Saudi Hollandi Bank - Al Yusr Morabaha & Sukuk Fund - Alawwal Invest
Al Yusr Morabaha and Sukuk Fund (Managed by Alawwal Invest Company, previously known as Saudi Hollandi Capital Company) UNAUDITED INTERIM FINANCIAL STATEMENTS 30 JUNE 2017
Al Yusr Morabaha and Sukuk Fund INTERIM BALANCE SHEET As at 30 June 2017 30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
6,345,113 201,000,000 405,633,750 431,250,923 7,901,507 1,027,740 ──────── 1,053,159,033 ────────
1,604,107 298,000,000 251,769,750 125,125,437 6,313,132 2,411,559 ──────── 685,223,985 ────────
9,090,915 469,000,000 251,907,250 4,036,549 4,737,764 27,597,160 ──────── 766,369,638 ────────
154,267 ──────── 154,267 ────────
76,518 ───────── 76,518 ────────
34,637 ──────── 34,637 ────────
NET ASSETS
1,053,004,766 ════════
685,147,467 ═════════
766,335,001 ════════
Units in issue
88,816,279 ════════
58,367,131 ═════════
66,219,566 ════════
Per unit value
11.8560 ════════
11.7386 ════════
11.5726 ════════
Note ASSETS Bank balance Morabaha placements Held to maturity investments Trading Investments Accrued income Receivables and prepayments
LIABILITY Accrued expenses
4 5 6
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 2
Al Yusr Morabaha and Sukuk Fund INTERIM STATEMENT OF OPERATIONS For the six-month period ended 30 June 2017
Note INVESTMENT INCOME Special commission income Trading income, net
7
EXPENSES Management fees Other expenses
8
NET INCOME FROM OPERATIONS
10
2017 (Unaudited) SR
2016 (Unaudited) SR
8,352,591 2,783,337 ───────── 11,135,928 ─────────
10,499,137 102,384 ───────── 10,601,521 ─────────
(2,192,786) (223,549) ───────── (2,416,335) ───────── 8,719,593 ═════════
(1,784,091) (207,297) ───────── (1,991,388) ───────── 8,610,133 ═════════
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 3
Al Yusr Morabaha and Sukuk Fund INTERIM STATEMENT OF CASH FLOWS For the six-month period ended 30 June 2017
OPERATING ACTIVITIES Net income from operations Adjustment for: Unrealized (gains) losses on trading investments
Changes in operating assets and liability: Morabaha placements Held to maturity investments Accrued income Trading investment Accrued expenses Receivables and prepayments Net cash used in operating activities FINANCING ACTIVITIES Bank overdraft Proceeds from sale of units Value of units redeemed Net cash from financing activities INCREASE IN BANK BALANCE Bank balance at the beginning of the period BANK BALANCE AT THE END OF THE PERIOD
2017 (Unaudited) SR
2016 (Unaudited) SR
8,719,593
8,610,133
(2,837,592) ───────── 5,882,001
603,488 ───────── 9,213,621
97,000,000 (153,864,000) (1,588,375) (303,287,894) 77,749 1,383,819 ───────── (354,396,700) ─────────
(127,000,000) 24,530,375 (2,485,102) 38,500,000 27,223 (26,305,205) ───────── (83,519,088) ─────────
478,354,662 (119,216,956) ───────── 359,137,706 ───────── 4,741,006
(112,650,408) 737,816,014 (532,555,603) ───────── 92,610,003 ───────── 9,090,915
1,604,107 ───────── 6,345,113 ═════════
───────── 9,090,915 ═════════
OPERATIONAL CASH FLOWS FROM SPECIAL COMMISSION INCOME Special commission income received
6,764,216 ═════════
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 4
8,014,035 ═════════
Al Yusr Morabaha and Sukuk Fund INTERIM STATEMENT OF CHANGES IN NET ASSETS For the six-month period ended 30 June 2017
NET ASSETS AT THE BEGINNING OF THE PERIOD CHANGES FROM OPERATIONS Net income from operations
CHANGES FROM UNIT TRANSACTIONS Proceeds from sale of units Value of units redeemed Net change from unit transactions NET ASSETS AT THE END OF THE PERIOD
2017 (Unaudited) SR
2016 (Unaudited) SR
685,147,467 ─────────
552,464,457 ─────────
8,719,593 ─────────
8,610,133 ─────────
478,354,662 (119,216,956) ───────── 359,137,706 ───────── 1,053,004,766 ═════════
737,816,014 (532,555,603) ───────── 205,260,411 ───────── 766,335,001 ═════════
UNIT TRANSACTIONS Transactions in units for the period ended 30 June are summarised as follows: 2017 (Unaudited) Units
2016 (Unaudited) Units
UNITS AT THE BEGINNING OF THE PERIOD
58,367,131 ─────────
48,308,163 ─────────
Units sold Units redeemed
40,545,795 (10,096,647) ───────── 30,449,148 ───────── 88,816,279 ═════════
64,276,114 (46,364,711) ───────── 17,911,403 ───────── 66,219,566 ═════════
Net increase in units UNITS AT THE END OF THE PERIOD
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 5
Al Yusr Morabaha and Sukuk Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS At 30 June 2017 1
GENERAL
Al Yusr Morabaha and Sukuk Fund (the “Fund”) is an open-ended fund created by an agreement between Alawwal Invest Company (the “Fund Manager”), a subsidiary of Alawwal Bank (the “Bank”) and investors in the Fund (the “Unit Holders”) and is designed for investors seeking steady capital appreciation with the preservation of capital and liquidity. The fund is governed by the terms and condition of its prospectus dated 01 March 2017. The assets of the Fund are invested in Morabaha transactions and funds together with and Sukuks in accordance with Sharia principles. All income is reinvested in the Fund and is reflected in the unit price. The Fund commenced its operations on 1 Jumad Awal 1424H (corresponding to 1 July 2003). The books and records are maintained in Saudi Riyals (SR). 2
REGULATING AUTHORITY
The Fund is governed by the Investment Fund Regulations (“the Regulations”) issued by the CMA on 3 Dhul Hijja 1427H (corresponding to 24 December 2006) and effective from 6 Safar 1438 (corresponding 6 November 2016) by the New Investment Fund Regulations (“Amended Regulations”), published by the Capital Market Authority on 16 Sha’aban 1437H (corresponding to 23 May 2016), detailing requirements for all funds within the Kingdom of Saudi Arabia. The enhanced requirements of Annexure 5(e) of the Amended Regulations are effective from 2017. 3
SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements have been prepared in accordance with the accounting standard on interim financial reporting issued by the Saudi Organization of Certified Public Accountants (SOCPA). The significant accounting policies used in the preparation of these interim financial statements are consistent with those used and disclosed in the annual financial statements for the year ended 31 December 2016 and are as follows: Accounting convention The interim financial statements are prepared under the historical cost convention. Investment valuation Investments that are bought with the intention of being held to maturity are carried at cost (adjusted for any premium or discount on an effective yield basis), less permanent decline in value. Trading investments are valued at their market price as at the balance sheet date. Unrealised gains and losses on the revaluation of investments and realised gains and losses on the disposal of investments are recognised in the interim statement of operations. Morabaha placements are carried at cost less provisions for any uncollectable amounts. Accrued special commission income as at the period end, is disclosed separately. Investment transactions Investment transactions are accounted for as of the trade date. Zakat and income tax Zakat and income tax are considered to be the obligation of the Unit Holders and are not provided in the accompanying interim financial statements. Revenue recognition Special commission income is recognised on an effective yield basis. Realised gains and losses on investments sold are determined on a weighted average cost basis. Trading income includes all gains and losses from changes in fair value and related interest income or expense and dividends from financial assets held for trading. Expenses Expenses are recognised based on the accrual method.
6
Al Yusr Morabaha and Sukuk Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 4
MORABAHA PLACEMENTS
Placements with the Bank Placements with other banks
5
30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
201,000,000 ──────── 201,000,000 ════════
298,000,000 ───────── 298,000,000 ════════
32,000,000 437,000,000 ──────── 469,000,000 ════════
30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
90,000,000 90,000,000 58,000,000 54,391,250 33,000,000 28,000,000 20,000,000 15,000,000 13,000,000 4,242,500 ──────── 405,633,750 ════════
33,000,000 20,000,000 28,000,000 54,391,250 33,000,000 28,000,000 20,000,000 15,000,000 13,000,000 4,378,500 3,000,000 ──────── 251,769,750 ════════
33,000,000 20,000,000 28,000,000 54,391,250 33,000,000 28,000,000 20,000,000 15,000,000 13,000,000 4,516,000 3,000,000 ──────── 251,907,250 ════════
HELD TO MATURITY INVESTMENTS
Debt Securities Riyadh Bank – Sukuk National Commercial Bank Sukuk Almarai Sukuk 4 Al Hilal Bank Sukuk Ordeico Sukuk Saudi British Bank – Sukuk Najran Cement – Sukuk Alawwal Bank Sukuk Advance Sukuk Arabian Aramco Total Services Company-Sukuk Saudi Electricity Company-Sukuk – III
6
TRADING INVESTMENTS Cost SR
Mutual funds 30 June 2017 (Unaudited) International Trade Finance Fund (Sunbullah SAR) – Samba Capital Falcom SAR Morabaha Fund Itqan Fund for Murabahat and Sukuk
31 December 2016 (Audited) International Trade Finance Fund (Sunbullah SAR) – Samba Capital Falcom SAR Morabaha Fund Itqan Fund for Murabahat and Sukuk
30 June 2016 (Unaudited) Itqan Fund for Murabahat and Sukuk
7
Market value SR
225,000,000 196,000,000 7,300,000 ═════════ 428,300,000 ═════════
226,724,171 197,031,958 7,494,794 ═════════ 431,250,923 ═════════
110,000,000 11,000,000 4,000,000 ═════════ 125,000,000 ═════════
110,011,163 11,012,965 4,101,309 ═════════ 125,125,437 ═════════
4,000,000 ═════════
4,036,549 ═════════
Al Yusr Morabaha and Sukuk Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 7
TRADING INCOME, NET For the six-month period ended 30 June 2016 2017 (Unaudited) (Unaudited) SR SR
Unrealised gains (losses) Realised (losses) gains
8
2,837,592 (54,255) ───────── 2,783,337 ═════════
(603,488) 705,872 ───────── 102,384 ═════════
TRANSACTIONS WITH RELATED PARTIES
The Fund is managed and administered by the Fund Manager. For this service the Fund pays a management fee calculated on every valuation day, at an annual rate of 0.5% of the Fund’s daily net assets. Other expenses paid by the Company on behalf of the Fund are charged to the Fund. In the normal course of business, the Fund places Morabaha investments in the Bank and borrows from the Bank at prevailing market rates. The Bank acts as the Fund’s banker and the Fund Manager acts as the custodian to the Fund’s investment. During the period, the Fund has placed special commission bearing Morabaha placements with the Bank. 9
LAST VALUATION DAY
The last valuation day of the period was 30 June 2017 (2016: 30 June 2016). 10
RESULTS OF OPERATIONS
The results for the interim period may not be indicative of the annual operating results.
8
Al Yusr Morabaha and Sukuk Fund INTERIM BALANCE SHEET As at 30 June 2017 30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
6,345,113 201,000,000 405,633,750 431,250,923 7,901,507 1,027,740 ──────── 1,053,159,033 ────────
1,604,107 298,000,000 251,769,750 125,125,437 6,313,132 2,411,559 ──────── 685,223,985 ────────
9,090,915 469,000,000 251,907,250 4,036,549 4,737,764 27,597,160 ──────── 766,369,638 ────────
154,267 ──────── 154,267 ────────
76,518 ───────── 76,518 ────────
34,637 ──────── 34,637 ────────
NET ASSETS
1,053,004,766 ════════
685,147,467 ═════════
766,335,001 ════════
Units in issue
88,816,279 ════════
58,367,131 ═════════
66,219,566 ════════
Per unit value
11.8560 ════════
11.7386 ════════
11.5726 ════════
Note ASSETS Bank balance Morabaha placements Held to maturity investments Trading Investments Accrued income Receivables and prepayments
LIABILITY Accrued expenses
4 5 6
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 2
Al Yusr Morabaha and Sukuk Fund INTERIM STATEMENT OF OPERATIONS For the six-month period ended 30 June 2017
Note INVESTMENT INCOME Special commission income Trading income, net
7
EXPENSES Management fees Other expenses
8
NET INCOME FROM OPERATIONS
10
2017 (Unaudited) SR
2016 (Unaudited) SR
8,352,591 2,783,337 ───────── 11,135,928 ─────────
10,499,137 102,384 ───────── 10,601,521 ─────────
(2,192,786) (223,549) ───────── (2,416,335) ───────── 8,719,593 ═════════
(1,784,091) (207,297) ───────── (1,991,388) ───────── 8,610,133 ═════════
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 3
Al Yusr Morabaha and Sukuk Fund INTERIM STATEMENT OF CASH FLOWS For the six-month period ended 30 June 2017
OPERATING ACTIVITIES Net income from operations Adjustment for: Unrealized (gains) losses on trading investments
Changes in operating assets and liability: Morabaha placements Held to maturity investments Accrued income Trading investment Accrued expenses Receivables and prepayments Net cash used in operating activities FINANCING ACTIVITIES Bank overdraft Proceeds from sale of units Value of units redeemed Net cash from financing activities INCREASE IN BANK BALANCE Bank balance at the beginning of the period BANK BALANCE AT THE END OF THE PERIOD
2017 (Unaudited) SR
2016 (Unaudited) SR
8,719,593
8,610,133
(2,837,592) ───────── 5,882,001
603,488 ───────── 9,213,621
97,000,000 (153,864,000) (1,588,375) (303,287,894) 77,749 1,383,819 ───────── (354,396,700) ─────────
(127,000,000) 24,530,375 (2,485,102) 38,500,000 27,223 (26,305,205) ───────── (83,519,088) ─────────
478,354,662 (119,216,956) ───────── 359,137,706 ───────── 4,741,006
(112,650,408) 737,816,014 (532,555,603) ───────── 92,610,003 ───────── 9,090,915
1,604,107 ───────── 6,345,113 ═════════
───────── 9,090,915 ═════════
OPERATIONAL CASH FLOWS FROM SPECIAL COMMISSION INCOME Special commission income received
6,764,216 ═════════
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 4
8,014,035 ═════════
Al Yusr Morabaha and Sukuk Fund INTERIM STATEMENT OF CHANGES IN NET ASSETS For the six-month period ended 30 June 2017
NET ASSETS AT THE BEGINNING OF THE PERIOD CHANGES FROM OPERATIONS Net income from operations
CHANGES FROM UNIT TRANSACTIONS Proceeds from sale of units Value of units redeemed Net change from unit transactions NET ASSETS AT THE END OF THE PERIOD
2017 (Unaudited) SR
2016 (Unaudited) SR
685,147,467 ─────────
552,464,457 ─────────
8,719,593 ─────────
8,610,133 ─────────
478,354,662 (119,216,956) ───────── 359,137,706 ───────── 1,053,004,766 ═════════
737,816,014 (532,555,603) ───────── 205,260,411 ───────── 766,335,001 ═════════
UNIT TRANSACTIONS Transactions in units for the period ended 30 June are summarised as follows: 2017 (Unaudited) Units
2016 (Unaudited) Units
UNITS AT THE BEGINNING OF THE PERIOD
58,367,131 ─────────
48,308,163 ─────────
Units sold Units redeemed
40,545,795 (10,096,647) ───────── 30,449,148 ───────── 88,816,279 ═════════
64,276,114 (46,364,711) ───────── 17,911,403 ───────── 66,219,566 ═════════
Net increase in units UNITS AT THE END OF THE PERIOD
The accompanying notes 1 to 10 form an integral part of these interim financial statements. 5
Al Yusr Morabaha and Sukuk Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS At 30 June 2017 1
GENERAL
Al Yusr Morabaha and Sukuk Fund (the “Fund”) is an open-ended fund created by an agreement between Alawwal Invest Company (the “Fund Manager”), a subsidiary of Alawwal Bank (the “Bank”) and investors in the Fund (the “Unit Holders”) and is designed for investors seeking steady capital appreciation with the preservation of capital and liquidity. The fund is governed by the terms and condition of its prospectus dated 01 March 2017. The assets of the Fund are invested in Morabaha transactions and funds together with and Sukuks in accordance with Sharia principles. All income is reinvested in the Fund and is reflected in the unit price. The Fund commenced its operations on 1 Jumad Awal 1424H (corresponding to 1 July 2003). The books and records are maintained in Saudi Riyals (SR). 2
REGULATING AUTHORITY
The Fund is governed by the Investment Fund Regulations (“the Regulations”) issued by the CMA on 3 Dhul Hijja 1427H (corresponding to 24 December 2006) and effective from 6 Safar 1438 (corresponding 6 November 2016) by the New Investment Fund Regulations (“Amended Regulations”), published by the Capital Market Authority on 16 Sha’aban 1437H (corresponding to 23 May 2016), detailing requirements for all funds within the Kingdom of Saudi Arabia. The enhanced requirements of Annexure 5(e) of the Amended Regulations are effective from 2017. 3
SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements have been prepared in accordance with the accounting standard on interim financial reporting issued by the Saudi Organization of Certified Public Accountants (SOCPA). The significant accounting policies used in the preparation of these interim financial statements are consistent with those used and disclosed in the annual financial statements for the year ended 31 December 2016 and are as follows: Accounting convention The interim financial statements are prepared under the historical cost convention. Investment valuation Investments that are bought with the intention of being held to maturity are carried at cost (adjusted for any premium or discount on an effective yield basis), less permanent decline in value. Trading investments are valued at their market price as at the balance sheet date. Unrealised gains and losses on the revaluation of investments and realised gains and losses on the disposal of investments are recognised in the interim statement of operations. Morabaha placements are carried at cost less provisions for any uncollectable amounts. Accrued special commission income as at the period end, is disclosed separately. Investment transactions Investment transactions are accounted for as of the trade date. Zakat and income tax Zakat and income tax are considered to be the obligation of the Unit Holders and are not provided in the accompanying interim financial statements. Revenue recognition Special commission income is recognised on an effective yield basis. Realised gains and losses on investments sold are determined on a weighted average cost basis. Trading income includes all gains and losses from changes in fair value and related interest income or expense and dividends from financial assets held for trading. Expenses Expenses are recognised based on the accrual method.
6
Al Yusr Morabaha and Sukuk Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 4
MORABAHA PLACEMENTS
Placements with the Bank Placements with other banks
5
30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
201,000,000 ──────── 201,000,000 ════════
298,000,000 ───────── 298,000,000 ════════
32,000,000 437,000,000 ──────── 469,000,000 ════════
30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
90,000,000 90,000,000 58,000,000 54,391,250 33,000,000 28,000,000 20,000,000 15,000,000 13,000,000 4,242,500 ──────── 405,633,750 ════════
33,000,000 20,000,000 28,000,000 54,391,250 33,000,000 28,000,000 20,000,000 15,000,000 13,000,000 4,378,500 3,000,000 ──────── 251,769,750 ════════
33,000,000 20,000,000 28,000,000 54,391,250 33,000,000 28,000,000 20,000,000 15,000,000 13,000,000 4,516,000 3,000,000 ──────── 251,907,250 ════════
HELD TO MATURITY INVESTMENTS
Debt Securities Riyadh Bank – Sukuk National Commercial Bank Sukuk Almarai Sukuk 4 Al Hilal Bank Sukuk Ordeico Sukuk Saudi British Bank – Sukuk Najran Cement – Sukuk Alawwal Bank Sukuk Advance Sukuk Arabian Aramco Total Services Company-Sukuk Saudi Electricity Company-Sukuk – III
6
TRADING INVESTMENTS Cost SR
Mutual funds 30 June 2017 (Unaudited) International Trade Finance Fund (Sunbullah SAR) – Samba Capital Falcom SAR Morabaha Fund Itqan Fund for Murabahat and Sukuk
31 December 2016 (Audited) International Trade Finance Fund (Sunbullah SAR) – Samba Capital Falcom SAR Morabaha Fund Itqan Fund for Murabahat and Sukuk
30 June 2016 (Unaudited) Itqan Fund for Murabahat and Sukuk
7
Market value SR
225,000,000 196,000,000 7,300,000 ═════════ 428,300,000 ═════════
226,724,171 197,031,958 7,494,794 ═════════ 431,250,923 ═════════
110,000,000 11,000,000 4,000,000 ═════════ 125,000,000 ═════════
110,011,163 11,012,965 4,101,309 ═════════ 125,125,437 ═════════
4,000,000 ═════════
4,036,549 ═════════
Al Yusr Morabaha and Sukuk Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 7
TRADING INCOME, NET For the six-month period ended 30 June 2016 2017 (Unaudited) (Unaudited) SR SR
Unrealised gains (losses) Realised (losses) gains
8
2,837,592 (54,255) ───────── 2,783,337 ═════════
(603,488) 705,872 ───────── 102,384 ═════════
TRANSACTIONS WITH RELATED PARTIES
The Fund is managed and administered by the Fund Manager. For this service the Fund pays a management fee calculated on every valuation day, at an annual rate of 0.5% of the Fund’s daily net assets. Other expenses paid by the Company on behalf of the Fund are charged to the Fund. In the normal course of business, the Fund places Morabaha investments in the Bank and borrows from the Bank at prevailing market rates. The Bank acts as the Fund’s banker and the Fund Manager acts as the custodian to the Fund’s investment. During the period, the Fund has placed special commission bearing Morabaha placements with the Bank. 9
LAST VALUATION DAY
The last valuation day of the period was 30 June 2017 (2016: 30 June 2016). 10
RESULTS OF OPERATIONS
The results for the interim period may not be indicative of the annual operating results.
8
