SUDANESE FRENSH BANK. sudanese frensh bank ANNUAL REPORT

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1 sudanese frensh bank ANNUAL REPORT 2011

2 2 Table of Contents sudanese frensh bank Page No. 1 About the Bank 4 2 Nominal and Paid Up Capital 4 3 Bank`s Branches 5 4 The Bank`s Shareholding in Companies and Corporation 6 5 Board of Directors 7 6 Shariaa Supervisory Board 8 7 Executive Management 9 8 Chairman`s Report 12 9 Resolutions of the Regular General Assembly Auditor`s Report Financial Statements Performance Report and Financial Review for the year List of Foreign Correspondents 45 Annual Report

3 Annual Report 2011 Our Vision: sudanese frensh bank To be your best banking choice sudanese frensh bank Our Mission: We are aware of our national responsibility to contribute in social development in addition to our leading economic role. We stick to Islamic Sahria Laws in all our transactions. We believe in the role of qualified and well trained staff to serve our customers. We attract deposits and provide finance according to Islamic models. We maintain the rights of shareholders, customers and employees to satisfy them. sudanese frensh bank Our values: - Honesty. - Transparency. - Devotion. - Role model. - Teamwork. - Observance of the ethics and standards of the job. - Sustainable development and improvement. 3

4 4 About The Bank After the nationalization of foreign banks in Sudan in the early 70 s, some businessmen joined by Bank of Sudan (Central Bank of Sudan) initiated the idea of establishing a new bank. Later, a number of local and foreign corporations, in addition to, the public were attracted to invest in the new Sudanese Investment Bank which started its operations in January 1979 with a 7.5 million Sudanese Pounds capital. By 1993 the bank adopted its ongoing name of Sudanese French Bank. Growing steadily and achieving remarkable success. In voyage towards entering the international markets, the bank ended the year 2010 with nominal capital to 300 million SDG and a paid up capital of million SDG (45 million Dollars). Nominal and Paid Up Capital Paid Up Capital As At 31/12/2011 Nominal Capital: 300 Million SDG Paid Up Capital: 103,109,252 SDG Shares at a value of 68,739,501 Share Head Office: P.O Box: Al Qasr Street Khartoum 2775 Khartoum Sudan Tel: (+249) Fax: (+249) Website: info@sfbank.net Swift Code: SUFRSDKH Member of: Sudanese Bank s Association Member of: Union of Arab Banks Member of: Bank Deposits Guarantee Fund Member of: Arab Trade Financing Program Member (Observer) of: Islamic Financial Services Board Malaysia Annual Report

5 Annual Report 2011 Bank s Branches Capital Branch Branch P.O. Box Area Code Tel. No. Fax No. 1 Main Branch-Khartoum Algamhouria Khartoum(2) Alsaggana Khartoum North Omdurman Souk Libya Alsouk Almahali AlRiyadh Khartoum Garden City Almamora States Branch Branch P.O. Box Area Code Tel. No. Fax No. 12 Port Sudan Qadariff New Halfa Madani Sinnar Rabak Almanagil Hasahissa Aldamazin Obeid Nyala Atbra

6 6 The Bank s Shareholding in Companies and Corporation sudanese frensh bank Since its incorporation in 1979 the bank continued to share in the capitals of companies and corporations to help development projects to succeed and reflect the national role of the bank. These companies are considered an investment channel for the bank resources to achieve a reasonable return. Within this context the bank shared in some effective projects on the Sudanese economy like: (1) Alfaransi Financial Services Company Ltd. The bank coped with investment development in financial stocks by establishing this company to be the assisting arm of the bank and its clients in the field of investment in stocks. The company is a licensed agent in Khartoum Stock Exchange. The bank is also a shareholder in the following companies: (1) Kenana Friesland Dairy Company (2) Alnatiza for Integration Service Co. Ltd (3) Gulf National Flour Mills (4) Financial Investment Bank (5) National Agency for Insurance and Finance of Exports (6) Electronic Banking Services Company (7) Al Rai Alam Printing and Publishing Company (8) Juba Insurance Company (9) Rural Development Co. (10) Financial Services Co. (AlBuhrain) (11) Kenana Diray Factory Annual Report

7 Annual Report 2011 Board of Directors Mr. Osman Salman Mohamed Nour Mr. Abdul A l Al Dawi Abdul A l Mr. Hussein Fadul Ali Mr. Osman Hamad Mohamed Kheir Mr. Fuad Yousif Shaker Mr. Roger Farid Dagher Dr. Mustafa Abass Mustafa Mr. Hazem Abdul Gader Ahmed Babiker Mr. Sandel Hassan Bambo Da ood Mr. Salah Eldin Ali Abu Elnagga Mr. Mahgoub Hassan Shabo (G. M.) Chairman Member Member Member Member Member Member Member Member Member Member Mr. Dafalaa Elfadel Mohamed Abu Gadeer Dr. Tag Alsir Ibrahiem Alshoush Board Secretary Legal Adviser sudanese frensh bank 7

8 8 Shariaa Supervisory Board M. El Tayib El Faki Musa Chairman Dr. Mohammed Ali Yousif Ahmed Member Mr. Al Bagir Yousif Mudawi Member Dr. Yousif Alkbashi Idreis Soliman Member and Shariaa Control Officer Certified Accountants Mubark for Accounting Auditing & Financial Consultancy Khartoum Tel: Fax: P.O. Box Khartoum - Sudan mubarak.ibrahim@maafc.com info@maafc.com Annual Report

9 Annual Report 2011 Executive Management sudanese frensh bank sudanese frensh bank Mr. Muawia Mustafa Mohd. Ahmed Alim Depty General Manager Mr. Mahgoub Hassn Shabo General Manager sudanese frensh bank sudanese frensh bank Mr. Abd Ulmonaim Elhaj Mohammed Assist. G. M. For Management Affaires Mr. Tag Elsir Hamid Abdul kareem Assist. G. M. For Financial Affaires 9

10 10 Departments Managers Mr. Adil Salih Bilal Mr. Mohamed Batran Hamad Mr. Sief Eldin Elfakki Mohammed Ms. Adeeba Ibrahim Bushara Elsaid Mr. Abdulrahman Abdulla Abdulrahman Mr. Mohamed Nory Mohamed Ms. Alawia Mohamed Ahmed Suliman Ms. Nayra Abd Alla Sharfi Mr. Osman Ahmed Osman Elhassan Mr. Mutwakel Yousif Mustafa Mr. Faissal Abd Elhay Mohammed Mr. Mohy Eldin Abd Elaziz Makki Mr. Mohamed Abd-Aziz Mohamed Mr. Gamal Saad Hassan Hamada Mr. Mustafa Mohamed Ismaiel Abubakr Ms. Ishraga Jaafar Abdraheem Mr. Abd Elmonaim Osman Elbashir Ahmed Mr. Ahmed Abdulla Abdulrahman Internal Auditor Dept. Computer & Information Technology Dept. Legal Dept. Human Resources Dept. Administration Affaires Dept. Foreign Relations Dept. Investment and Finance Dept. Marketing & Research Dept. Financial Affairs Dept. Risk Management Dept. Engineering Dept. Compliance Officer Electronic Services Unit Reconciliation Unit Macro Finance Unit Labor Systems Unit Central Operations Unit Executive Office sudanese frensh bank Annual Report

11 Annual Report 2011 Branches Manager Capital Branch: شبكة المراسلين Branch-Khartoum اإلقليميين Main والدوليين Algamhouria Khartoum (2) Alsaggana Khartoum North Omdurman Souk Libya Alsouk Almahali AlRiyadh Khartoum Garden City Almamora Mr. Kamal Mohamed Ali Hamed Mr. Mohamed Hamed Ali Murad Mr. Abdhadi Osman Mohamed Abo Elreesh Mr. Mohamed Ahmed Ali Seed Ahmed Mr. Awad Mohamed Hassien Nasroon Ms. Fatima Mohamed Ali Salih Mr. Azhari Adam Ali Mohamed Mr. Hassan Elnour ElAmen Osman Ms. Najat Abd Elgader Mohamed Mr. Abd Elhamed Ismail Mohamed (Acting) Mr. Tarig Abdaaziz Shedoo States Branch: Port Sudan Qadariff New Halfa Madani Sinnar Rabak Almanagil Hasahissa Aldamazin Obeid Nyala Atbra Mr. Musaad Elbashier Ahmed Ebrahim Mr. Muatasim Hashim Elawad Elzouber Mr. Hamza Tawoo Elbeed Hamoori Mohamed Mr. Elhadi Elsadig Mohamed Mahmoud Mr. Ali Abdlrahman Osman Abdlfatah (Acting) Mr. Abdlrahman Elmubark Elkhiedr Ahmed Mr. Abdlalah Ebrahem Jaafr (Acting) Mr. Ali Widaa Awad Elkareem Mr. Mohamed Ahmed Elsiddig Elamen Mr. Amar Abdrahem Eltahier Mr. Ahmed Mohamed Osman Hassan Mr. Ismaiel Taj Eldeen Elbashier 11

12 12 The Address of H.E the Chairman of the Board of Directors to the 43th Ordinary General Assembly of the Share Holders of the Sudanese French Bank God Almighty says: In the Name of Allah, the Beneficent, the Merciful Annual Report It was by the mercy of Allah that thou was Lenient with them (O Mohammed), for if thou hadst been stern and fierce of heart they would have dispersed from round about thee. So pardon them and ask forgiveness for them and consult with them upon the conduct of affairs. And when thou art resolved, then put thy trust in Allah, Lo! Allah loveth those who put their trust (in Him). The Family of Imran (159) Brothers and sisters, Honorable audience, Praise be to God and may His prayers and peace be upon His sincere and Honest Messenger. Salamu Alaykum and may the blessing and mercy of Allah be upon you. In the name of the board of directors of the Sudanese French Bank I welcome you in your home which is always hospitable by your presence. In this blessed evening convenes the forty third meeting in the long life of your institution, with the will of God. I hope God will guide us to exchange views and positive suggestions to guide the board of directors in the path of improvement towards the better in order to achieve the common goals. Brothers and sisters, Honorable shareholders, I address you today, in an atmosphere of successive and accelerating events and variables in the domestic, regional and international banking industry. They can be summarized in the following points which we are going to handle in a transparent and candid manner: - The repercussions of the international financial crises are still extending their shadows on the Sudanese economy and subsequently on the activity of the Sudanese banks and their ability to move in a wide range. The unfair economic blockade imposed on our country, the different security treats, and the expected wars in the demarcation boarder regions after the separation of the South which affected directly and negatively the Sudanese economy according to the loss of foreign currency resources resulting from oil exports. Hardships sometimes create benefits. The state started to give more concern to gold mining which proved to be available in large quantities in the different regions of Sudan. The state also started to support agriculture and there was a rally to rehabilitate the Gaziera Scheme. - Foreign currency resources are considered for the banks in general and the Sudanese French Bank especially the corner stone in providing banking services and transactions in imports and exports operations. The bank was really affected due to the drop in these resources. For this reason we started to expand in local currency financing, encourage Sudanese exports financing estate, intermediate financing and financing services in the different Islamic models. - The bank, as you know, has many financial problems and inherited indebtedness since the year 2003 which is still affecting the progress of the bank. We worked hardly to solve it with the external auditor and the Central Bank of Sudan. Praise be to God, they were cooperative in rescheduling the debts. And, with the will of God. we are working hard on the financial and administrative reform programme of the bank.

13 Annual Report The Investment in some of the companies attached the bank was of unsatisfactory returns. This was the reason behind the decision taken towards them. Gadarif SILOS company and the Sudanese Investment and projects company ltd. (SIPCO) were liquidated. Studies are going on to evaluate the feasibility of the other investment s to take the suitable decision. - In its efforts to support its own capacities, the bank re-evaluated its fixed assets after taking the permission of the Bank of Sudan and added them to the share Shareholders equity which was affected by extinguishing the inherited debts, the supplement of the retirement allowances of the employees to be 100%, the allotment for the difference of re-evaluating the fixed assets and liabilities in hard currency out of the accumulations of the previous years. The bank agreed with the Bank of Sudan to extinguish them in installments within six years. - Because of the facts I mentioned already in a clear and transparent way, we depended on God Almighty and decided to make efforts to go ahead with regular steps to achieve the high goals of the bank to secure the reputation and position of the bank and then to move with other banks, to face the cut throat competition of the emergence of foreign banks with strong abilities. - Quantitative and qualitative in local financing to all economic activities according to Central Bank s policies with concentration on priority sectors in industry, processing industries and different services. - Continuous improvement of banking technology which widen the base of customers through improving performance, upgrading the efficiency of customers services and activation of the numerous marketing strategies. - The increasing attention the state pays to elevate poverty and unemployment through active participation in providing micro financing to the targeted sectors of small entrepreneurs, handicraftsmen and professionals, besides contributing in employment of graduates and responding to the Central Bank s plan to select the candidates for micro financing projects. - To work hard to follow up and siege the default debts by taking all the legal measures to liquidate the guarantees to recover the default debts in order to secure the rights of the bank and the customers. - Full coordination and cooperation between the different technical, legal, and accounting administrations to reflect the actual position of the bank in a transparent and clear way. This was shown in the outcome of internal auditing represented in the auditing and control committee (one of the committees of the board of directors to activate the institutional control) with the external certified auditor. - Full observance of the Central Bank of Sudan regulations in completing the administrative organizational set up of the bank to activate the role of the boards of directors to carry out their reforms and apply the correct banking standards to achieve the expected goals. - In spite of the continuity of the problem of foreign currency resources which lead to shortage in the volume of foreign currency utilized in the different banking transactions like imports, transfers and others, the revenue achieved from the banking services is considered an achievement in such conditions. We are now working hard to invent substitutes to support foreign currency resources by working with the correspondents to open facilities channels to this important sector in banking. The outstanding arrears of the transactions with the correspondents for the previous years was a top priority to the bank management, and they were settled till /12/. - The continuous interest of the board of directors to increase the revenue and decrease the expenditure and the working running cost without affecting the flow of work. We are hoping to reach the cost rate agreed upon locally and internationally in the near future. - Control the executive management and push it to adopt the principle of [calling to account and punishment] and also the principle of [motivation and praise] and put it for execution and direct control. 13

14 14 Honorable brothers and sisters, The certified accountant of the bank highlighted in his report to the management about the final accounts for the year 2011 the shortcomings in some areas of work and performance. We, as a board of directors, will try hard to manage these shortcomings to improve the performance. The negative effects of the separation of the south like the decline in available resources of foreign currency made the banking system face the great responsibility of making available all the requirements of the economy and the economic and developing activities. This can only be achieved through hard work and efforts to overcome the shortcomings mentioned by the certified accountant through the bank s organs and committees which support the board of directors and control the daily performance like the administrative committee, auditing and regulations committee and the Sharia control commission. They are very important committees and they help the boards of directors in evaluating risks and deal with the failures because they include banking and economic experts who represent a real asset to the bank. Honorable Audience, In a perfect brief I will show you the figures of the financial position of your institution as in /12/ compared to with that in /12/. Amount in Millions SDG Items % Total Assets % Total Cash & quasi cash (including the legal reserves) % Total finance [ local and foreign] % Deposits [local+ foreign + margins] % Shareholders equity and paid capital % Total revenues including (the right of unrestricted investment accounts owners % Total expenditure including [remunerations- depreciations-extinguishing % Total profit % Net income after Zakat and taxes % Return on share (the percentage of net income to paid capital) 22% 22% The factors and circumstances I mentioned before produced these results which are below our ambitions and we are trying hard to achieve better year after year. We pray to God to give us priority and success to achieve our expected goals. Sisters and brothers, honorable shareholders: In the name of the board of directors and on the background of what we explained to you, I submit to you the following recommendations according to the rules and regulations to approve and adopt them: 1st: Approval of the report of the board of directors for the year nd: Approval of the report of the certified auditor for the year rd: Approval of the Sharia Control Commission report for the year Annual Report

15 Annual Report th: 5th: 6th: 7th: Adoption of the financial situation statements and the income statement for the year 2011 including the account of the amended profits according to the directives of the Central Bank of Sudan. Approval of the recommendation of the board of directors about profits distribution including bonus shares for the year 2011 as follows: - 10% cash divided and 3% bonus shares. According to the approval of the Central Bank of Sudan. Approval of the remuneration of the members of the board of directors for the year Approval of the appointment of Messers Mubarak Accountancy, Auditing and financial consultations to audit the accounts of the bank for the year 2012 and authorize the board of directors to fix their remunerations. 8th: Elections of the Sharia Board Commission for the year Honorable brothers and sisters; I submitted to you a full report of our efforts in All this was done with help of the Almighty God and due to our sense of responsibility. We hope to be up to the standard of your expectations. The Prophet (May Prayers and Peace of Allah be upon Him) said (A good Muslim always trust others). We hope also that God Almighty will help us to achieve the goals you are expecting from us with your support. It is a responsibility and a duty in front of God and you. Finally I offer my thanks and gratitude to all those who contributed in this effort and preparation for this blessed meeting. A special salute and gratitude to the Central Bank of Sudan represented in the Governor Dr. Mohammed Khair Alzubair, his deputy brother Dr. Badr Eldin Mahmoud and the assistant governors, general managers and the employees of the Bank. A salute and gratitude to the members of the board of directors and its committees for their efforts. A salute and gratitude to the executive administration and the employees of the bank for their efforts and patience to achieve the goals of the bank. A salute and gratitude to H.E. the Wali of Khartoum, the police administration and the local council for their support to hold this meeting. A salute and gratitude to all those who supported us by physical efforts or advice. Lastly, a salute and gratitude to you for coming in this blessed evening. God we ask you good guidance, piety, purity and satisfaction. We ask you a useful knowledge, an acceptable fruitful work, a submissive heart, a laudating tongue, wide wealth and cure from every illness] Amin. Salamu Alaykum 15

16 16 Resolutions of the Regular General Assembly NO 43 sudanese frensh bank Resolution (1) Resolution (2) Resolution (3) Resolution (4) May Mercy of God and His Mercy be upon you Approval of the Board of Directors report and adoption of the financial situation statement, distribution of profits accounts and the reports of the certified auditor and Islamic Sharia Control Commission for the year ending on /12/. Approval of the recommendation of the Board of Directors, to distribute profits at the ratio of 10% of the nominal value of the share. Approval of the recommendation of the Board of Directors, to pay their remunerations for the year Appointment of Messrs Mubrak accounts, auditing and financial consultation, to audit the bank accounts for the year 2012, and to delegate the Board of Directors to fix and pay their remunerations. Resolutions (5) Appointment of Islamic Sharia Control Commission and delegate the Board of Directors to fix their remunerations for Mr. Dafalaa Elfadel Mohamed Abu Gadeer Board Secretary Annual Report

17 MUBARAK For Accounting, Auditing & Financial Consultancy Certified Public Accountants Independent Firm, Correspondent of ERNST & YOUNG مبارك للمحاSسبة واملراجعة والإSستûشارات املالية حماSسبون قانونيون مكتب مùستقل مراSسلون اإرنù ست و ي ونغ INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF SUDANESE FRENCH BANK We have audited the accompanying financial statements of Sudanese French Bank, which comprise the balance sheet as at 31 December 2011 and the income statement, cash flows statement and statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors Responsibility for the Financial Statements The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Accounting Standards issued by The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Audit Standards Issued by (AAOIFI). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s pre`paration and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bank as of 31 December 2011 and its financial performance and its cash flows for the year then ended in accordance with Accounting Standards of The Accounting and Auditing Organization for Islamic Financial Institutions. Mubarak Ali Ibrahim - Partner May 07, 2012 Tel.: Fax.: /1 - Block 5 Khartoum East Al Zubair Basha St. P.O. Box Sudan inlb@maafc.com تلفون: فاكùس: Tشارع الزبري باTشا - 1/3 مربع 5 اخلرطوم Tرشق Uص.ب الùسودان بريد اإلكرتوين: info@maafc.com 17

18 18 Statement Of Financial Position At December 31, 2011 Assets Notes Cash and cash equivalents 4 411,361, ,515,797 Central Bank of Sudan - Statutory cash reserve 5 113,379, ,680,614 Sales receivables 6 367,424, ,712,169 Investments in securities held to maturity 7 265,119, ,118,500 Available for sales investments 8 42,096,894 26,747,762 Investments in subsidiaries 9 3,960,000 6,969,200 Mudaraba investments 10 93,050, ,329,400 Musharaka investments 11 54,553,620 54,894,208 Other Assets ,316, ,725,140 Fixed assets 13 84,203,640 81,316,293 Total Assets 1,589,466,505 1,356,009,083 Liabilities, Unrestricted Investment Accounts and Shareholders Equity Liabilities Current Accounts ,963, ,090,068 Other Liabilities ,119, ,326,648 Provisions 16 42,859,732 29,806,934 Total Liabilities 1,195,942,519 1,047,223,650 Equity of unrestricted investment account holders ,236, ,543,752 Shareholders Equity Paid up capital ,109, ,106,070 Reserves 19 97,339,210 84,695,657 Retained earnings (losses) )53,171,369( )53,570,653( Dividends 10,010,607 10,010,607 Total Shareholders Equity 157,287, ,241,681 Total Liabilities, Unrestricted Investment Accounts and Shareholders Equity 1,589,466,505 1,356,009,083 Osman Salman M. Nour Chairman Osman Hamad M. Khair Director Mahgoub Hassan Shabo General Manager Annual Report

19 Annual Report 2011 Income Statement Year Ended December 31, 2011 Income Notes Income from deferred sales 20 28,920,831 28,179,132 Income from investments 21 54,082,446 45,157,455 Total income from finance and investments 83,003,277 73,336,587 Less: Return on unrestricted investment accounts (19,197,364) (14,811,226) Bank s share in income from investments (as Mudarib and fund owner) 63,805,913 58,525,361 Income from banking services 22 42,155,577 37,746,745 Other income 23 13,440,869 10,531,994 Total Bank s income 119,402, ,804,100 Expenses Staff cost 24 (43,839,088) (36,209,789) General and administration expenses 25 (18,680,131) (16,982,849) Depreciation and Amortization 26 (20,189,683) (14,535,447) Investment and Finance Provisions 6/1 (6,528,572) (5,395,303) Total Expenses (89,237,475) (73,123,388) (Loss) from foreign currency revaluation (5,141,456) (9,034,000) Net income before zakah and tax 25,023,429 24,646,712 Zakah provision (2,632,250) (2,203,038) Net income for the year 22,391,179 22,443,674 Earnings per share Osman Salman M. Nour Chairman Osman Hamad M. Khair Director Mahgoub Hassan Shabo General Manager 19

20 20 Statement Of Cash Flows Year ended december 31, 2011 Operating activities Net income for the year 22,391,179 22,443,674 Adjustment for: Depreciation of fixed assets 5,460,616 5,536,509 Depreciation of fixed assets (Disposal) (838,462) (670,872) Provision 27,013,333 27,309,310 Changes in operating assets, liabilities and unrestricted investment accounts Central Bank of Sudan - Statutory cash reserve (11,698,964) (27,992,688) Sales receivables (45,712,611) 15,054,635 Investments (57,721,207) 97,168,710 Other assets (6,591,654) (25,610,271) Current accounts 57,872,962 (20,187,308) Provision 13,052,798 23,023,317 Equity of unrestricted investment account holders 68,692,534 8,607,190 Other liabilities 77,793,109 (40,179,038) prior year Expenses (6,738,988) (65,065,641) Cash used in operations 88,947,978 (35,181,094) Net cash from (used in) operating activities 115,961,311 (7,871,784) Investing activities Purchases of fixed assets (8,376,493) (6,322,535) Disposal of Fixed Assets 866, ,043 Net cash from (used in) investing activities (7,509,502) (5,640,492) Financing activities Reserves 10,404,435 - Dividends (10,010,607) - Net cash from financing activities 393,828 - Increase/ (Decrease) in cash and cash equivalents for the year 108,845,637 (13,512,276) Cash and cash equivalents at the beginning of the year 302,515, ,028,073 Cash and cash equivalents at the end of the year 411,361, ,515,797 Osman Salman M. Nour Chairman Osman Hamad M. Khair Director Mahgoub Hassan Shabo General Manager Annual Report

21 Annual Report 2011 Statement Of Changes In Equity Year ended december 31, 2011 Note Paid up capital Retained (losses) earnings Statutory reserve General reserve Fair Value Reserve Revaluation Reserve Proposed Dividends Total SDG SDG SDG SDG SDG SDG SDG SDG Balance at January 1, ,106,070 1,306,288 10,670,087 17,714,055-5,688, ,485,377 Prior year adjustments - (65,065,641) (65,065,641) Net income for the Year - 22,443, ,443,674 Dividends paid - (10,010,607) ,010,607 - Reserves - (2,244,367) 2,244, ,378,271-48,378,271 Balance at December 31, ,106,070 (53,570,653) 12,914,454 17,714,055 54,067,148 10,010, ,241,681 Proior year adjustments 27 - (6,738,988) (6,738,988) Dividends paid (10,010,607) (10,010,607) Net income for the year - 22,391, ,391,179 Increase in Capital 3,003,182 (3,003,182) Cash dividends 18 - (10,010,607) ,010,607 - Reserves - (2,239,118) 2,239, ,000 9,754, ,404,435 Balance as at December 31, ,109,252 (53,171,369) 15,153,572 18,364,055 9,754,435 54,067,148 10,010, ,287,700 Osman Salman M. Nour Chairman Osman Hamad M. Khair Director Mahgoub Hassan Shabo General Manager 21

22 22 Notes to the Financial Statements year ended december 31, 2011 Annual Report (1) Incorporation and activities: Sudanese French Bank (the Bank) was established in 1978 and started its banking activities in January 1979, In 1981 the name of the bank was changed to Sudanese International Bank; in 1993 the name was changed to Sudanese French Bank as a public listed limited liability company under Companies Act, 1925 with registration certificate No The Bank is providing commercial, financial, Investments, development projects financing and banking services according to Islamic rules and principles. The Bank is providing its services from the head office which is located at Qaser street and through its branches located in Khartoum and other states. (2) Significant accounting policies: (i) Basis of preparation: 1. The financial statements are prepared in accordance with the standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), as required by the Central Bank of Sudan and Shari a Supervisory Board (SSB) requirements. 2. The financial statements have been presented in Sudanese pounds (SDG), the functional currency. 3. The financial statements are prepared on the historical cost concept except for the remeasurement at fair value of securities classified as available for sale. 4. The Bank uses the accrual basis in recording its assets, liabilities, revenues and expenses. 5. The accounting policies for the current year are consistent with pervious year. ii) Fixed assets: Fixed assets are stated at cost less accumulated depreciation and any impairment in value. Depreciation of fixed assets is calculated on a straight line basis over their estimated useful lives, as follows: Motor vehicles %15 Machinery and equipment %10 Furniture %10 Buildings %2.5 IT equipment %20 The carrying amounts of the Bank s fixed assets are reviewed at each balance sheet date to determine whether there is any indication or objective evidence of impairment. If any increase in the recoverable values the new values will be booked and difference between the carrying values and the new recoverable values will be charged to equity to decrease the revaluation reserve. The leased hold land amortized over period of 30 years which is the contract duration. (iii) Foreign Currencies Transactions in foreign currencies are recorded at the exchange rate prevailing on the transaction date. Monetary assets and liabilities at balance sheet date, denominated in foreign currencies, are translated at the exchange rates prevailing at the balance sheet date. Foreign Currency differences

23 Annual Report 2011 related to normal bank transactions in investments denominated in foreign currencies, whether gains or losses, are treated as revaluation differences. Other realized and unrealized gains or losses on foreign exchange are credited or charged to the income statement. (iv) Revenue recognition a. Murabaha and Istisnaa: The profits from Murabaha and Istisnaa transactions are recognized on a proportionate basis over the period of the credit. b. Mudaraba Financing: Mudaraba financing is recognized in the Income Statement at the time of liquidation or to extent of profits being distributed or at declaration date or when such profits can reasonably be estimated. c. Musharaka and Salam Financing The profits from Musharaka and Salam transactions are recognized at the time of the liquidation. d. Income from banking services Income from banking services is recognized at the time the related services are provided and the amount of revenue can be measured reliably h. Dividends income and Profit from Securities. Dividend income and profit from securities is recognized when declared or when such profits can reasonably be estimated. (v) Provision for doubtful debts: The provision for doubtful debt is based on the assessment of collectability of each debt and in accordance with the directives of the Central Bank of Sudan and the Bank>s policy. (vi) Cash and cash equivalents: For the purpose of preparation of the statement of cash flows, cash and cash equivalents consist of cash with banks (current accounts) and balances with Central Bank of Sudan and cash in hand. (vii) Provisions: Provisions are recognized when the Bank has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and can reliably be measured. (viii) Employees end of service benefits: End of service benefits payable to employees at the end of their services are provided for in accordance with Sudanese labour law. (ix) Measurement of investments and finance at the end of the period: a. Sales receivable Sales receivable are initially recorded at cost, at the end of the financial period sales receivables are measured at their face value or net realizable value, whichever is less. 23

24 24 b. Mudaraba Mudaraba is measured by the amount paid or the amount placed under the disposition of the Mudarib less the portion of the Mudaraba capital recovered from the Mudarib (if any). c. Musharaka Musharaka is recorded at cost less any impairment loss in the statement of financial position. d. Available for sale investments Available for sale investments which are shown in the balance sheet at fair value and any difference is carried to the revaluation reserve as part of equity. Where fair value cannot be reliably measured, those investments are carried at cost. (x) Zakah and Tax treatment The Bank is subject to the Zakah and Tax according to regulations prescribed by Zakah and Tax authorities. The Bank is subject to Business Profit Tax after excluding profits from investments in Shahama>s bonds. (xi) Return on unrestricted investment account holders: The Return on unrestricted investment accounts is calculated on a yearly basis. The Bank allows the investment account holders to withdraw funds from their investment accounts before maturity with a condition that they forfeit any accrued profits, and in the case of Mudaraba transactions with specified period of investment, the Bank as Mudarib, retains the right to hold the Mudaraba instrument to it s maturity. Profits are allocated between the unrestricted investment account holders and the Bank>s share holders according to the contribution of each of the two parties. Those profit added to their accounts after the approval of Shari a Supervisory Board and the regulatory authorities. (xii) Impairment and uncollectibility of financial assets: An assessment is made at each statement of financial position date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, an impairment loss is recognised in the consolidated statement of income. (xiii) Liabilities: Liabilities are recognized for amounts to be paid in the future for materials and services received, whether billed by the supplier or not. These are carried at cost, which is the fair value of the consideration to be paid in the future for amounts payable. (3) Shari` a Supervisory Board (SSB): The Bank s business activities are subject to supervision of Shari a Supervisory Board. The Shari` a Supervisory Board has been appointed by the shareholders. The Shari` a Supervisory Board has the power to directly review and supervise the activities of the Bank. Annual Report

25 Annual Report 2011 (4) Cash and cash equivalents: Cash in hand and in ATM 52,275,310 44,127,562 Balances with Central Bank of Sudan 300,635, ,729,609 Cash with foreign correspondent banks 58,450,275 54,658, ,361, ,515,797 (5) Central Bank of Sudan - Statutory cash reserve: Local currency 87,979,298 74,705,130 Foreign currency 25,400,281 26,975, ,379, ,680,614 (6) Sales receivables: Murabaha 386,707, ,505,378 Salam 6,356,748 3,920,215 Mugawla 35,778,470 30,064,445 Micro Finance 811, ,736 Deferred payment sales 2,370,606 4,561,514 Other Finance 15,635,391 42,423, ,659, ,692,927 Less: Deferred profits )50,138,563( )34,952,438( 397,520, ,740,489 Less: provision for doubtful debts (note 6/1) )30,096,138( )22,028,320( Sales receivables (net) 367,424, ,712,169 Other finace represents deferred Letter of credits of which 9.7 million is over due. The bank has provided for the over due amounts. (6/1) Provisions for finance and investments: General provision: Balance at the beginning of the year 4,096,198 3,299,733 Provision for the year 1,178, ,465 Balance at the end of the year 5,274,377 4,096,198 Specific provision: Balance at the beginning of the year 20,907,888 16,309,050 Provision for the year 5,350,393 4,598,838 Bad Debt )235,766( - Balance at the end of the year 26,022,515 20,907,888 Total Provision (General +Specific) 31,296,892 25,004,086 Total Provision expense charged (General +Specific) for the year 6,528,572 5,395,303 25

26 26 (6/2) Total Provisions for finance and investments (General and Specific): Provision for doubtful debts (note 6) 30,096,138 22,028,320 Provision for finance losses (mudarba note 10) 531,873 2,276,055 Provision for finance losses (musharka note 11) 668, ,711 (7) Investments in securities held to maturity: 31,296,892 25,004,086 Shahama securities (Note 7/1) 161,739, ,161,000 Shihab securities (Note 7/2) 2,000,000 2,000,000 Government s Bonds (Note 7/3) 91,522,000 47,522,000 Shama (Note 7/4) 9,858,000 9,435, ,119, ,118,500 (7/1) Shahama Certificates: These are government certificates issued by Ministry of Finance on behalf of Government of Sudan and are distributed by Sudan Financial Services Company. Shahama certificates are issued based on Musharaka contract. The average annual return on these certificates is ranging from 12% to15%. (7/2) Shihab Certificates: These certificates are issued by Sudan Financial Services Company to invest in Central Bank s building. The relationship between Sudan Financial Services Company and the investors is based on agency agreement. The average annual return on these certificates is ranging from 10% to 12%. (7/3) Government s Bonds: These bonds are issued by the Ministry of Finance and are distributed through Sudan Financial Services Company. The maturity of these bonds is from 2 to 6 years, these bonds are ijarh contracts invested in assets management. The profits distubuted every 3 months and these bonds are quoted and listed in Khartoum stock exchange. (7/4) Ijarah certificates (Shama): Shama certificates are Khartoum Refinery bonds which are quoted and listed in Khartoum stock exchange with an average return of 14% distributed every 3 months and the maturity of these bonds are 7 years started from October (8) Available for Sale Investments: Khaleej National Flour Mills Co. 24,154,631 24,154,632 Financial Investment Bank 2,361,864 2,117,016 Annual Report

27 Annual Report 2011 National Agency for Export Development 250, ,000 Electronic Banking Services 126, ,114 Rayaam Printing and Publishing. 100, ,000 Joba Insurance 13,230,000 - Rural Development 221,100 - Arab financial services 309,808 - sudanese Rural development 1,343,377 - Kenana Diary Factory 2,660,000 2,660,000 Transworld Petroleum 500, ,000 provision for Investmant )3,160,000( )3,160,000( (9) Investments in Subsidiaries: 42,096,894 26,747,762 Sudanese Investments and Projects Co. - 3,999,200 Al Faransi Financial Services Co. 3,960,000 2,970,000 3,960,000 6,969,200 The Board of Directors on its meeting on July 27, 2011 decided to liquidate the Sudanese Investments and Projects Co., and that all its property shall be transferred to the bank. (10) Mudaraba Finance: Mudaraba with financial institutions 40,395,000 60,000,000 Investment Funds 53,187,320 71,605,455 93,582, ,605,455 Less: provision for finance losses (note 6/2) )531,873( )2,276,055( 93,050, ,329,400 (11) Musharaka Investments: Musharaka with domestic customers 55,222,501 55,593,919 Less: provision for finance losses (note 6/2) )668,881( )699,711( (12) Other Assets: 54,553,620 54,894, SDG 2010 SDG Receivables under collection (note 12/1) 39,734,694 46,553,601 Revaluation of assets and liabilities (note 12/2) 23,590,886 28,309,064 27

28 28 Accrued revenue 19,722,909 8,766,850 Staff loans 25,509,894 18,092,510 Other Debit Balances 8,699,427 8,330,000 Legal claims 1,913,166 3,055,837 Prepaid expenses 2,522,950 2,624,238 Inventory - printing 558, ,719 Rehabilitation expenses 2,891,313 2,882,063 Inventory - Goods 14,313,015 15,005,290 Direct investment 291,788 3,388,667 Loans without profits - 1,500,000 Others - 1,312,223 Exchange revenue for Central Bank of Sudan Note (12/3) 15,334,134 8,646,508 National restrictions 409,125 - provision for doubtful debts )1,175,160( )1,209,430( 154,316, ,725,140 (12/1) Receivables under collection: Represents long outstanding receivables since The Central Bank of Sudan agreed to be amortized over 10 years starting from 2008 by charging the income statement the amount of SDG 6.5 million annually. (12/2) Revaluation of Assets and Liabilities: Represent foreign exchange losses arising from revaluation of assets and liabilities of the bank from foreign currencies to local currency which related to year The management agreed with the Central Bank of Sudan to amortize these losses over 6 years starting from this year by charging the income statement the amount of SDG 4.7 million annually. (12/3) Exchange revenue for Central bank of Sudan: Represents purchases of foreign currency from the customers of the bank on behalf of Central Bank of Sudan. Such transactions resulting in the following balances: Amounts due from Central Bank of Sudan (local currency) 74,017,105 SDG Amounts due to Central Bank of Sudan foreign currency) 58,682,971 SDG 15,334,134 Annual Report

29 Annual Report 2011 (13) Fixed Assets: Motor Vehicles Furniture & Fittings & Equipment Electronic Equipment Lands Buildings Assete Under consruction SDG SDG SDG SDG SDG SDG SDG Cost January 1,2011 6,916,709 20,624,153 10,219,134 39,124,441 33,629,802 1,403, ,918,086 Additions 2,102,337 1,318, , ,369 3,650,790 8,376,493 Disposals (707,265) (119,742) (39,984) - - (866,991) As of December31,2011 8,311,781 21,823,374 10,986,184 39,124,441 34,127,171 5,054, ,427,587 Depreciation January 1,2011 4,467,859 15,204,395 6,259, ,509 4,035,594-30,601,793 Charge for the year 1,057,866 1,756,643 1,472, , ,462-5,460,616 Disposals (684,728) (113,750) (39,984) (838,462) As of December31,2011 4,840,997 16,847,288 7,691, ,141 4,885,056-35,223,947 Net Carrying Values As of December31,2011 3,470,784 4,976,086 3,294,719 38,165,300 29,242,115 5,054,637 84,203,640 As of December31,2010 2,448,850 5,419,758 3,959,698 38,489,932 29,594,208 1,403,847 81,316,293 Total 29

30 30 (14) Current Accounts: Local currency 671,622, ,105,703 Foreign currency 154,973, ,546,163 Saving Accounts 107,366,738 81,438, ,963, ,090,068 (15) Other Liabilities: Cash margin against letters of credit 94,116,057 62,792,860 Cash margin against letters of guarantee 5,032,103 5,573,872 Notes payable 34,695,417 38,615,303 Accrued charges 16,667,028 10,184,104 Other credit balances 9,111,286 7,962,047 Export accounts 51,184,070 10,355,844 Dividends payable 3,725,740 2,997,319 Transfers under clearance 3,678,139 2,477,450 Foreign banks interest * 616, ,076 Staff deposits 292, , ,119, ,326,648 * Foreign banks interest Foreign banks interest: These are interest received due to transactions with foreign banks which will be treated in accordance with instructions of Sharia Supervisory Board. (16) Provisions: Zakah provision 2,632,250 2,203,038 End of service benefits 37,727,803 25,319,979 Business profit tax provision (note 16/1) 217, ,355 Provision for deposits Guarantee (note 16/2) 2,281,959 1,960,562 42,859,732 29,806,934 (16/1) Tax provision: * * There is no business profit tax provision for this year as the exempted profit from Shahama amounting to SDG 40,687,911 is greater than net profit. (16/2) Provision for bank deposit security fund: Provision expensed for the year 1,958,645 1,734,622 Unrestricted investment account holders balance 323, ,940 2,281,959 1,960,562 Annual Report

31 Annual Report 2011 (17) Equity of unrestricted investment account holders: Unrestricted investment account holders balance 219,018, ,717,301 Unrestricted investment account holders return for the year 19,197,364 14,811,226 Profits paid during the year )1,656,529( )1,758,835( Holders share in Fund grantee provision )323,314( )225,940( 236,236, ,543,752 (18) Capital: Authorized capital 300,000, ,000,000 Paid up capital 103,109, ,106,070 The authorized share capital of the Bank comprises 200,000,000 shares of nominal value of SDG 1.5 each. Dividend: On its annual general meeting on April 4, 2012 the shareholders approved the distribution of cash dividends amounting to SDG 2,910,246 and bonus share amounting to SDG 11,241,246. (19) Reserve: General reserve 18,364,055 17,714,055 Fair Value Reserve 9,754,435 - Fixed assets revaluation Reserve * 54,067,148 54,067,148 Statutory reserve 15,153,572 12,914,454 97,339,210 84,695,657 * Fixed assets revaluation Reserve In 2010 the bank revalued its lands and buildings by a specialized firm resulted in a surplus of SDG 48.3 million. (20) Income from Deferred sales: Murabaha income 25,963,506 25,876,822 Muqawala income 1,766,026 1,531,380 Salam income 725, ,150 Direct investment 108, ,156 Deferred payment sales income 357,535 54,625 28,920,831 28,179,132 (21) Income from investments: Profit from Securities 40,687,991 31,436,527 Musharaka 6,228,141 4,105,569 Income from portfolio investment 5,732,553 6,876,766 Mudaraba - Financial institutions 1,433,761 2,738,592 54,082,446 45,157,455 31

32 32 (22) Income from banking services: Letters of credit 14,380,836 10,036,912 Documents under collections 3,402,623 2,870,385 Commission on checks collections and transfers 6,346,248 5,956,660 Foreign transfers 990,949 1,406,054 Letters of Guarantee 1,344,148 1,260,324 Export 295, ,139 Income from Nile card 649, ,313 Book keeping 2,831,822 2,318,529 Foreign exchange 2,094,011 2,751,024 Trading in currencies 5,154,994 6,176,440 Communication commission 375, ,738 Income from investments (Note 22/1) 4,288,654 3,878,228 42,155,577 37,746,745 (22/1) Income from investments: Khaleej National Flour Mills Co. 2,682,968 2,052,148 Al Faransi Financial Services Co. 1,138,500 1,445,400 Electronic Banking Services 12,612 29,804 Financial Investment Bank 454, ,876 Income from Sudanese Investments and Projects Co ,288,654 3,878,228 (23) Other Income: Fees and other commissions 1,557,501 1,760,831 Insurance commission 217, ,246 Gain on sale of fixed assets 376, ,916 Income from Subsidary Liquidation. 11,290,101 - Income received* - 8,330,000 13,440,869 10,531,994 (24) Staff cost: Salaries 11,130,301 10,285,961 Staff bonus 6,105,393 5,465,921 Eids bonus 3,685,908 3,382,829 Vacation 5,814,751 5,245,237 Uniform 3,567,245 3,249,180 End of service benefits 6,744,810 2,966,740 Training 788, ,274 Social Insurance 1,808,647 1,644,050 Health Insurance 1,547,732 1,172,345 Overtime 761, ,378 Tickets 418, ,756 Travel and business trips 160, ,134 Staff Tax 1,306,013 1,142,984 43,839,088 36,209,789 Annual Report

33 Annual Report 2011 (25) General and administration expenses: Printing & stationery 1,238,252 1,190,446 Subscription on bank deposit security fund 1,958,645 1,734,622 Rent 2,252,964 2,040,746 Electricity & water 1,147,119 1,132,707 Board of Directors remuneration 1,180,000 1,180,000 Advertising 1,139,065 1,029,088 Communication 1,295,717 1,158,605 Insurance 965, ,020 Cash handling 376, ,667 Bank charges 523,847 1,151,619 Central Bank Penalties 449,090 24,000 Repair and Maintenance 843, ,461 Fuel and lubricants 548, ,942 Security services 766, ,938 Entertainment & refreshment 360, ,045 Donations and gifts 274, ,891 Transportation 239, ,266 ATM Expenses 1,123, ,689 Subscriptions 426, ,625 Cleaning expenses 344, ,948 Board of Directors expenses 100,552 94,700 Sharia Supervisory Board s expenses 38,400 38,400 Government fees 107, ,187 Legal consultancy fees 85, ,256 General Annual meeting expenses 139, ,777 Postage 85,730 40,595 Audit fees 200, ,000 Miscellaneous 264, ,160 Hotel charges 76,342 65,245 Newspapers and magazines 42,434 40,089 Registration 46,342 52,087 Correspondents` balances 39,209 33,026 18,680,131 16,982,849 (26) Depreciation and Amortization: Fixed Assets Depreciation 5,460,616 5,226,632 Rehibitation expenses amortization 529, ,010 Receivables amortization 7,963,807 8,427,806 Assets and liabilities amortization 4,718,177 - Correspondents balances 1,517,153-20,189,683 14,535,447 33

34 34 (27) Prior Year Adjustments: Personal income tax difference )206,017( )294,514( Golden Steel Co. - )146,813( Government stamp - )15,000( Gum Arabic inventory losses - )303,468( Al Sabigoon Musharka - )45,000( Port Sudan Cotton Co. Gomhoria Branch - )244,498( Accrued expenses 5,415 5,109 Disposals of Furniture )86,316( )1,067,526( Correspondents ` balances written off - )6,520,680( End of service deficit )6,839,801( )20,000,000( Impairment of Investments (Note 27/1) - )35,590,703( Share Capital increase expenses- previous years - )467,122( Micro finance Consultancy - )65,550( Debit balances written off - )309,877( Amortization of leased lands 340,128 - Retained Erning from Sudanese Investments and Projects Co. 47,603 - )6,738,988( )65,065,641( (27/1) Impairment of Investments: Khaleej National Flour Mills Co. - 32,430,703 Kenana Friesland - 2,660,000 Transworld - 500,000-35,590,703 (28) Earning Per Share: Net income for the year 22,391,179 22,443,674 Number of shares 66,737,380 66,737,380 Earning Per Share (29) Contra accounts: Contra accounts not included in the financial statements of the Bank are as follows: Checks under collection 484,350, ,508,477 Letters Of Credit 287,239, ,257,753 Letters Of Guarantee 28,535,271 28,501,460 Documents Proceeds - 109,218,819 Ficilities from Foreign Bank (note 29/1) 42,993,753 15,286,982 Bad Debts 6,751,868 6,516, ,870, ,289,593 Annual Report

35 Annual Report 2011 (29/1) Ficilities from Foreign Bank: Represent facilities extended from correspondent banks to a number of the banks customers. The role of the bank is to manage these facilities in return for agreed commissions to be paid to the bank for such service. (30) Concentration of investments Economic sector: The total Investments for the period amounting to SDG 804,676,046 and it was distributed according to economic sectors as follows: Agriculture 7% Manufacturing 19% Exports 4% Transportation and Storage 3% Vocational and Technical 1% Mining 1% Commercial 17% Import 2% Real State 2% Other segments 44% Total 100% (31) Related party transactions: These represent transactions with related parties, i.e. shareholders, board of directors and senior management of the Bank, and companies of which they are principal shareholders. These transactions are conducted in an arm length basis. Balances with related parties included in the balance sheet are as follows: Major Top Shareholders & Board management of directors & related of the bank companies Total as of31 December 2011 SDG SDG SDG Balance sheet items: Murabaha 1,882,435-1,882,435 Mugaolat 496, ,700 Mudaraba 2,000,000-2,000,000 Income statement Items: Murabha income 121,646 - Mugaolata income 149, ,010 Mudaraba income Top management compensation: Remuneration Contingent Liabilities Letters of credit Letters of guarantee 246, Letters of guarantee Commission 2,460 35

36 36 (32) 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 Bank attempts to control credit risk by monitoring credit exposures continuously. The Bank seeks to manage its credit risk exposure through the diversification of financing and investment activities to ensure that there is no undue concentration of risks with individuals or groups of customers in specific locations or business. The Bank also takes collateral when appropriate. (33) Liquidity risk: Liquidity risk is the risk that the Bank will be unable to meet its net funding requirements. Liquidity risk can be caused by market disruptions or credit downgrades, which may cause certain sources of funding to dry up immediately. To mitigate this risk, management has diversified funding sources and assets are managed with liquidity in mind, maintaining a healthy balance of cash, cash equivalents, and readily marketable securities. The contractual maturities of assets and liabilities have been determined on the basis of the remaining period at the balance sheet date to the contractual maturity date. Management monitors the maturity profile to ensure that adequate liquidity is maintained. The contractual maturities of assets and liabilities have been determined on the basis of the remaining period at the balance sheet date to the contractual maturity date. Management monitors the maturity profile to ensure that adequate liquidity is maintained. Assets Within 3 months From 3 From 6 to 6 Month to 12 Month More than a year Cash and cash equivalents 411,361, ,361,434 Central Bank of Sudan - Statutory cash reserve ,379, ,379,578 Sales receivable 85,348,577 66,989,408 63,126, ,960, ,424,780 Investments in securities 7,353,316 67,000,000 44,500, ,266, ,119,316 Available for sale investments ,096,894 42,096,894 Investments in Subsidiaries ,960,000 3,960,000 Mudaraba 10,000,000 10,000,000 21,915,135 51,135,313 93,050,448 Musharaka - 7,737,588 29,686,406 17,129,626 54,553,620 Other assets 20,606,010 18,043,259 17,561,213 98,106, ,316,794 Fixed assets ,203,640 84,203,640 Total Assets 534,669, ,770, ,788, ,237,967 1,589,466,505 Shareholder`s equity and Liabilities Shareholder`s equity ,287, ,287,700 Current accounts 468,540,976 61,493, ,742, ,185, ,963,030 Other liabilities 57,902, ,687,057 20,909,917 33,620, ,119,758 Provisions ,859,732 42,859,732 Equity of un-restricted investments account ,236, ,236,286 Total liabilities and shareholders` equity Total 526,443, ,181, ,652, ,189,769 1,589,466,505 Annual Report

37 Annual Report 2011 (34) Market risk: Market risk is the risk that the value of an asset will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual investment or its issuer or factors affecting all investments traded in the market. Market risk is managed on the basis of pre-determined asset allocations across various asset categories, diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of market conditions and trends and management s estimate of long and short term changes in fair value. (35) Shares prices risk: Shares prices risk is a risk that the value of the shares will fluctuate as a result of changes in the market prices of the shares. The Board of Directors of the Bank sets limits on the amounts and types of shares to be acquired for investments purposes. The investments committee of the Bank regularly monitors these limits. (36) Profit rate risk: The profit rate risk refers to the risk due to change of profit rates, which might affect the future earnings of the Bank. Exposure to profit rate risk is managed by the Bank through diversification of assets portfolio and by matching the maturities of assets and liabilities. In line with the policy approved by the Board of Directors, the assets and liabilities committee performs regular review of the assets and liabilities in order to ensure that the maturity gap between assets and liabilities is maintained at minimum levels and also to ensure that financing and investments are made for quality assets at higher rate of return. (37) Currency risk: Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk is managed on the basis of limits determined by the Bank s Board of Directors. These limits are monitored continuously to ensure that the net exposure is kept on an acceptable level. Assets 343,801, ,793,000 Liabilities 435,391, ,207,000 (38) Capital adequacy: The Bank monitors the adequacy of its capital using the ratios established by Central Bank of Sudan. Core capital 45,394,000 Total risk weighted assets 480,078,000 The Bank s capital adequacy ratio 9.5% Minimum capital adequacy ratio required 12% 37

38 38 Performance & Financial Report 2011 sudanese frensh bank First: The Balance Sheet The Assets: The bank s assets amounted to million SDG in 2011 compared with million SDG in 2010 with an increase of i.e. 7.21%. The current assets in 2011 amounted to million SDG while the current liabilities at the same time were million SDG. i.e. 1:1.2 circulation rate. This shows that the bank is in a financial position to meet its obligations when required. It also shows the optimum utilization of the bank s resources, It also shows that the bank is able to pay its short term loans without selling its assets. 1, , , , , Assets Development (million SDG) Annual Report

39 Annual Report 2011 Cash and Quasi Cash The cash and quasi cash was million SDG in 2011 compared with million SDG in 2010 with an increase of million SDG i.e. 30% Local Currency Foreign Currency Components of Cash and Quasi Cash (million SDG) Finance: The finance provided in local and hard currencies in 2011 was 775 million SDG compared with 642 million SDG in 2010 with 13.38% increase. Following is the analysis of financing according to the outstanding balance on /12/ compared with the outstanding balance in /12/:- (1) Finance in local currency The finance as an outstanding balance was million SDG on /12/ compared with million SDG on /12/ with million SDG increase i.e %. The balance of settled finance million SDG in 2011 compared with million SDG in Recovered Finance Granted Finance Total finance granted in local currency (Million SDG) 39

40 40 Following are the forms of finance used during the year 2011 according to the balance of finance on /12/. Murabaha: amounted to 42.48% out of the total finance in 2011 compared with 36.6% for the year Musharaka: amounted to 7.27% out of the total finance in 2011 compared with 7.86% for the year Mudaraba: amounted to 9.28% out of the total finance in 2011 compared with 19.59% for the year Salam: amounted to 2.79% out of the total finance in 2011 compared with 28.35% for the year Securities: amounted to 34.39% out of the total finance in 2011 compared with 0.61 for the year Mugawala: amounted to 3.40% out of the total finance in 2011 compared with 3.18% for the year Micro Finance + others: amounted to 0.44% out of the total finance in 2011 compared with 3.81% for the year Skilled Labour 1% Exports 5% Imports 1% Real Estate 1% Transports 4% Other Sectors 4% Industry 23% Local Trade 36% Agriculture 8% Securities 14% Forms of Finance as percentages of the total finance in 2011 Finance According to the Economic Sector In accordance with the policy of the Central Bank of Sudan and the targets of the national economy the management put into consideration, when providing finance, to cover all the sectors. The figures below shows the distribution of finance among the different economic sectors during 2011: 7.79% out of the total available finance was granted to the agriculture sector, 23.37% to the industrial sector, 5.50% to exports sectors, 4.22% to transport sector, 3.57% to import sector, 1.43% to estate sector, 35.79% to local trade sector, 14.08% to securities, 0.56% for handicraftsmen and professionals and 3.69% for other sectors. Annual Report

41 Annual Report 2011 Securities, 34.39% Mugawala, 3.40% Microfinance/ Others 0.44% Salam, 2.79% Murabaha 42.48% Mudaraba, 9.28% Musharaka, 7.27% Banking Finance Analysis according to the Economic sectors 2011 (1) Finance in Foreign Currency: It amounted to million US$ in 2011 compared to million US$ in 2010 with 7.13 million US$ decrease i.e % decrease. The finance in foreign currency achieved 4.90 million SDG profits in 2011 compared with 6.46 SDG in 2010 with 1.56 million SDG decrease i.e % Total Finance in hard currency (million SDG) Fixed Assets: The balance of the historic cost of buying the fixed assets (after additions and discounts raised from million SDG in 2010 to SDG in 2011 with 7.5 million SDG i.e. 6.7% increase. This is due to the additions and after discounting the depreciations the net book value raised from million SDG in 2010 to million SDG in 2011 with 2.88 million SDG i.e. 3.54% increase. This increase was not a real increase in the fixed assets because it included assets under constructions equivalent to 1.40 million SDG in 2010 and 3.65 million SDG in The book value of lands and buildings and assets under execution amounted to million SDG. It represents 86.05% of the total net book value of the fixed assets as on /12/. 41

42 Fixed Assets (million SDG) Second: Liabilities and Shareholders Equity Liabilities: The total liabilities consisting of different deposit including the rights of unrestricted investment accounts customers, payable accounts and other liabilities and owners equity amounted to 1, million SDG in 2011 compared with million SDG in 2010 with an increase of million SDG i.e. 1721%- increase. At the same time the total liabilities without the equity of unrestricted investment accounts customers amounted to million SDG compared with SDG in 2010 with % increase i.e %. 1, , , , , Total Liabilities (million SDG) Deposits The total sum of deposits (local + foreign + margins) and the equity of unrestricted accounts without the return was million SDG in 2011 compared with million SDG in 2010 with an increase of i.e %. The total deposits consisting of current accounts + unrestricted + local and Foreign saving accounts amounted to million SDG in 2011 compared with million SDG in 2010 with an increase of million SDG i.e %. Annual Report

43 Annual Report , , , , Development of Assets (Million SDG) Shareholders Equity and Paid-up Capital: The total shareholders equity consisting paid-up capital, the different reserves +accumulated (losses0 and profits amounted to million SDG in 2011 compared with million SDG in 2010 with an increase of million SDG i.e %. During the last five years the shareholders equity increased from million SDG in 2007 to million SDG in 2011 with an increase of million SDG i.e %. During the last five years, the paid up capital increased from66.95 million SDG in 2007 to million SDG in 2011 with million SDG increase i.e % Shareholders Equity (Million SDG) 43

44 Paid-up Capital (Million SDG) Third: Income Statement: From the analysis of the income statement of 2011 in comparison with that of 2010 one can draw the following: (1) The total income 9before discount of the return of unrestricted investment accounts customers) increased from million SDG in 2010 to million SDG The increase was million SDG i.e %. The return of investment and deferred sales return (after subtracting the returns of unrestricted investment accounts customers) was million SDG in 2011 compared with million SDG in 2010 with an increase of 5.28% million SDG i.e. 9% increase. The income from forward sales and investments (after subtracting the returns of unrestricted investment accounts customers constituted 53.44% of the total revenues. The return of the banking services increased from million SDG in 2010 to million SDG in 2011 with an increase of 4.41 million SDG i.e % increase. (2) The total general and administrative expenditure including allowances +depreciations + extinguishing + finance and investment allowances amounted to 8,923 million SDG in 2011 with million SDG in 2010 with an increase of million SDG i.e % increase. (3) The net income before Zakat and taxes was million SDG in 2011 compared with million SDG in 2010 with an increase of 38 thousand SDG i.e. 1.5% and 0.2% after subtracting Zakat and taxes. (4) The net income (after Zakat and taxes) ratio to the paid-up capital was 22% in 2011 compared with 22% in Annual Report

45 Annual Report 2011 List of Foreign Correspondents sudanese frensh bank (1) Commercial International Bank (Egypt) Cairo - Egypt Nile Tower Building 2123/ Chares De Gauls Geza P.O. Box: 2430 Cairo Swift Code: CIBEEGCX (2) Arab Banking Corporation Cairo - Egypt ABC Bank, 1, El Salih Ayoub St, Zamalek P.O. Box 64 Zamalek, Cairo A.R.E. (11211) Swift Code: EAABEGCXXXX (3) Alrajhi Banking And Investment Corporation Riyadh The Kingdom of Saudi Arabia P.O. Box: 28 Postal Code Swift Code: RJHISARIA (4) National Commercial Bank Jeddah The Kingdom of Saudi Arabia P.O. Box: 3555 Jeddah Swift Code: NCBKSAJE (5) Qatar Islamic Bank Doha Qatar P.O. Box: 559 Swift Code: QISBQAQA (6) Arab Banking Corporation ABC Manama Bahrain ABC Tower, Diplomatic Area P.O. Box: 5698 Manama Bahrain Swift Code: ABCOBHBM (7) Arab Investment Co. Manama Bahrain P.O. Box: 5559 Swift Code: TAIQBHBM (8) Albaraka Islamic Bank Manama Bahrain P.O. Box: 1882, Manama Swift Code: ABIBBHBMXXX 45

46 46 (9) ALUBAF Arab International Bank Manama Bahrain P.O. Box: 11529, Manama Swift Code: ALUBBHBMXXX (10) Ithmar Bank Manama Bahrain Seef Tower, Alseef District P.O. Box: 3005, Manama Swift Code: FIBHBHBM (11) Arab Bank For Investment And Foreign Trade Abu Dhabi Abu Dhabi U.A.E. P.O. Box: Arbift Building H.E. Hamdan St. Tousit Club Area Abu Dhabi, U.A.E. (ARABFT) Swift Code: ABINAEAA (12) Abu Dhabi Islamic Bank Abu Dhabi U.A.E. P.O. Box:313 Tel: (972) Fax: (9712) Swift Code: ABDIAEAD (13) Mashreq Bank PSC Dubai U.A.E. Head Office Tel: P.O. Box: 1250, Dubai U.A.E. Swift Code: BOMLAEAD (14) United Arab Bank Sharjah U.A.E. P.O. Box: 3562 Tel: Fax: Swift Code: UARBAEAA (15) Bank Muscat Muscat Oman S.A.O.G. P.O. Box: 134 Postal Code:112 RUEI Swift Code: BMUSOMR (16) The Housing Bank For Trade & Finance Amman - Jordan P.O. Box: 7693 Amman Swift Code: HBHOJOA (17) Union Bank For Saving Amman - Jordan Shaker Bin Zayed Street - Shemeisani P.O. Box: Code: Jordan Swift Code: UBSIJOAX (18) Bank Of Beirut S.A.L. Beirut - Lebanon P.O. Box: Bank Of Beirut S.A.L. Building Foch St. Beirut Central District Swift Code: BABELBBE (19) Byblos Bank Beirut Beirut - Lebanon P.O. Bank Byblos Tower Building, Elias Serkis Avenue Achratia, Beirut, Lebanon Swift Code: BYBALBBX (20) Banque Libano Francaise SAL Beirut Lebanon Beirut Liberty Plaza BLDG, Roma Street, Hamra Beirut, P.O. Box: Hamra Swift Code: BLFSLBBX (21) Fransa Bank SAL Beirut Lebanon Riad El Solh P.O. Box: Beirut Swift Code: FSABLBBXXXX (22) First International Merchant Bank Malta 7th Floor The Plaza Commercial Center Bisazza Street Sliema SLM. 15 Malta Swift Code: FIMBMTM3 (23) Al Baraka Turk Participation Bank Istanbul - Turkey Buyukdere Cad. No Mecidiyekoy, Istanbul, Turkey Swift Code: BTFHTRIS (24) UBAE Arab Italian Bank S.P.A. Roma Rome - Italy VIA Quintino Sella 2 CAP00187 Swift Code: UBAIITRRA (25) Uni Credito Itaciano S.P.A. Millano - Italy Piazza Cordusio Milano - Italia Swift Code: UNCRITMM Annual Report

47 Annual Report 2011 (26) BCP Banque De Commerce Et De Placements NTS Geneva - Swezerland 1, Rue De la Fontaine, Case Postale 3069, P.O. Box: 133 CH Geneva 1 Swift Code: BPCPCHGG (27) Unicredit Bank Austria Vienna Austria 1030 Vienna, Vordero Zollamtsstrasse/3 Swift Code: BKAUATWW2XXX (28) Byblos Bank Europe S.A. Brussels Belgium Rue Montoyer 0 Bte.3 B Brussels Swift Code: BYBBBEBB (29) The Royal Bank of Scotland (RBS) Amesterdam Netherland Gustav Mahlerlaan PP Amesterdam P.O. Box: AX Swift Code: RBOSNL2A (30) Commerz Bank Frankfurt - Germany Financial Institution Postal Address Frankfurt Main Swift Code: COBADEFFXXX (31) Union Des Banque Arab ET Francaise (UBAF) Paris - France 190 Avenue Charles De Gaulie Neuilly Cedex France Swift Code: UBAFFRPP (32) Natiexis Banque Paris - France Centre De Traitement BP Paris Cedex 02 Swift Code: CCBPFRPP (33) Banque Intercontinentale Arabe Paris - France 67 Avenue Franklin D. Roosevelt Paris Swift Code: BIARFRPPA (34) Byblos Bank Europe S.A. London - England Suite 5, First Floor. Berkeley Square House. London, WIJ 6BS, UK Swift Code: BYBBGB2LXXX (35) British Arab Commercial Bank London - England 8-10 Mansion House Place London EC4N 8BJ - UK Swift Code: BACMGB2LA (36) Bank Of Beirut (UK) LTD London - England 17 A Curzon Street, London W1J 5HS, U.K. Swift Code: BRBAGB2L (37) CIMB Bank Beruad Kuala Lumpur Kuala Lumpur - Malaysia 6 Jalan Tun Perak P.O. Box: Swift Code: CIBBMYKLAXXX (38) Korea Exchange Bank Seoul - Korea 181, Euljiro 2 - GA, JUNG - GU, C P.O. Box: 2924, Seoul , Korea Swift Code: KOEXKRSE (39) Bank of China Bejing - China 410 Fucheng Memnei Cajie Swift Code: BKCHCNBJ 47

48 48 Your best banking choice Annual Report