ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND ...
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) Financial Statements For the period from 20 April 2014 (date of registration) to 31 December 2014 together with the Independent Auditor’s Report
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) BALANCE SHEET As at 31 December 2014 (Amounts in Saudi Arabian Riyal)
Note
2014
ASSETS Cash at bank - current accounts - Murabaha placements Other current assets TOTAL ASSETS
2,680,818 7
1,000,044 8,959 3,689,821
LIABILITIES Accrued expenses and other current liabilities TOTAL LIABILITIES NET ASSETS ATTRIBUTABLE TO UNITHOLDERS
38,827 38,827 3,650,994 8
Units in issue (numbers) Net assets attributable to each unit
366,797 9.95
The accompanying notes 1 through 13 form an integral part of these financial statements.
1
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) STATEMENT OF INCOME For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal)
INCOME Income from Murabaha placements
68,710 68,710
EXPENSES Management and administration fees Other expenses
(47,781) (63,030) (110,811) (42,101)
NET LOSS FOR THE PERIOD
The accompanying notes 1 through 13 form an integral part of these financial statements.
2
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) STATEMENT OF CASH FLOWS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal)
CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period
(42,101)
Changes in operating assets and liabilities: Other current assets Accrued expenses and other current liabilities Net cash used in operating activities
(8,959) 38,827 (12,233)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of units Payments against redemption of units Net cash generated from financing activities Net increase in cash and cash equivalents during the period Cash and cash equivalents at end of the period
16,000,000 (12,306,905) 3,693,095 3,680,862 3,680,862
The accompanying notes 1 through 13 form an integral part of these financial statements.
3
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) STATEMENT OF CHANGES IN NET ASSETS IN ATTRIBUTABLE TO UNITHOLDERS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal)
Net loss for the period
(42,101)
Changes from unit transactions Proceeds from issuance of units Payments against redemption of units Net change from unit transactions
16,000,000 (12,306,905) 3,693,095
Net assets attributable to Unitholders at end of the period
3,650,994
The accompanying notes 1 through 13 form an integral part of these financial statements.
4
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 1.
THE FUND AND ITS ACTIVITIES Al Oula Geojit Capital – Saudi Riyal Murabaha Fund (“the Fund”) is an open-ended mutual investment fund which is managed through an agreement between Al Oula Geojit Capital Company (“the Fund Manager”) and Investors (the Unitholders). The objective of the Fund is to generate income and liquidity consistent with short-term money market rates and to preserve the value of unit holders’ investment. All income is reinvested in the Fund and is reflected in the unit price. In dealing with the unit holders, the Fund Manager considers the Fund as an independent unit. Accordingly, the Fund Manager prepares separate financial statements for the Fund. The Fund commenced its operation on 20 Jumada Al Akhir 1435 H (corresponding to 20 April 2014) to meet the above mentioned objectives, accordingly these financial statements have been prepared for the period from 20 April 2014 (date of registration) to 31 December 2014 being the first accounting period and accordingly, no comparative information have been presented in these financial statements.
2.
REGULATING AUTHORITY The Fund is governed by the Investment Fund Regulations (“the Regulations”) published by Capital Market Authority (CMA) on 22 Dhul Hijja 1427H (corresponding to 12 January 2007) detailing requirements for all funds within the Kingdom of Saudi Arabia.
3.
SUBSCRIPTION / REDEMPTION (DEALING DAY & VALUATION DAY) Subscription / redemption requests will be accepted on all days on which the Tadawul is open. The value of the Fund’s portfolio is determined twice weekly on Monday and Wednesday (each being a “Valuation Day”). The net asset value of the Fund for the purpose of purchase or sale of units is determined by dividing the net value of assets (fair value of fund assets minus fund liabilities) by the total number of outstanding fund units on the relevant valuation day.
4.
BASIS OF PREPARATION
a)
Statement of compliance These financial statements have been presented in accordance with the requirements of accounting standard issued by the Saudi Organization of Certified Public Accountants (the “SOCPA”).
b)
Basis of measurement These financial statements have been prepared under the historical cost convention, using accrual basis of accounting and the going concern concept.
c)
Functional and presentation currency These financial statements are presented in Saudi Arabian Riyals (SAR), which is the functional currency of the Fund.
d)
Use of estimates and judgments In the ordinary course of business, the preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods affected. 5
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal) 5.
SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been adopted by the Fund and applied consistently throughout the period.
a)
Murabaha placements Murabaha placements are held to maturity investments placed with various banks and are stated at amortized cost, value determined on cost plus accrued profit basis.
b)
Cash and cash equivalents Cash and cash equivalents includes balances with banks and highly liquid investments with original maturity of three months or less.
c)
Revenue recognition Profit on Murabaha placements is recognized on time-proportion basis over the period of the contract based on the principal amounts outstanding and agreed rate of profit.
d)
Fund management, custodian & fund administration fees Fund management, custodian & fund administration fees are at rates agreed with the Fund Manager. These charges are calculated on each valuation day at an annual percentage of the Fund’s net assets value. These expenses are charged to the statement of income.
e)
Zakat / Income tax Zakat / Income tax is the obligation of the Unitholders and is not provided for in these financial statements.
f)
Subscription and redemption of units Units subscribed and redeemed are recorded at the net asset value per unit on the valuation day for which the subscription request and redemption applications are received.
g)
Net asset value attributable to unit holders The net asset attributable to each unit disclosed in the balance sheet is calculated by dividing the net assets to the unit holders by the number of units in issue at the period-end.
6.
FUND MANAGEMENT FEE, CUSTODIAN & FUND ADMINISTRATION FEES AND SUNDRY EXPENSES The Fund Manager charges to the Fund on each Valuation Day, management fee at a rate of 0.5% per annum of the Fund's net assets value. The Fund Manager also recovers from the Fund any other expenses incurred on behalf of the Fund including custodian and fund administration fee, audit fee, board compensation and other similar charges. These charges, in total, are not expected to exceed the limit as agreed with the Fund Manager.
6
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal) 7.
MURABAHA PLACEMENT As at 31 December 2014, it represents an amount of SAR 1 million, which was held as Murabaha deposit with a local bank at a profit rate of 0.4% per annum. The original maturity of the Murabaha deposit is 27 January 2015.
8.
UNIT TRANSACTIONS Transactions in units for the period are summarized as follows:
(Numbers) Units issued during the period Units redeemed during the period Units at end of the period
1,600,000 (1,233,203) 366,797
9.
TRANSACTIONS AND BALANCES WITH RELATED PARTIES
a)
The related parties of the Fund include Al Oula Geojit Capital Company, being the Fund Manager, the custodian and the administrator of the Fund and the other funds managed by the Fund Manager. In the ordinary course of its activities, the Fund transacts with the Fund Manager on terms approved by the Fund Manager. Related party transactions are governed by limits set by the regulations issued by Capital Market Authority (CMA). Related party transactions for the period are as under: Related party
Nature of transactions
Al Oula Geojit Capital Company (Fund Manager)
-
Fund management and administration fee Subscription of units (100,000 units)
For the period from 20 April 2014 to 31 December 2014 47,781 1,000,000
The above transactions resulted in following balances as at 31 December: Related party
2014
Al Oula Geojit Capital Company (Fund Manager)
11,800
As at 31 December 2014, 266,797 units of the Fund, having a value of SAR 2.66 million of the Fund held by Ishbelya Tower Real Estate Fund managed by the Al Oula Geojit Capital Company.
7
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amount in Saudi Arabian Riyals) 10.
CASH AND CASH EQUIVALENT Cash at bank – current accounts Murabaha placement – original maturity of less than three months
11.
2014 2,680,818 1,000,044 3,680,862
FINANCIAL RISK MANAGEMENT The Fund maintains position in financial instrument as dictated by its investment policy. The Fund is exposed to the following risks: Credit risk Credit risk is a risk that one party to a financial instrument may fail to discharge an obligation and cause the other party to incur a financial loss. The Fund is exposed to the credit risk on cash and cash equivalents which are maintained with the financial institutions with good credit rating. Thus the credit risk is not considered significant. Murabaha profit rate risk Murabaha profit rate risks are exposed to fluctuations in the prevailing profit rates on the Fund's financial position and cash flows. The Fund’s Murabaha placements are based on fixed rates and are not exposed to profit rate fluctuations Currency risk Currency risk is the risk that the value of a financial instrument may fluctuate due to a change in foreign exchange rates. The Fund is not subject to currency risks as all the assets and liabilities of the Fund are in local currency. Liquidity risk Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at an amount close to its fair value. The Fund Manager manages the liquid risk by monitoring on a regular basis that sufficient funds are available through managing Murabaha placements to meet any future commitments. At period end the current assets are significantly higher than its current liabilities and thus the Fund does not face any significant liquidity risk.
12.
FAIR VALUES OF FINANCIAL INSTRUMENTS Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable willing parties in an arm’s length transaction. Financial instruments comprise financial assets and financial liabilities. The Fund’s financial assets comprise of cash and cash equivalents and its financial liabilities comprise of expenses payable. The fair values of financial instruments are not materially different from their carrying values.
13.
APPROVAL OF THE FINANCIAL STATEMENTS These financial statements were approved by the Fund Board on 25 Jumada Al Awwal 1436 H corresponding to 16 March 2015.
8
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) BALANCE SHEET As at 31 December 2014 (Amounts in Saudi Arabian Riyal)
Note
2014
ASSETS Cash at bank - current accounts - Murabaha placements Other current assets TOTAL ASSETS
2,680,818 7
1,000,044 8,959 3,689,821
LIABILITIES Accrued expenses and other current liabilities TOTAL LIABILITIES NET ASSETS ATTRIBUTABLE TO UNITHOLDERS
38,827 38,827 3,650,994 8
Units in issue (numbers) Net assets attributable to each unit
366,797 9.95
The accompanying notes 1 through 13 form an integral part of these financial statements.
1
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) STATEMENT OF INCOME For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal)
INCOME Income from Murabaha placements
68,710 68,710
EXPENSES Management and administration fees Other expenses
(47,781) (63,030) (110,811) (42,101)
NET LOSS FOR THE PERIOD
The accompanying notes 1 through 13 form an integral part of these financial statements.
2
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) STATEMENT OF CASH FLOWS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal)
CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period
(42,101)
Changes in operating assets and liabilities: Other current assets Accrued expenses and other current liabilities Net cash used in operating activities
(8,959) 38,827 (12,233)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of units Payments against redemption of units Net cash generated from financing activities Net increase in cash and cash equivalents during the period Cash and cash equivalents at end of the period
16,000,000 (12,306,905) 3,693,095 3,680,862 3,680,862
The accompanying notes 1 through 13 form an integral part of these financial statements.
3
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) STATEMENT OF CHANGES IN NET ASSETS IN ATTRIBUTABLE TO UNITHOLDERS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal)
Net loss for the period
(42,101)
Changes from unit transactions Proceeds from issuance of units Payments against redemption of units Net change from unit transactions
16,000,000 (12,306,905) 3,693,095
Net assets attributable to Unitholders at end of the period
3,650,994
The accompanying notes 1 through 13 form an integral part of these financial statements.
4
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 1.
THE FUND AND ITS ACTIVITIES Al Oula Geojit Capital – Saudi Riyal Murabaha Fund (“the Fund”) is an open-ended mutual investment fund which is managed through an agreement between Al Oula Geojit Capital Company (“the Fund Manager”) and Investors (the Unitholders). The objective of the Fund is to generate income and liquidity consistent with short-term money market rates and to preserve the value of unit holders’ investment. All income is reinvested in the Fund and is reflected in the unit price. In dealing with the unit holders, the Fund Manager considers the Fund as an independent unit. Accordingly, the Fund Manager prepares separate financial statements for the Fund. The Fund commenced its operation on 20 Jumada Al Akhir 1435 H (corresponding to 20 April 2014) to meet the above mentioned objectives, accordingly these financial statements have been prepared for the period from 20 April 2014 (date of registration) to 31 December 2014 being the first accounting period and accordingly, no comparative information have been presented in these financial statements.
2.
REGULATING AUTHORITY The Fund is governed by the Investment Fund Regulations (“the Regulations”) published by Capital Market Authority (CMA) on 22 Dhul Hijja 1427H (corresponding to 12 January 2007) detailing requirements for all funds within the Kingdom of Saudi Arabia.
3.
SUBSCRIPTION / REDEMPTION (DEALING DAY & VALUATION DAY) Subscription / redemption requests will be accepted on all days on which the Tadawul is open. The value of the Fund’s portfolio is determined twice weekly on Monday and Wednesday (each being a “Valuation Day”). The net asset value of the Fund for the purpose of purchase or sale of units is determined by dividing the net value of assets (fair value of fund assets minus fund liabilities) by the total number of outstanding fund units on the relevant valuation day.
4.
BASIS OF PREPARATION
a)
Statement of compliance These financial statements have been presented in accordance with the requirements of accounting standard issued by the Saudi Organization of Certified Public Accountants (the “SOCPA”).
b)
Basis of measurement These financial statements have been prepared under the historical cost convention, using accrual basis of accounting and the going concern concept.
c)
Functional and presentation currency These financial statements are presented in Saudi Arabian Riyals (SAR), which is the functional currency of the Fund.
d)
Use of estimates and judgments In the ordinary course of business, the preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods affected. 5
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal) 5.
SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been adopted by the Fund and applied consistently throughout the period.
a)
Murabaha placements Murabaha placements are held to maturity investments placed with various banks and are stated at amortized cost, value determined on cost plus accrued profit basis.
b)
Cash and cash equivalents Cash and cash equivalents includes balances with banks and highly liquid investments with original maturity of three months or less.
c)
Revenue recognition Profit on Murabaha placements is recognized on time-proportion basis over the period of the contract based on the principal amounts outstanding and agreed rate of profit.
d)
Fund management, custodian & fund administration fees Fund management, custodian & fund administration fees are at rates agreed with the Fund Manager. These charges are calculated on each valuation day at an annual percentage of the Fund’s net assets value. These expenses are charged to the statement of income.
e)
Zakat / Income tax Zakat / Income tax is the obligation of the Unitholders and is not provided for in these financial statements.
f)
Subscription and redemption of units Units subscribed and redeemed are recorded at the net asset value per unit on the valuation day for which the subscription request and redemption applications are received.
g)
Net asset value attributable to unit holders The net asset attributable to each unit disclosed in the balance sheet is calculated by dividing the net assets to the unit holders by the number of units in issue at the period-end.
6.
FUND MANAGEMENT FEE, CUSTODIAN & FUND ADMINISTRATION FEES AND SUNDRY EXPENSES The Fund Manager charges to the Fund on each Valuation Day, management fee at a rate of 0.5% per annum of the Fund's net assets value. The Fund Manager also recovers from the Fund any other expenses incurred on behalf of the Fund including custodian and fund administration fee, audit fee, board compensation and other similar charges. These charges, in total, are not expected to exceed the limit as agreed with the Fund Manager.
6
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amounts in Saudi Arabian Riyal) 7.
MURABAHA PLACEMENT As at 31 December 2014, it represents an amount of SAR 1 million, which was held as Murabaha deposit with a local bank at a profit rate of 0.4% per annum. The original maturity of the Murabaha deposit is 27 January 2015.
8.
UNIT TRANSACTIONS Transactions in units for the period are summarized as follows:
(Numbers) Units issued during the period Units redeemed during the period Units at end of the period
1,600,000 (1,233,203) 366,797
9.
TRANSACTIONS AND BALANCES WITH RELATED PARTIES
a)
The related parties of the Fund include Al Oula Geojit Capital Company, being the Fund Manager, the custodian and the administrator of the Fund and the other funds managed by the Fund Manager. In the ordinary course of its activities, the Fund transacts with the Fund Manager on terms approved by the Fund Manager. Related party transactions are governed by limits set by the regulations issued by Capital Market Authority (CMA). Related party transactions for the period are as under: Related party
Nature of transactions
Al Oula Geojit Capital Company (Fund Manager)
-
Fund management and administration fee Subscription of units (100,000 units)
For the period from 20 April 2014 to 31 December 2014 47,781 1,000,000
The above transactions resulted in following balances as at 31 December: Related party
2014
Al Oula Geojit Capital Company (Fund Manager)
11,800
As at 31 December 2014, 266,797 units of the Fund, having a value of SAR 2.66 million of the Fund held by Ishbelya Tower Real Estate Fund managed by the Al Oula Geojit Capital Company.
7
ALOULA GEOJIT CAPITAL SAUDI RIYAL MURABAHA FUND (Managed by Al Oula Geojit Capital Company) NOTES TO THE FINANCIAL STATEMENTS For the period from 20 April 2014 (date of registration) to 31 December 2014 (Amount in Saudi Arabian Riyals) 10.
CASH AND CASH EQUIVALENT Cash at bank – current accounts Murabaha placement – original maturity of less than three months
11.
2014 2,680,818 1,000,044 3,680,862
FINANCIAL RISK MANAGEMENT The Fund maintains position in financial instrument as dictated by its investment policy. The Fund is exposed to the following risks: Credit risk Credit risk is a risk that one party to a financial instrument may fail to discharge an obligation and cause the other party to incur a financial loss. The Fund is exposed to the credit risk on cash and cash equivalents which are maintained with the financial institutions with good credit rating. Thus the credit risk is not considered significant. Murabaha profit rate risk Murabaha profit rate risks are exposed to fluctuations in the prevailing profit rates on the Fund's financial position and cash flows. The Fund’s Murabaha placements are based on fixed rates and are not exposed to profit rate fluctuations Currency risk Currency risk is the risk that the value of a financial instrument may fluctuate due to a change in foreign exchange rates. The Fund is not subject to currency risks as all the assets and liabilities of the Fund are in local currency. Liquidity risk Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at an amount close to its fair value. The Fund Manager manages the liquid risk by monitoring on a regular basis that sufficient funds are available through managing Murabaha placements to meet any future commitments. At period end the current assets are significantly higher than its current liabilities and thus the Fund does not face any significant liquidity risk.
12.
FAIR VALUES OF FINANCIAL INSTRUMENTS Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable willing parties in an arm’s length transaction. Financial instruments comprise financial assets and financial liabilities. The Fund’s financial assets comprise of cash and cash equivalents and its financial liabilities comprise of expenses payable. The fair values of financial instruments are not materially different from their carrying values.
13.
APPROVAL OF THE FINANCIAL STATEMENTS These financial statements were approved by the Fund Board on 25 Jumada Al Awwal 1436 H corresponding to 16 March 2015.
8
