Al-Mubarak IPO Fund (Managed by Arab National Investment Company)

Transcription

1 FINANCIAL STATEMENTS For the period from 8 May 2016 to 31 December 2017

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4 BALANCE SHEET As at 31 December 2017 Note 2017 ASSETS Bank balances 4,358,742 Trading investments 4 50,359,460 Dividend Receivable 54,750 54,772,952 LIABILITY Payables 283,051 UNIT HOLDERS FUNDS Net assets 54,489,901 Units in issue 6,092,001 Per unit value 8.94 The accompanying notes 1 to 10 form part of these financial statements. 3

5 STATEMENT OF OPERATIONS For the period from 8 May 2016 to 31 December 2017 For the period from 8 May 2016 to 31 December 2017 Notes LOSS Trading loss, net 5 (6,005,098) EXPENSES Management fees 6 2,219,180 Other fees 6 187,377 2,406,557 NET LOSS FROM OPERATIONS (8,411,655) The accompanying notes 1 to 10 form part of these financial statements. 4

6 STATEMENT OF CASH FLOWS For the period from 8 May 2016 to 31 December 2017 For the period from 8 May 2016 to 31 December 2017 OPERATING ACTIVITIES Net loss from operations (8,411,655) Adjustment for: Movement in unrealised losses on trading investments 3,341,798 (5,069,857) Changes in operating assets and liabilities: Trading investments, net (53,701,258) Dividend Receivable (54,750) Payables 283,051 Net cash used in operating activities (58,542,814) FINANCING ACTIVITIES Proceeds from units sold 115,962,484 Value of units redeemed (53,060,928) Net cash from financing activities 62,901,556 INCREASE IN BANK BALANCES 4,358,742 Bank balances at the beginning of the period - BANK BALANCES AT THE END OF THE PERIOD 4,358,742 Cash flows from dividends Dividends received 3,294,260 The accompanying notes 1 to 10 form part of these financial statements. 5

7 STATEMENT OF CHANGES IN NET ASSETS For the period from 8 May 2016 to 31 December 2017 For the period from 8 May 2016 to 31 December 2017 NET ASSET VALUE AT THE BEGINNING OF THE PERIOD - NET LOSS FROM OPERATIONS (8,411,655) CHANGES FROM UNIT TRANSACTIONS Proceeds from units sold 115,962,484 Value of units redeemed (53,060,928) Net change from unit transactions 62,901,556 NET ASSET VALUE AT THE END OF THE PERIOD 54,489,901 UNIT TRANSACTIONS Transactions in units for the period from For the period from 8 May 2016 to 31 December 2017 are summarised as follows: For the period from 8 May 2016 to 31 December 2017 Units UNITS AT THE BEGINNING OF THE PERIOD - Units sold 11,621,670 Units redeemed (5,529,669) Net increase in units 6,092,001 UNITS AT THE END OF THE PERIOD 6,092,001 The accompanying notes 1 to 10 form part of these financial statements. 6

8 NOTES TO THE FINANCIAL STATEMENTS At 31 December GENERAL Al-Mubarak IPO Fund (the Fund ) is an open ended investment fund created by an agreement between Arab National Investment Company (the Fund Manager ) and investors ( unit holders ). The investment objective of the fund is long-term growth of capital through participation and investment primarily in initial public offerings in the Saudi stock market as well as initial rights and the remaining subscriptions of newly listed companies up to a maximum of five years from the listing date provided they comply with the fund s Sharia a standards. The terms and conditions were issued on 21 February The fund commenced date as per terms and conditions was 8 May As the fund has commenced its operations on 8 May 2016, these are the first financial statements of the fund covering the period from 8 May 2016 (the date of commencement) to 31 December Accordingly, no comparative information has been presented in these financial statements. In accordance with the Capital Market Authority s (CMA) decision No dated 21 Jumada Awal 1426H (corresponding to 28 June 2005) issued by the CMA Board in connection with the regulations relating to Authorised Persons, the Bank has transferred its asset management operations to the Arab National Investment Company (the Fund Manager ), a wholly owned subsidiary of the Bank, effective 1 January The books and records of the Fund are maintained in Saudi Riyals. 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 1438H (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. 3 SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting standards generally accepted in the Kingdom of Saudi Arabia. The significant accounting policies adopted are as follows: Accounting convention The financial statements are prepared under the historical cost convention modified to include the measurement of fair value of trading investments. Revenue recognition Dividend income is recognised when declared (i.e. when the Fund s right to receive the dividend is established). Trading income includes movement in unrealised gains and losses from changes in fair value, realised gains and losses from sale of trading investments and dividends declared. Realised gains and losses on trading investments sold are determined on a weighted average cost basis. Special commission income is recognised on an effective yield basis. Investment valuation Equity investments which are purchased for trading purposes are valued at their market price as at the valuation date. Investment transactions Investments transactions are accounted for as of the trade date. Zakat and income tax Zakat and income tax are the obligations of the Unit holders and are not provided for in the accompanying financial statements. 7

9 NOTES TO THE FINANCIAL STATEMENTS (continued) At 31 December TRADING INVESTMENTS The composition of the trading investments portfolio by industry sector is summarised below: Description % of market Cost Market value Unrealised gain (loss) 2017 Value Equity investments Health care equipment and services ,441,009 11,222,600 (1,218,409) Materials ,466,196 10,759, ,784 REITs ,656,880 6,691,200 (1,965,680) Capital goods ,298,476 5,302,680 4,204 Real estate management and ,867,420 4,657,500 (209,920) development Retailing ,494,594 4,603,200 1,108,606 Transportation ,749,518 4,558,800 (1,190,718) Food and staples retailing ,631,381 1,522,300 (109,081) Insurance ,095,784 1,041,200 (54,584) Total investments ,701,258 50,359,460 (3,341,798) Trading investments are listed on the Saudi stock exchange (Tadawul). The Fund Manager seeks to limit its risk by monitoring exposures in each investment sector and individual securities. 5 TRADING LOSS, NET For the period from 8 May 2016 to 31 December 2017 Movement in unrealised losses on trading investments, net (3,341,798) Realised losses on sale of trading investments, net (6,012,310) Dividend income 3,349,010 (6,005,098) 6 TRANSACTIONS WITH RELATED PARTIES A subscription fee of 2% may be charged to the subscribers by the Fund Manager upon subscription. The Fund pays a management fee at the rate of 1.75% per annum calculated on the total net assets at each valuation date. In addition, the Fund Manager also charges a fee at a maximum rate of 1.00% per annum calculated on the total net assets at each valuation date to meet other expenses of the Fund. The management fees amounting to 2,219,180 and other fees amounting to 187,377 reflected in the statement of operations, represent the fees charged by the Fund Manager as described above. Trade transactions on the Tadawul are executed through the Fund Manager. The Fund Manager also acts as the custodian of the Fund s investments. The Bank (parent of the Fund Manager) acts as the Fund s banker. 8

10 NOTES TO THE FINANCIAL STATEMENTS (continued) At 31 December TRANSACTIONS WITH RELATED PARTIES The Unit holders account at 31 December included units held as follows: 2017 Units Held by funds under same management 64,354 Held by the employees of the Bank 46, ,357 7 RISK MANAGEMENT Special commission rate risk Special commission rate risk is the risk that the value of financial instruments will fluctuate due to changes in the market rates. The Fund does not have any floating special commission bearing financial assets or liabilities as at 31 December 2017 and is not subject to special commission rate risk. Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Fund is normally exposed to credit risk on its bank balances and dividend receivable. The Fund Manager seeks to limit its credit risk by monitoring credit exposures and dealing with reputed counterparties only. The table below shows the maximum exposure to credit risk for the components of the balance sheet. Bank balances 4,358,742 Dividend receivable 54,750 4,413,492 The above balances are held with the bank, which has an investment grade credit rating. Equity price risk Equity price risk is the risk that the fair value of equities changes as the result of changes in the levels of equity indices and the value of individual stocks. The effect on the statement of operations (as a result of a change in fair value of equity instruments held in the trading portfolio) due to a reasonable possible change in equity indices, with all other variables held constant, is as follows: The sensitivity analysis presented below is based on a historical comparison of unit price and underlying index volatilities. This sensitivity analysis relies upon assumptions including a correlation of the equity holdings of the Fund with the index composition

11 NOTES TO THE FINANCIAL STATEMENTS (continued) At 31 December RISK MANAGEMENT (continued) Market index Change in equity price Effect on statement of operations % SS &P Saudi IPO Index 10 4,027,650 Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in releasing funds to meet commitments associated with financial liabilities. Liquidity risk may result from an inability to sell a financial asset quickly at an amount close to its fair value. The Fund s terms and conditions provide for redemptions of units twice a week and it is, therefore, exposed to the liquidity risk of meeting Unit holders redemptions. The Fund s investments are considered to be readily realisable, as they are listed on recognised stock exchanges. The Fund Manager monitors liquidity requirements on a regular basis and seeks to ensure that sufficient funds are available including bank facilities to meet commitments as they arise. Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to a change in foreign exchange rates. The Fund s functional currency is the Saudi Riyal. As the Fund s financial assets and financial liabilities are denominated in its functional currency, the Fund is not subject to currency risk. 8 FAIR VALUES OF FINANCIAL INSTRUMENTS Financial instruments comprise financial assets and financial liabilities. The Fund s financial assets consist of bank balances, trading investments and dividend receivable. The financial liability consist of payables. 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. For investments traded in an active market, fair value is determined by reference to quoted market bid prices. Trading investments are carried at their fair value. The fair values of other financial instruments are not expected to be materially different from their carrying value. 9 LAST VALUATION DAY The last valuation day of the period was 31 December FUND BOARD APPROVAL The financial statement of the Fund for the period from 8 May 2016 to 31 December 2017 was approved by the Board of Directors of the fund on 29 March