivable Takaful expense Surplus from takaful operations Investment income – net Mudarib share Wakala fees Deficit from takaful operations 20 20 General takaful Unaudited Unaudited 30 June 30 June 2020 2019 RO RO 15,148,119 (8,189,165) 6,958,954 23,488 6,982,442 204,470 13,800,592 (6,909,677) 6,890,915 525,749 7,416,664 122,233 7,186,912 Family takaful Unaudited Unaudited 30 June 30 June 2020 2019 RO RO Unaudited 30 June 2020 RO Total Unaudited 30 June 2019 RO 7,538,897 1,145,696 (865,662) 280,034 6,251 286,285 286,285 1,111,476 (816,746) 294,730 5,996 300,726 300,726 16,293,815 (9,054,827) 7,238,988 29,739 7,268,727 204,470 7,473,197 14,912,068 (7,726,423) 7,185,645 531,745 7,717,390 122,233 7,839,623 (5,332,006) 1,767,076 (3,564,930) (124,500) (3,689,430) (782,895) (4,472,325) 2,714,587 (12,040,844) 7,141,965 (4,898,879) 417,160 (4,481,719) (794,839) (5,276,558) 2,262,339 (502,727) 430,940 (71,787) (17,685) (89,472) (66,457) (155,929) 130,356 (587,687) 483,932 (103,755) (18,326) (122,081) (61,739) (183,820) 116,906 (5,834,733) 2,198,016 (3,636,717) (142,185) (3,778,902) (849,352) (4,628,254) 2,844,943 (12,628,531) 7,625,897 (5,002,634) 398,834 (4,603,800) (856,578) (5,460,378) 2,379,245 69,883 (75,000) (60,678) 2,648,792 110,716 (60,894) (3,029,624) (331,010) 83,103 (60,000) (96,575) 2,188,867 107,224 (58,973) (2,760,118) (523,000) 242 (30,167) 100,431 33,556 (18,456) (229,139) (113,608) 70,125 (75,000) (90,845) 2,749,223 144,272 (79,350) (3,258,763) (444,618) 83,353 (60,000) (97,302) 2,305,296 125,273 (68,900) (2,982,413) (620,744) The notes on pages 8 to 22 form an integral part of this unaudited condensed interim financial information. 250 (727) 116,429 18,049 (9,927) (222,295) (97,744)
6. 4 AL MADINA INSURANCE COMPANY SAOG UNAUDITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 Note Wakala fees Investment income (net) Mudarib share 20 21 20 General and administrative expenses Other income Earnings per share attributable to shareholders basic and diluted 3,258,763 573,278 79,350 3,911,391 2,982,413 459,546 68,900 3,510,859 (2,426,305) 48 (2,426,257) (2,222,040) 64 (2,221,976) 1,485,134 (112,500) 1,372,634 1,288,883 (99,786) 1,189,097 13 234,405 1,607,039 (126,386) 1,062,711 24 0.008 0.007 Profit before tax Taxation Profit for the period Other comprehensive income Items that may be reclassified to profit or loss Net change in fair value of investments at fair value through equity Total comprehensive income for the period Shareholders’ fund Unaudited Unaudited 30 June 30 June 2019 2020 RO RO The notes on pages 8 to 22 form an integral part of this unaudited condensed interim financial information.
7. 5 AL MADINA INSURANCE COMPANY SAOG UNAUDITED CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS ’ EQUITY FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 At 1 January 2020 (audited) Comprehensive income: Profit for the period Other comprehensive income: Net change in fair value of investment at fair value through equity Total comprehensive income for the period Transaction with owners: Transfer to legal reserve Dividend paid At 30 June 2020 (unaudited) At 1 January 2019 (audited) Comprehensive income: Profit for the period Other comprehensive income: Net change in fair value of investment at fair value through equity Transfer to profit or loss on sale of investment in real estate Transaction with owners: Transfer to legal reserve Dividend paid At 30 June 2019 (unaudited) Share capital Share premium Legal reserve RO RO RO Investment fair value reserve RO 17,500,000 1,380,151 1,000,576 420,112 - - - - - - - 234,405 234,405 17,500,000 1,380,151 137,263 137,263 1,137,839 654,517 17,500,000 Property fair value reserve Retained earnings Total RO RO RO 130,976 3,114,661 23,546,476 - 1,372,634 1,372,634 1,372,634 234,405 1,607,039 (137,263) (1,050,000) (1,187,263) 3,300,032 (1,050,000) (1,050,000) 24,103,515 130,976 1,380,151 909,244 254,891 213,924 3,167,670 23,425,880 - - - - - 1,189,097 1,189,097 - - - (126,386) - - (126,386) - - - (126,386) 1,189,097 1,062,711 (118,910) (875,000) (993,910) 3,362,857 (875,000) (875,000) 23,613,591 17,500,000 1,380,151 118,910 118,910 1,028,154 128,505 The notes on pages 8 to 22 form an integral part of this unaudited condensed interim financial information. - 213,924 -
8. 6 AL MADINA INSURANCE COMPANY SAOG UNAUDITED CONDENSED INTERIM STATEMENT OF CHANGES IN PARTICIPANTS ’ FUND FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 Deficit in participants’ fund General Family takaful takaful RO RO At 1 January 2020 (audited) Deficit for the period At 30 June 2020 (unaudited) At 1 January 2019 (audited) Deficit for the period Transfer to contingency reserve At 30 June 2019 (unaudited) (5,436,726) (331,010) (5,767,736) (5,083,412) (523,000) (567,896) (6,174,308) (807,434) (113,608) (921,042) (804,773) (97,744) (11,115) (913,632) Contingency reserve General Family takaful takaful RO RO Total RO 4,080,454 4,080,454 181,478 181,478 (1,982,228) (444,618) (2,426,846) 3,474,175 567,896 4,042,071 156,327 11,115 167,442 (2,257,683) (620,744) (2,878,427) The notes on pages 8 to 22 form an integral part of this unaudited condensed interim financial information.
9. 7 AL MADINA INSURANCE COMPANY SAOG UNAUDITED CONDENSED INTERIM STATEMENT OF CASH FLOWS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 Note Operating activities Profit before tax for the period Deficit from takaful operations Adjustments for : Depreciation Dividend income Profit on wakala deposits Profit from investments carried out at amortised cost Amortisation of investments carried at amortised cost End of service benefits charge for the period Rental income on investment in real estate Fair value loss on investments carried at fair value through profit or loss Provision for bad and doubtful debt Loss on sale of investments Operating cash flows before end of service benefits End of service benefits paid Operating cash flows before working capital changes 16 21 21 21 14 21 21 21 Working capital changes: Takaful and retakaful/reinsurance balance receivables Retakaful / reinsurance share of outstanding claims and unearned contribution reserve Other receivables, prepayments and other assets Deferred policy acquisition cost Outstanding claims and unearned premium reserve Accounts and other payables Due to retakaful / reinsurance Unearned retakaful/reinsurance commission Net cash used in operating activities Unaudited 30 June 2020 RO Unaudited 30 June 2019 RO 1,485,134 (444,618) 1,288,883 (620,744) 88,452 (188,438) (190,356) (177,438) 304 61,245 (201,061) 95,905 75,000 2,273 606,402 606,402 92,579 (208,980) (255,598) (162,326) 286 53,070 (224,130) 180,653 (60,000) 40,445 124,138 (5,407) 118,731 126,733 (1,312,437) (3,566,621) (98,001) (184,677) 3,679,070 (643,458) (1,285,341) 24,340 (1,341,553) 2,878,881 297,279 (39,357) (3,809,458) 98,945 448,025 107,270 (1,212,121) (25,980) (118,979) 51,569 (50,000) 59,808 396,548 188,438 501,404 (25,198) 49 103,885 (445,000) 377,950 164,318 208,980 384,984 Cash flow from Financing activity Dividends paid (1,050,000) (875,000) Net change in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period (1,890,149) 5,972,972 4,082,823 (1,702,137) 3,195,642 1,493,505 Cash flows from Investing activities Purchase of property and equipment Purchase of investments carried at amortised cost Proceeds from disposal of investments at fair value through profit or loss Proceeds from redemption of investment at fair value through equity Movement in bank deposits Rent on investment in real estate received Profit received on bank deposits and Sukuk Dividends received Net cash generated from investing activities 16 14 7 6 21 5 The notes on pages 8 to 22 form an integral part of this unaudited condensed interim financial information.
10. AL MADINA INSURANCE COMPANY SAOG 8 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 1 Legal status and principal activities Al Madina Insurance Company SAOG (the “Company”) was incorporated on 15 May 2006 as a closed joint stock company in the Sultanate of Oman. On 10 December 2013, the Company became a public joint stock company. The Company operates in Oman and is engaged in the business of General and Family Takaful activities and investments by adopting wakala and mudarabha model respectively, on behalf of the participants in accordance with the Islamic Sharia’ principles. The retakaful/reinsurance activities organised on an underwriting period basis with the participants pooling their contributions to compensate for losses suffered in the pool on occurrence of a defined event. The Company commenced commercial operations from 1 August 2006. The Company was granted license from Capital Market Authority (CMA) on 15 July 2006. The Company started Takaful operations on 1 January 2014 after being granted the Takaful license by the CMA. 2 Summary of significant accounting policies, critical accounting estimates and judgements Summary of significant accounting policies (a) This unaudited condensed interim financial information for the six month period ended 30 June 2020 has been prepared in accordance with Financial Accounting Standards (FAS) issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). In line with the requirement of AAOIFI, for matters that are not covered by AAOIFI standards, the Company uses guidance from the relevant International Financial Reporting Standards (IFRS). Accordingly, the interim unaudited condensed financial information has been presented in condensed form in accordance with the guidance provided by International Accounting Standard 34 – ‘Interim Financial Reporting’. (b) This unaudited condensed interim financial information does not contain all information and disclosures required for full financial statements prepared in accordance with FAS issued by AAOIFI and should be read in conjunction with the Company’s annual financial statements for the year ended 31 December 2019. (c) The accounting policies adopted in the preparation of this unaudited condensed interim financial information is consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 31 December 2019. In addition, results for the six month period ended 30 June 2020 are not necessarily indicative of the results that may be expected for the year ending 31 December 2020. (d) The unaudited condensed interim financial information is prepared in Rial Omani which is the Company’s functional and presentation currency. (e) The unaudited condensed interim financial information has been prepared using historical cost convention except for investments at fair value through profit or loss, investments at fair value through equity and investment in real estate which are measured at fair value. The accounting policies adopted are consistent with those of the previous financial year. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. Critical accounting estimates and judgements The preparation of unaudited condensed interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this unaudited condensed interim financial information, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2019. 3 Significant event and transactions The World Health Organization declared coronavirus and COVID-19 a global health emergency on 30 January 2020. Company has been closely monitoring the impact of coronavirus outbreak on the Company’s business and has put in place adequate contingency measures to ensure business continuity. The Company’s business remains largely unaffected by COVID-19, and the Company has successfully been able to maintain operational capability throughout this period, with almost all employees working from home. 4 Financial risk management factors The Company’s activities expose it to a variety of financial risks: market risk (including currency exchange rate risk, profit rate risk and price risk), credit risk and liquidity risk. The unaudited condensed interim financial information does not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the annual financial statements as at and for the year ended 31 December 2019. There have been no changes in the risk management policies since year end.
11. AL MADINA INSURANCE COMPANY SAOG 9 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 5 Cash and cash equivalents Shareholders 30 June 2020 (Unaudited) Cash at bank in current accounts Cash at bank in call accounts Cash balances with investment managers Cash in hand 31 December 2019 (audited) Cash at bank in current accounts Cash at bank in call accounts Cash balances with investment managers Cash in hand 6 RO 56,394 444,031 1,185,236 2,674 1,688,335 General RO 894,565 1,438,693 744 2,334,002 Participants Family RO 60,486 60,486 207,200 16,423 1,113,908 2,789 1,340,320 439,818 3,998,035 13,104 4,450,957 12,107 169,588 181,695 Total RO 955,051 1,438,693 744 2,394,488 451,925 4,167,623 13,104 4,632,652 Bank deposits Shareholders Participants General Family Total RO 6,123,500 30 June 2020 (Unaudited) Bank deposits with maturity of more than three months RO 5,576,500 RO 4,876,416 RO 1,247,084 31 December 2019(audited) Bank deposits with maturity of more than three months 5,526,500 4,876,416 1,247,084 6,123,500 (a) Bank deposits carry profit rates in range of 4.3 % to 5 % per annum (31 December 2019 – 3.75% to 5% per annum). (b) Restrictions on transfer of assets In accordance with the law governing the operation of insurance companies within the Sultanate of Oman, the Company identified certain specific bank deposits with carrying value of RO 11,100,000 (31 December 2019 - RO 11,100,000) to the CMA. The Company can only transfer these assets with the prior approval of the CMA. (c) The Company has kept a deposit of RO 50,000 (31 December 2019 - RO 50,000) which is under lien with Omani Unified Bureau for Orange Card Company SAOC in the Sultanate of Oman, against settlement of claims. 7 Investments carried at fair value through profit or loss Local quoted Service sector Industrial sector Financial sector Total investments Shareholders Unaudited 30 June 2020 Fair value Cost RO RO 402,057 754,142 2,500 1,158,699 484,085 768,048 2,470 1,254,603 Shareholders Audited 31 December 2019 Fair value Cost RO RO 535,685 770,290 2,470 1,308,445 657,703 941,052 2,250 1,601,005
12. AL MADINA INSURANCE COMPANY SAOG 10 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 7 Investments carried at fair value through profit or loss (continued) (a) Movement in investments at fair value through profit or loss Shareholders Unaudited Audited 30 June 31 December 2020 2019 RO RO At 1 January Disposals during the period/year Loss on disposal Net change in fair value At 30 June / 31 December 1,308,445 (51,569) (2,273) (95,905) 1,158,699 1,710,928 (141,240) 31,317 (292,560) 1,308,445 (b) Details of the Company’s investments carried at fair value through profit or loss for which the Company’s holding exceeds 10% of the fair value of investments held at fair value through profit or loss at 30 June 2020 / 31 December 2019 are: 30 June 2020 (unaudited) A'Saffa Foods SAOG Salalah Mills Company SAOG 31 December 2019 (audited) A'Saffa Foods SAOG (c) % of Portfolio Number of Securities Fair value RO Cost RO 13 13 249,661 256,556 149,297 150,342 149,297 128,278 % of Portfolio 11 Number of Securities 249,661 Fair value RO 149,297 Cost RO 149,297 Restrictions on transfer of assets In accordance with the law governing the operation of insurance companies within the Sultanate of Oman, the Company identified certain specific investments with the carrying value of RO 744,798 (31 December 2019 - RO 843,124) to the CMA. The Company can only transfer these assets with the prior approval of the CMA. 8 Takaful and retakaful / reinsurance balance receivable General RO 30 June 2020 (Unaudited) Takaful receivable including due from related parties Less: specific and portfolio provision for impairment Retakaful / reinsurance balances receivable Less: specific and portfolio provision for impairment Participants Family RO Total RO 12,397,847 (840,762) 11,557,085 728,769 (44,745) 684,024 13,126,616 (885,507) 12,241,109 1,221,489 (305,589) 915,900 12,472,985 36,102 (20,865) 15,237 699,261 1,257,591 (326,454) 931,137 13,172,246
13. AL MADINA INSURANCE COMPANY SAOG 11 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 8 Takaful and retakaful / reinsurance balance receivable (continued) General RO 31 December 2019 (Audited) Takaful receivable including due from related parties Less: specific and portfolio provision for impairment Retakaful / reinsurance balances receivable Less: specific and portfolio provision for impairment Participants Family RO Total RO 12,947,324 (765,762) 12,181,562 1,009,918 (44,745) 965,173 13,957,242 (810,507) 13,146,735 492,638 (305,589) 187,049 12,368,611 61,060 (20,865) 40,195 1,005,368 553,698 (326,454) 227,244 13,373,979 Normal credit period allowed to takaful debtors and retakaful / reinsurance companies is 120 days after which amounts are considered as past due. As at 30 June 2020, receivables past due above 121 days amounting to RO 5,046,301 (31 December 2019 – RO 4,013,567 ) are not considered impaired as these are due from government, quasi-government entities, brokers and corporate clients with which the Company deals in the normal course of business and with which there is no recent history of default. (a) An analysis of takaful balances receivable including due from related parties and retakaful / reinsurance balances receivable as at year end is as under: 30 June 2020 (Unaudited) Neither past due nor impaired Past due but not impaired Past due and impaired 31 December 2019 (Audited) Neither past due nor impaired Past due but not impaired Past due and impaired (b) General RO Participants Family RO Total RO 7,826,556 4,646,429 1,146,351 13,619,336 314,390 384,871 65,610 764,871 8,140,947 5,031,301 1,211,961 14,384,209 8,576,975 3,791,636 1,071,351 13,439,962 783,437 221,931 65,610 1,070,978 9,360,412 4,013,567 1,136,961 14,510,940 Movement in the provision for impairment of receivables during the period / year is as follows: 30 June 2020 (Unaudited) At 1 January 2020 Charge for the period At 30 June 2020 31 December 2019 (Audited) At 1 January 2019 Charge for the year At 31 December 2019 General RO Participants Family RO Total RO 1,071,351 75,000 1,146,351 65,610 65,610 1,136,961 75,000 1,211,961 961,351 110,000 1,071,351 55,610 10,000 65,610 1,016,961 120,000 1,136,961 (c) At 30 June 2020, 37% of the Company’s takaful receivable is from 5 customers (31 December 2019- 44% from 5 customers). (d) At 30 June 2020, 59 % of the Company’s due from retakaful / reinsurance companies are from 5 retakaful / reinsurance companies (31 December 2019 – 72% from 5 retakaful / reinsurance companies).
14. AL MADINA INSURANCE COMPANY SAOG 12 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 9 Receivable from participants and payable to shareholders Shareholders Unaudited Audited 30 June 31 December 2020 2019 RO RO At 1 January Wakala fee income for the year Mudarib share for the year Amount received from policyholders Net movement in policyholders’ account At 30 June / 31 December – net 1,524,565 3,258,763 79,350 (3,103,341) (128,450) 1,630,887 1,566,915 4,474,940 157,938 (4,656,000) (19,228) 1,524,565 (a) Receivable from participants’ fund includes due from general takaful and family takaful policyholders on account of wakala fees, mudarib share and inter-fund balances. (b) The break-up of receivable from participants is as follows: Shareholders Unaudited Audited 30 June 31 December 2020 2019 RO RO On account of qard hassan - From general takaful - From family takaful On account of wakala fees, mudarib share and inter-fund balances - From general takaful - From family takaful 10 1,183,956 22,597 1,206,553 1,183,956 22,597 1,206,553 424,334 424,334 1,630,887 98,123 219,889 318,012 1,524,565 Takaful liabilities Gross RO General takaful Claims incurred but not settled Claims incurred but not reported Unearned contributions reserve 38,614,006 5,757,244 44,371,250 14,681,822 59,053,072 Unaudited 30 June 2020 Retakaful / reinsurance RO Net RO (34,573,233) 4,040,773 (3,610,733) 2,146,511 (38,183,966) 6,187,284 (8,277,759) 6,404,063 (46,461,725) 12,591,347 Audited 31 December 2019 Retakaful / Gross reinsurance RO RO 32,702,271 4,998,874 37,701,145 17,689,239 55,390,384 Net RO (27,877,628) 4,824,643 (3,760,733) 1,238,141 (31,638,361) 6,062,784 (11,261,688) 6,427,551 (42,900,049) 12,490,335
15. AL MADINA INSURANCE COMPANY SAOG 13 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 10 Takaful liabilities (continued) Gross RO Family takaful Claims incurred but not settled Claims incurred but not reported Unearned contributions reserve (a) 716,500 358,898 1,075,398 495,150 1,570,548 60,623,620 Unaudited 30 June 2020 Retakaful / reinsurance RO Net RO (605,834) 110,666 (280,656) 78,242 (886,490) 188,908 (316,984) 178,166 (1,203,474) 367,074 (47,665,199) 12,958,421 Audited 31 December 2019 Retakaful / Gross reinsurance RO RO 744,494 328,898 1,073,392 480,776 1,554,168 56,944,552 Net RO (621,514) 122,980 (280,656) 48,242 (902,170) 171,222 (296,359) 184,417 (1,198,529) 355,639 (44,098,578) 12,845,974 Claims and loss adjustment expenses Gross RO General takaful Notified claims Incurred but not reported Total at the beginning of the period / year Cash paid for claims settled during the period / year Increase in liabilities arising from current and prior period claims Total at the end of the period / year Notified claims Incurred but not reported Total at the end of the period / year Family takaful Notified claims Incurred but not reported Total at the beginning of the period / year Cash paid for claims settled during the period / year Increase in liabilities arising from current and prior period claims Total at the end of the period / year Notified claims Incurred but not reported Total at the end of the period / year Unaudited 30 June 2020 Retakaful / reinsurance RO Net RO Audited 31 December 2019 Retakaful / Gross reinsurance RO RO Net RO 32,702,271 4,998,874 (27,877,628) 4,824,643 (3,760,733) 1,238,141 28,094,636 4,120,498 (23,278,479) 4,816,157 (2,750,452) 1,370,046 37,701,145 (31,638,361) 6,062,784 32,215,134 (26,028,931) 6,186,203 (5,332,006) 1,767,076 (3,564,930) (18,324,373) 12,002,111 (8,312,681) 3,689,430 9,443,053 (8,881,320) 23,810,384 (15,052,483) 8,757,901 44,371,250 (38,183,966) 6,187,284 37,701,145 (31,638,361) 6,062,784 38,614,006 5,757,244 (34,573,233) 4,040,773 (3,610,733) 2,146,511 32,702,271 4,998,874 (27,877,628) 4,824,643 (3,760,733) 1,238,141 44,371,250 (38,183,966) 6,187,284 37,701,145 (31,638,361) 6,062,784 744,494 328,898 (621,514) (280,656) 122,980 48,242 338,300 610,190 (279,569) (510,614) 58,731 99,576 1,073,392 (902,170) 171,222 948,490 (790,183) 158,307 (502,727) 430,941 (71,786) (1,217,764) 1,031,704 (186,060) 504,733 (415,261) 89,472 1,342,666 (1,143,691) 198,975 1,075,398 (886,490) 188,908 1,073,392 (902,170) 171,222 716,500 358,898 (605,834) (280,656) 110,666 78,242 744,494 328,898 (621,514) (280,656) 122,980 48,242 1,075,398 (886,490) 188,908 1,073,392 (902,170) 171,222
16. AL MADINA INSURANCE COMPANY SAOG 14 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 10 Takaful liabilities (continued) (b) Provisions for unearned contributions and unexpired short term takaful risks Gross RO Audited 31 December 2019 Reinsurance RO Net RO 17,689,239 (11,261,688) 6,427,551 480,776 (296,359) 184,417 12,754,965 515,766 (5,775,627) (322,874) 6,979,338 192,892 18,170,015 (11,558,047) 6,611,968 13,270,731 (6,098,501) 7,172,230 Gross RO Unearned contributions reserves Mathematical reserves Total at the beginning of the period / year Gross contributions during the period / year Net release during the period / year Total at the end of the period / year Unearned contributions reserves Mathematical reserves Total at the end of the period / year 11 16,293,815 Unaudited 30 June 2020 Reinsurance RO Net RO (9,054,827) (19,286,858) 12,018,131 7,238,988 38,912,525 (7,268,727) (34,013,241) 18,756,075 (15,257,166) 15,176,972 (8,594,743) 6,582,229 18,170,015 (11,558,047) 6,611,968 14,681,822 495,150 (8,277,759) (316,984) 6,404,063 17,689,239 178,166 480,776 (11,261,688) (296,359) 6,427,551 184,417 15,176,972 (8,594,743) 6,582,229 18,170,015 (11,558,047) 6,611,968 Deferred policy acquisition cost General takaful RO At 1 January 2020 (Audited) Cost incurred during the period Amortised during the period At 30 June 2020 (Unaudited) Family takaful RO 732,398 971,380 (782,895) 920,883 55,852 62,649 (66,457) 52,044 General takaful RO At 1 January 2019 (Audited) Cost incurred during the year Amortised during the year At 31 December 2019 (Audited) 12 (24,215,621) 14,696,904 Family takaful RO 715,283 1,569,901 (1,552,786) 732,398 59,867 127,887 (131,902) 55,852 Total RO 788,250 1,034,029 (849,352) 972,927 Total RO 775,150 1,697,788 (1,684,688) 788,250 Other receivables and takaful assets Shareholders 30 June 2020 (Unaudited) Rent receivable Accrued income Advances Prepayments Others RO 204,668 419,167 85,879 78,080 31,993 819,787 General takaful RO 14,861 33,680 607,094 655,635 Participants Family takaful RO 409,822 409,822 Total RO 424,683 33,680 607,094 1,065,457
17. AL MADINA INSURANCE COMPANY SAOG 15 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 12 Other receivables and takaful assets (continued) Shareholders 31 December 2019 (Audited) Accrued income Prepayments Advances Rent receivable Other 13 RO 447,653 112,152 124,886 63,415 15,079 763,185 General Takaful RO 43,435 14,861 570,388 628,684 Participants Family takaful RO 395,374 395,374 Total RO 43,435 410,235 570,388 1,024,058 Investments at fair value through equity Unaudited 30 June 2020 Fair value RO Local quoted Service sector Industrial sector Shareholders Unaudited Audited 30 June 31 December 2020 2019 Cost Fair value RO RO Audited 31 December 2019 Cost RO 177,600 29,573 207,173 223,741 35,554 259,295 210,300 28,305 238,605 223,741 35,554 259,295 Total local Foreign quoted Financial sector Service sector Real estate development Food and beverages Total foreign 343,568 152,400 495,968 703,141 71,428 157,500 228,928 488,223 343,569 152,400 495,969 734,574 71,428 157,500 228,928 488,223 159,978 1,497,586 126,869 29,630 1,814,063 233,713 689,549 326,980 46,346 1,296,588 230,759 1,048,308 231,466 37,692 1,548,225 233,713 689,549 326,980 46,346 1,296,588 Total investments 2,517,204 1,784,811 2,282,799 1,784,811 Local unquoted Service sector Real estate development (a) Movement in investments at fair value through equity Shareholders Unaudited Audited 31 December 30 June 2019 2020 RO RO At the beginning of the period / year Purchases during the period / year Disposals during the period / year Realised (loss) / gain on disposal Net change in fair value Impairment loss on investment At the end of the period / year 2,282,799 234,405 2,517,204 2,178,384 105,087 (103,885) (40,446) 224,927 (81,269) 2,282,799
18. AL MADINA INSURANCE COMPANY SAOG 16 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 13 Investments at fair value through equity (continued) (b) Details of the Company’s investments at fair value through equity for which the Company’s holding exceeds 10% of investments held at fair value through equity at 30 June 2020 / 31 December 2019 are: % of portfolio Basis of valuation Number of securities 30 June 2020 (Unaudited) Investment from shareholders’ fund National Takaful Company (Watania) – listed Omani Unified Bureau Orange Card SAOC 59 14 Fair value Fair value 31 December 2019 (Audited) Investment from shareholders’ fund National Takaful Company (Watania) – listed Omani Unified Bureau Orange Card SAOC 46 15 Fair value Fair value 14,303,596 71,428 14,303,596 71,428 Fair value RO 1,497,587 343,569 1,048,308 343,569 (c) Movement in investments fair value reserve: Shareholders Unaudited Audited 30 June 31 December 2020 2019 RO RO At the beginning of the period / year Net change in fair value of investment during the period / year - net of tax Impact of deferred tax At the end of the period / year 420,112 234,405 234,405 654,517 254,891 224,927 (59,706) 165,221 420,112 (d) Investments classified as ‘investments at fair value through equity’ consists of investments in equity securities. (e) Restrictions on transfer of assets In accordance with the law governing the operation of insurance companies within the Sultanate of Oman, the Company identified certain specific investments with the carrying value of RO 81,604 (31 December 2019 - RO 81,405) to the CMA. The Company can only transfer these assets with the prior approval of the CMA. 14 Investments carried at amortised cost The Company has invested in sukuks listed in the local and international markets. The Company has a positive intention and ability to hold sukuks until their maturity ranging from June 2021 to November 2023, respectively. (a) Movement in investments carried at amortised cost Shareholders Unaudited Audited 30 June 31 December 2020 2019 RO RO At the beginning of the period / year Purchased during the period / year Amortised during the period / year At the end of the period / year 5,261,228 118,979 (304) 5,379,903 4,753,654 508,159 (585) 5,261,228
19. AL MADINA INSURANCE COMPANY SAOG 17 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 14 Investments carried at amortised cost (continued) (b) Restrictions on transfer of assets In accordance with the law governing the operation of insurance companies within the Sultanate of Oman, the Company identified 5,252,068 units (31 December 2019 – 2,754,568 units) with the carrying value of RO 5,253,334 (31 December 2019 - RO 4,750,000) to the Capital Market Authority. The Company can only transfer these assets with the prior approval of the CMA. 15 Investment in real estate Movement of carrying amounts of investment in real estate: Shareholders Unaudited Audited 30 June 31 December 2020 2019 RO RO At the beginning of the period / year Addition (Loss) / gain on revaluation of investment in real estate Impairment on investment in real estate At the end of the period / year 5,946,675 5,946,675 5,997,586 70,636 (97,586) (23,961) 5,946,675 As of 30 June 2020, the Company has investment in investment real estate of RO 5,946,675 (31 December 2019 - RO 5,946,675) which is 19% of overall investments of the Company, which is in line with the limit prescribed by Regulations for Investing Assets for Insurance Companies issued by CMA. As per the Regulation, investments in real estate should not exceed 20% of the total investments of the insurer. 16 Property and equipment Shareholders Unaudited Audited 30 June 31 December 2020 2019 RO RO Net book value At beginning of the period / year Additions during the period / year Depreciation for the period / year At the end of the period / year 17 847,511 25,980 (88,452) 785,039 930,587 103,620 (186,696) 847,511 Contingency reserve In accordance with Article 10(bis) (2)(c) and 10(bis) (3)(b) of Regulations for Implementing Insurance Companies Law (Ministerial Order 5/80), as amended, 10% of the net outstanding claims in case of the general insurance business and 1% of the life assurance contributions for the period for life insurance business at the reporting date is transferred from retained earnings to a contingency reserve. The Company may discontinue this transfer when the reserve equals to the issued share capital. No dividend shall be declared in any period until the deficit in the reserve is covered from the retained profits. The reserves shall not be used except by prior approval of the Capital Market Authority. CMA has issued the new Takaful Insurance Law, however, the detailed rules and regulations are not available for the calculation of the contingency reserve for takaful business operations. During the current period, the Company has not provided any amount to the contingency reserve, with respect to the general and family takaful business. (30 June 2019 - RO 638,355). This amount has been charged to the participants’ fund in the previous period.
20. AL MADINA INSURANCE COMPANY SAOG 18 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 18 Unearned retakaful commission Movement in unearned retakaful commission is shown below: General takaful RO At 1 January 2020 – Audited Income from retakaful contracts accrued during the year Amortised during the period At 30 June 2020 – Unaudited Participants Family takaful RO 165,014 228,810 (204,470) 189,354 - General takaful RO At 1 January 2019 – Audited Income from retakaful contracts accrued during the year Amortised during the year At 31 December 2019- Audited 19 165,014 228,810 (204,470) 189,354 Family Takaful RO 50,629 410,181 (295,796) 165,014 Total RO Total RO - 50,629 410,181 (295,796) 165,014 Net claims incurred Gross RO Claims notified and not settled 39,330,506 Claims incurred but not reported 6,116,142 Outstanding at end of the period 45,446,648 Unaudited 30 June 2020 Retakaful / Reinsurances’ share RO Net RO Unaudited 30 June 2019 Retakaful / reinsurances’ share RO Gross RO Net RO (35,179,067) 4,151,439 24,698,613 (20,372,557) 4,326,056 (3,891,389) 2,224,753 4,880,688 (3,261,068) 1,619,620 (39,070,456) 6,376,192 29,579,301 (23,633,625) 5,945,676 5,834,733 (2,198,017) 3,636,716 12,628,531 (7,625,897) 5,002,634 Claims notified and not settled 33,446,765 Claims incurred but not reported 5,327,772 Outstanding at beginning of the period 38,774,537 Claims incurred 12,506,844 (28,499,142) 4,947,623 28,432,936 (23,558,048) 4,874,888 (4,041,389) 1,286,383 4,730,688 (3,261,066) 1,469,622 (32,540,531) (8,727,942) 6,234,006 3,778,902 33,163,624 9,044,208 (26,819,114) (4,440,408) 6,344,510 4,603,800 Takaful claims paid (a) Takaful / insurance revenue analysis Unaudited 30 June 2020 Contributions revenue before Net retakaful / contributions Reinsurance RO RO Motor Fire, accidents, engineering and others Marine cargo and hull Medical Life 1,711,353 833,792 51,421 127,226 100,431 2,824,223 1,786,706 3,246,122 131,260 215,640 530,207 5,909,935 Unaudited 30 June 2019 Contributions revenue before Net retakaful / contributions reinsurance RO RO 1,743,666 3,532,303 (223,352) (128,786) 298,635 5,222,466 (141,548) (2,739,027) 143,338 62,273 (182,206) (2,857,170)
21. AL MADINA INSURANCE COMPANY SAOG 19 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 19 (a) Net claims incurred (continued) Takaful / insurance revenue analysis (continued) Contributions revenue before retakaful/reinsurance is calculated as the sum of gross contributions and adjustment for unearned contributions reserve thereon, gross claims incurred, commission expense and adjustment for deferred commission expense thereon and policy fee and other income. 20 Wakala fees and Mudarib share The shareholders manage the general and family takaful operations for the participants and charge 20% (31 December 2019 - 14%) of gross contributions as a wakala fees as approved by the Board of Directors. The shareholders also manage the participants fund as a mudarib and charge 55% (31 December 2019 – 55%) of the general takaful and family takaful investment income earned by the participants’ investment funds, respectively. The maximum chargeable wakala fee and mudarib share as approved by the Sharia Supervisory Committee are 20% and 55% (31 December 2019 – 14% and 55%) respectively. 21 Investment income - net Unaudited 30 June 2020 RO Rental income on investment in real estate Dividend income Profit from investment carried at amortised cost Profit on deposits Realised (loss) on sale of investments Investment management costs Fair value loss on investments held at fair value through profit or loss 22 201,061 188,438 177,438 190,356 (2,273) (85,837) (95,905) 573,278 Unaudited 30 June 2019 RO 224,130 208,980 162,326 130,325 (40,445) (45,117) (180,653) 459,546 Sharia Supervisory Committee The Company business activities are subject to the supervision of a Sharia Supervisory Committee consisting of three members appointed by the Board of Directors. The Sharia Supervisory Committee performs a supervisory role in order to determine whether the operations of the Company are conducted in accordance with Islamic Sharia rules and principles. 23 Takaful reserve Sharia Board of the Company has formulated a policy for the Takaful Reserve. As per the policy in one period maximum of 50% of the Takaful Surplus for the period can be transferred to the Takaful Reserve until such balance equals the share capital. During the current period the Company has not transferred any amount from Takaful Surplus to Takaful Reserve. 24 Earnings per share Unaudited 30 June 2020 Profit for the period – RO Weighted average number of shares outstanding – number Earnings per share attributable to shareholders – basic and diluted – RO 1,372,634 175,000,000 0.008 Unaudited 30 June 2019 1,189,097 175,000,000 0.007 Basic earnings per share is calculated by dividing the profit for the period by the weighted average number of shares outstanding during the period. There is no effect on diluted earnings per share as the Company does not have any instruments having diluting effects.
22. AL MADINA INSURANCE COMPANY SAOG 20 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 25 Related parties Related parties represent associated companies, major shareholders, directors, Sharia Supervisory Committee members, key management personnel and business entities in which they are interested or have the ability to control or exercise significant influence in financial and operating decisions. The transactions are entered into at terms and conditions which the directors consider to be comparable with those adopted for arm’s length transactions with third parties. The approximate volumes of such transactions involving related parties and holders of 10% or more of the Company’s shares or their family members other than those separately disclosed, during the year were as follows: (a) Transactions with related parties Transactions with related parties or holders of 10% or more of the Company’s shares or their family members, included in the statement of participants’ revenue and expenses and statement of profit or loss and comprehensive income are as follows: Unaudited 30 June 2020 RO Gross contributions Retakaful/reinsurance contribution ceded Claims - net Board sitting fees Sharia supervisory committee fee Dividend paid to shareholders (b) 762,357 50,377 5,579,817 26,600 14,250 1,050,000 Unaudited 30 June 2019 RO 2,469,657 47,524 923,914 30,556 17,750 875,000 Balances with related parties Balances due from related parties or holders of 10% or more of the Company’s shares, or their family members, less provisions and write offs, and is analysed as follows: Unaudited Audited 30 June 31 December 2020 2019 RO RO Takaful and retakaful / reinsurance contract receivables Contribution balances receivables from other related parties 3,279,612 1,596,726 Investment receivables Rental income receivable 33,626 Accrued interest on investment in Modern Sukuk Company SAOC 71,637 Investment in Modern Sukuk Company SAOC 2,501,266 2,502,500 Investment in Mohammed Al Barwani Sukuk Issue SAOC 1,500,000 1,500,000 Investments at fair value through equity 1,993,555 1,556,014
23. AL MADINA INSURANCE COMPANY SAOG 21 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 25 Related parties (continued) (c) Compensation of key management personnel of the Company Compensation of key management personnel of the Company, consisting of salaries and benefits, is as follows: Unaudited 30 June 2020 RO Short-term benefits Employee end of service benefits 26 422,340 23,547 445,887 Unaudited 30 June 2019 RO 368,127 18,675 386,802 Contingencies Contingent liabilities At 30 June 2020, the Company had contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of business amounts to RO 85,024 (31 December 2019 – RO 18,715). Legal claims The Company, in common with the significant majority of insurers, is subject to litigation in the normal course of its business. The Company, based on independent legal advice, does not believe that the outcome of these court cases will have a material impact on the Company’s financial performance. 27 Segment information Business segments – primary reporting segment The Company has two reportable business segments, as described below, which are the Company’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic units, the Company’s CEO reviews internal management reports on a regular basis. Operating segments The Company has the following operating segments: General takaful General business includes takaful and retakaful/reinsurance of motor; fire and general accident; and marine cargo and hull. Family takaful Family business relates to the takaful of the life of an individual or group life.
24. AL MADINA INSURANCE COMPANY SAOG 22 NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2020 (CONTINUED) 27 Segment information (continued) Operating segments (continued) 30 June 2020 – unaudited Takaful revenue (net of retakaful / reinsurance) Takaful expenses (net of retakaful / reinsurance) Segment results Takaful income Provision for impairment of receivables Takaful expense Investment income Mudarib share Wakala fees Deficit for the period Segment assets Assets allocated to shareholders Total assets Segment liabilities Liabilities allocated to shareholders Total liabilities 30 June 2019 – unaudited Takaful revenue (net of retakaful / reinsurance) Takaful expenses (net of retakaful / reinsurance) Segment results Takaful income Provision for impairment of receivables Takaful expense Investment income Mudarib share Wakala fees Deficit for the period Segment assets Assets allocated to shareholders Total assets Segment liabilities Liabilities allocated to shareholders Total liabilities General takaful RO Family takaful RO 7,186,912 (4,472,325) 2,714,587 69,883 (75,000) (60,678) 110,716 (60,894) (3,029,624) (331,010) 68,632,699 286,285 (155,929) 130,356 242 (30,167) 33,556 (18,456) (229,139) (113,608) 3,672,171 70,319,981 4,411,735 General takaful RO Family takaful RO 7,538,897 (5,276,558) 2,262,339 83,103 (60,000) (96,575) 107,224 (58,973) (2,760,118) (523,000) 47,746,642 300,726 (183,820) 116,906 250 (727) 18,049 (9,927) (222,295) (97,744) 3,972,937 49,878,879 4,719,127 Total RO 7,473,197 (4,628,254) 2,844,943 70,125 (75,000) (90,845) 144,272 (79,350) (3,258,763) (444,618) 72,304,870 25,578,574 97,883,444 74,731,716 1,475,059 76,206,775 Total RO 7,839,623 (5,460,378) 2,379,245 83,353 (60,000) (97,302) 125,273 (68,900) (2,982,413) (620,744) 51,719,579 24,720,439 76,440,018 54,598,006 1,106,848 55,704,854 The activities of the Company are restricted to carrying out takaful, on the principles of Sharia significant portion of which is concentrated in the GCC countries which are subject to similar risks and rewards. Accordingly, no segmental information relating to products and services has been presented. Geographical segments – secondary reporting segment The Company has one geographical segment as all their operations are carried within the Sultanate of Oman. 28 Earnings prohibited under Sharia Earnings retained during the previous year from transactions which are not permitted under Sharia are recorded as part of accounts and other payables amounted to RO 13,970 (31 December 2019 – RO 18,970).