Saudi Hollandi Bank - US Equity Fund - Alawwal Invest
Al Yusr Saudi Equity Fund (Managed by Alawwal Invest Company, previously known as Saudi Hollandi Capital Company) UNAUDITED INTERIM FINANCIAL STATEMENTS 30 JUNE 2017
Al Yusr Saudi Equity Fund INTERIM BALANCE SHEET As at 30 June 2017
Note ASSETS Bank balance Trading investments Dividend receivable
30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
16,427,640 57,975,897 ───────── 74,403,537
65,802,866 108,235,591 ───────── 174,038,457
52,336,126 124,598,416 240,547 ───────── 177,175,089
66,510 ───────── 74,337,027 ─────────
91,245 ───────── 173,947,212 ─────────
41,019 ───────── 177,134,070 ─────────
Units in issue
1,017,195 ═════════
2,359,184 ═════════
2,422,825 ═════════
Per unit value
73.0804 ═════════
73.7320 ═════════
73.1106 ═════════
LIABILITY Accrued expenses NET ASSETS
4
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 2
Al Yusr Saudi Equity Fund INTERIM STATEMENT OF OPERATIONS For the six months period ended 30 June 2017 2017 (Unaudited) SR
2016 (Unaudited) SR
5
(1,223,293) ─────────
(2,747,309) ─────────
EXPENSES Management fees Other expenses
6
NET LOSS FROM OPERATIONS
8
(1,193,808) (126,850) ───────── (1,320,658) ───────── (2,543,951) ═════════
(1,661,654) (124,234) ───────── (1,785,888) ───────── (4,533,197) ═════════
Note
INVESTMENT LOSS Trading loss, net
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 3
Al Yusr Saudi Equity Fund INTERIM STATEMENT OF CASH FLOWS For the six months period ended 30 June 2017
OPERATING ACTIVITIES Net loss from operations Adjustment for: Unrealised gains on trading investments
Changes in operating assets and liability: Trading investments Dividend receivable IPO advance Accrued expenses Net cash from operating activities FINANCING ACTIVITIES Proceeds from sale of units Value of units redeemed Net cash used in financing activities (DECREASE) 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
(2,543,951)
(4,533,197)
(442,615) ───────── (2,986,566)
(25,679,750) ───────── (30,212,947)
50,702,309 (24,735) ───────── 47,691,008 ─────────
58,007,830 (240,547) 2,020,050 41,019 ───────── 29,615,405 ─────────
(97,066,234) ───────── (97,066,234) ───────── (49,375,226)
1,401,455 (7,486,828) ───────── (6,085,373) ───────── 23,530,032
65,802,866 ───────── 16,427,640 ═════════
28,806,094 ───────── 52,336,126 ═════════
1,902,247 ═════════
3,401,403 ═════════
OPERATIONAL CASH FLOWS FROM DIVIDEND INCOME Dividend income received
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 4
Al Yusr Saudi Equity Fund INTERIM STATEMENT OF CHANGES IN NET ASSETS For the six months period ended 30 June 2017 2017 (Unaudited) SR NET ASSETS AT THE BEGINNING OF THE PERIOD
CHANGES FROM OPERATIONS Net loss 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
2016 (Unaudited) SR
173,947,212 ─────────
187,752,640 ─────────
(2,543,951) ─────────
(4,533,197) ─────────
(97,066,234) ───────── (97,066,234) ───────── 74,337,027 ═════════
1,401,455 (7,486,828) ───────── (6,085,373) ───────── 177,134,070 ═════════
UNIT TRANSACTIONS Transactions in units for the period ended 30 June are summarized as follows: 2017 (Unaudited) Units
2016 (Unaudited) Units
UNITS AT THE BEGINNING OF THE PERIOD
2,359,184 ─────────
2,505,949 ─────────
Units sold Units redeemed
(1,341,989) ───────── (1,341,989) ───────── 1,017,195 ═════════
19,730 (102,854) ───────── (83,124) ───────── 2,422,825 ═════════
Net decrease in units UNITS AT THE END OF THE PERIOD
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 5
Al Yusr Saudi Equity Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS At 30 June 2017 1
GENERAL
Al Yusr Saudi Equity Fund (the “Fund”) is an open ended fund created by an agreement between Alawwal Invest (the “Fund Manager”), a subsidiary of Alawwal Bank (the “Bank”) and investors in the Fund (the “Unit Holders”) and is designed for investors seeking long term capital appreciation through investments in Sharia compliant publicly traded Saudi companies and short term Morabaha deposits and funds. The fund is governed by the terms and condition of its prospectus dated 1 March 2017. The assets of the Fund are invested in equities of Sharia compliant publicly traded Saudi companies and may invest in either Morabaha Deposits or Morabaha Funds. All income is reinvested in the Fund and is reflected in the unit price. The Fund commenced its operations on 23 Safar 1416H (corresponding to 22 July 1995). The books and records of the Fund 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 modified to include the measurement at fair value of trading investments. Investment valuation Trading investments are valued at market prices. Unrealised gains and losses on the revaluation of equity investments and realised gains and losses on the disposal of investments are recognised in the interim statement of operations. 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 Dividend income is recorded when the right to receive dividends are established. Realised gains and losses on investments sold are determined on an average cost basis. Trading income includes all gains and losses from changes in fair value and related dividends from trading investments. Expenses Expenses are recognised based on the accrual method. Foreign currencies Transactions in foreign currencies are translated into Saudi Riyals at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates of exchange ruling at that date. Resulting exchange gains and losses are taken to the interim statement of operations.
6
Al Yusr Saudi Equity Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 4
TRADING INVESTMENTS
A summary of the investment portfolio on the last valuation date of the period is set out below: Cost SR
Sectors 30 June 2017 (Unaudited) Materials Banks Energy Telecommunication Services Commercial & Professional Svc Food & Beverages Transportation Consumer Services Capital Goods Food & Staples Retailing Consumer Durables & Apparel Retailing Health Care Equipment & Svc Real Estate Development Total 31 December 2016 (Audited) Retail Cement Agriculture and Food Industries Petrochemical and industrial investment Banks and financial services Telecommunication Transport Multi – Investment Sector Building and construction Sector Real Estate Development Industrial Investment Sector Hotel & Tourism Sector Total 30 June 2016 (Unaudited) Petrochemical and industrial investment Banks and financial services Retail Agriculture & Food Industries Sector Cement Telecommunication Building & Construction Industrial Investment Sector Real Estate Development Other Total
7
Market value SR
34,683,551 13,157,632 4,899,131 4,102,721 4,016,588 2,230,096 1,920,200 1,399,703 1,317,753 1,193,153 1,980,067 813,205 553,764 297,900 ────────── 72,565,464 ══════════
22,760,369 12,287,940 5,043,600 3,622,664 3,384,959 2,867,500 1,710,760 1,345,584 1,338,936 1,031,945 950,250 715,190 620,250 295,950 ────────── 57,975,897 ══════════
23,491,847 28,898,306 15,365,825 14,528,298 15,212,793 7,964,501 3,363,124 2,888,389 3,452,424 2,230,351 4,349,654 2,127,255 ────────── 123,872,767 ══════════
20,696,428 17,783,968 15,850,836 15,595,743 12,858,750 7,947,912 3,903,300 3,126,900 2,724,022 2,674,477 2,542,154 2,531,101 ────────── 108,235,591 ══════════
32,542,055 30,013,699 23,128,313 21,026,650 27,430,662 5,838,932 8,662,734 5,144,354 3,099,877 6,967,829 ────────── 163,855,105 ══════════
25,311,480 22,281,330 18,279,086 17,908,984 17,093,021 5,405,670 5,310,128 3,435,097 3,273,280 6,300,340 ────────── 124,598,416 ══════════
Al Yusr Saudi Equity Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 5
TRADING LOSS, NET Six months period ended 30 June 2017 2016 (Unaudited) (Unaudited) SR SR
Dividend income Unrealised gains Realised losses
6
1,902,247 442,615 (3,568,155) ───────── (1,223,293) ═════════
3,641,950 25,679,750 (32,069,009) ───────── (2,747,309) ═════════
TRANSACTIONS WITH RELATED PARTIES
The Fund is managed and administered by the Fund Manager. For these services the Fund pays a management fee calculated on every valuation day at an annual rate of 1.95% of the Fund’s daily net assets. In addition the Fund Manager charges a subscription fee of 1.5% on gross subscriptions and a redemption fee of 0.5% on redemptions within a month of subscribing, which is reinvested in the Fund. 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 deposits and borrows from or to 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. 7
LAST VALUATION DAY
The last valuation day of the period was 30 June 2017 (2016: 30 June 2016). 8
RESULTS OF OPERATIONS
The results for the interim period may not be indicative of the annual operating results.
8
Al Yusr Saudi Equity Fund INTERIM BALANCE SHEET As at 30 June 2017
Note ASSETS Bank balance Trading investments Dividend receivable
30 June 2017 (Unaudited) SR
31 December 2016 (Audited) SR
30 June 2016 (Unaudited) SR
16,427,640 57,975,897 ───────── 74,403,537
65,802,866 108,235,591 ───────── 174,038,457
52,336,126 124,598,416 240,547 ───────── 177,175,089
66,510 ───────── 74,337,027 ─────────
91,245 ───────── 173,947,212 ─────────
41,019 ───────── 177,134,070 ─────────
Units in issue
1,017,195 ═════════
2,359,184 ═════════
2,422,825 ═════════
Per unit value
73.0804 ═════════
73.7320 ═════════
73.1106 ═════════
LIABILITY Accrued expenses NET ASSETS
4
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 2
Al Yusr Saudi Equity Fund INTERIM STATEMENT OF OPERATIONS For the six months period ended 30 June 2017 2017 (Unaudited) SR
2016 (Unaudited) SR
5
(1,223,293) ─────────
(2,747,309) ─────────
EXPENSES Management fees Other expenses
6
NET LOSS FROM OPERATIONS
8
(1,193,808) (126,850) ───────── (1,320,658) ───────── (2,543,951) ═════════
(1,661,654) (124,234) ───────── (1,785,888) ───────── (4,533,197) ═════════
Note
INVESTMENT LOSS Trading loss, net
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 3
Al Yusr Saudi Equity Fund INTERIM STATEMENT OF CASH FLOWS For the six months period ended 30 June 2017
OPERATING ACTIVITIES Net loss from operations Adjustment for: Unrealised gains on trading investments
Changes in operating assets and liability: Trading investments Dividend receivable IPO advance Accrued expenses Net cash from operating activities FINANCING ACTIVITIES Proceeds from sale of units Value of units redeemed Net cash used in financing activities (DECREASE) 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
(2,543,951)
(4,533,197)
(442,615) ───────── (2,986,566)
(25,679,750) ───────── (30,212,947)
50,702,309 (24,735) ───────── 47,691,008 ─────────
58,007,830 (240,547) 2,020,050 41,019 ───────── 29,615,405 ─────────
(97,066,234) ───────── (97,066,234) ───────── (49,375,226)
1,401,455 (7,486,828) ───────── (6,085,373) ───────── 23,530,032
65,802,866 ───────── 16,427,640 ═════════
28,806,094 ───────── 52,336,126 ═════════
1,902,247 ═════════
3,401,403 ═════════
OPERATIONAL CASH FLOWS FROM DIVIDEND INCOME Dividend income received
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 4
Al Yusr Saudi Equity Fund INTERIM STATEMENT OF CHANGES IN NET ASSETS For the six months period ended 30 June 2017 2017 (Unaudited) SR NET ASSETS AT THE BEGINNING OF THE PERIOD
CHANGES FROM OPERATIONS Net loss 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
2016 (Unaudited) SR
173,947,212 ─────────
187,752,640 ─────────
(2,543,951) ─────────
(4,533,197) ─────────
(97,066,234) ───────── (97,066,234) ───────── 74,337,027 ═════════
1,401,455 (7,486,828) ───────── (6,085,373) ───────── 177,134,070 ═════════
UNIT TRANSACTIONS Transactions in units for the period ended 30 June are summarized as follows: 2017 (Unaudited) Units
2016 (Unaudited) Units
UNITS AT THE BEGINNING OF THE PERIOD
2,359,184 ─────────
2,505,949 ─────────
Units sold Units redeemed
(1,341,989) ───────── (1,341,989) ───────── 1,017,195 ═════════
19,730 (102,854) ───────── (83,124) ───────── 2,422,825 ═════════
Net decrease in units UNITS AT THE END OF THE PERIOD
The accompanying notes 1 to 8 form an integral part of these interim financial statements. 5
Al Yusr Saudi Equity Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS At 30 June 2017 1
GENERAL
Al Yusr Saudi Equity Fund (the “Fund”) is an open ended fund created by an agreement between Alawwal Invest (the “Fund Manager”), a subsidiary of Alawwal Bank (the “Bank”) and investors in the Fund (the “Unit Holders”) and is designed for investors seeking long term capital appreciation through investments in Sharia compliant publicly traded Saudi companies and short term Morabaha deposits and funds. The fund is governed by the terms and condition of its prospectus dated 1 March 2017. The assets of the Fund are invested in equities of Sharia compliant publicly traded Saudi companies and may invest in either Morabaha Deposits or Morabaha Funds. All income is reinvested in the Fund and is reflected in the unit price. The Fund commenced its operations on 23 Safar 1416H (corresponding to 22 July 1995). The books and records of the Fund 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 modified to include the measurement at fair value of trading investments. Investment valuation Trading investments are valued at market prices. Unrealised gains and losses on the revaluation of equity investments and realised gains and losses on the disposal of investments are recognised in the interim statement of operations. 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 Dividend income is recorded when the right to receive dividends are established. Realised gains and losses on investments sold are determined on an average cost basis. Trading income includes all gains and losses from changes in fair value and related dividends from trading investments. Expenses Expenses are recognised based on the accrual method. Foreign currencies Transactions in foreign currencies are translated into Saudi Riyals at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates of exchange ruling at that date. Resulting exchange gains and losses are taken to the interim statement of operations.
6
Al Yusr Saudi Equity Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 4
TRADING INVESTMENTS
A summary of the investment portfolio on the last valuation date of the period is set out below: Cost SR
Sectors 30 June 2017 (Unaudited) Materials Banks Energy Telecommunication Services Commercial & Professional Svc Food & Beverages Transportation Consumer Services Capital Goods Food & Staples Retailing Consumer Durables & Apparel Retailing Health Care Equipment & Svc Real Estate Development Total 31 December 2016 (Audited) Retail Cement Agriculture and Food Industries Petrochemical and industrial investment Banks and financial services Telecommunication Transport Multi – Investment Sector Building and construction Sector Real Estate Development Industrial Investment Sector Hotel & Tourism Sector Total 30 June 2016 (Unaudited) Petrochemical and industrial investment Banks and financial services Retail Agriculture & Food Industries Sector Cement Telecommunication Building & Construction Industrial Investment Sector Real Estate Development Other Total
7
Market value SR
34,683,551 13,157,632 4,899,131 4,102,721 4,016,588 2,230,096 1,920,200 1,399,703 1,317,753 1,193,153 1,980,067 813,205 553,764 297,900 ────────── 72,565,464 ══════════
22,760,369 12,287,940 5,043,600 3,622,664 3,384,959 2,867,500 1,710,760 1,345,584 1,338,936 1,031,945 950,250 715,190 620,250 295,950 ────────── 57,975,897 ══════════
23,491,847 28,898,306 15,365,825 14,528,298 15,212,793 7,964,501 3,363,124 2,888,389 3,452,424 2,230,351 4,349,654 2,127,255 ────────── 123,872,767 ══════════
20,696,428 17,783,968 15,850,836 15,595,743 12,858,750 7,947,912 3,903,300 3,126,900 2,724,022 2,674,477 2,542,154 2,531,101 ────────── 108,235,591 ══════════
32,542,055 30,013,699 23,128,313 21,026,650 27,430,662 5,838,932 8,662,734 5,144,354 3,099,877 6,967,829 ────────── 163,855,105 ══════════
25,311,480 22,281,330 18,279,086 17,908,984 17,093,021 5,405,670 5,310,128 3,435,097 3,273,280 6,300,340 ────────── 124,598,416 ══════════
Al Yusr Saudi Equity Fund NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 30 June 2017 5
TRADING LOSS, NET Six months period ended 30 June 2017 2016 (Unaudited) (Unaudited) SR SR
Dividend income Unrealised gains Realised losses
6
1,902,247 442,615 (3,568,155) ───────── (1,223,293) ═════════
3,641,950 25,679,750 (32,069,009) ───────── (2,747,309) ═════════
TRANSACTIONS WITH RELATED PARTIES
The Fund is managed and administered by the Fund Manager. For these services the Fund pays a management fee calculated on every valuation day at an annual rate of 1.95% of the Fund’s daily net assets. In addition the Fund Manager charges a subscription fee of 1.5% on gross subscriptions and a redemption fee of 0.5% on redemptions within a month of subscribing, which is reinvested in the Fund. 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 deposits and borrows from or to 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. 7
LAST VALUATION DAY
The last valuation day of the period was 30 June 2017 (2016: 30 June 2016). 8
RESULTS OF OPERATIONS
The results for the interim period may not be indicative of the annual operating results.
8
