Al Mubarak Diyar Jeddah Real Estate Fund (Managed by Arab National Investment Company)

Transcription

1 (Managed by Arab National Investment Company) UNAUDITED INTERIM FINANCIAL STATEMENTS 30 JUNE

2

3 BALANCE SHEET As at Note 30 June 31 December 30 June ASSETS Bank balance 55,466 1,021,053 6,025,065 Trading investments 5 5,928,257 9,845,632 11,789,503 Investments in real estate properties, at cost 6 324,537, ,849, ,327,231 Advances to suppliers 1,106,274 1,193,713 1,210,626 Advance marketing fees 9 100, , ,000 TOTAL ASSETS 331,727, ,009, ,452,425 LIABILITIES Payable to suppliers 729, , ,500 Other payables related to contracts 10,537,080 10,274,761 12,019,584 Management fee payable 9-1,755,000 3,510,000 Administration payable 9 331, , ,715 Performance fees payable - - 7,701,623 TOTAL LIABILITIES 11,598,008 12,897,501 24,256,422 NET ASSETS 320,129, ,112, ,196,003 Units in issue 35,100,000 35,100,000 35,100,000 Per unit value The attached notes 1 to 11 form part of these interim financial statements. 2

4 STATEMENT OF OPERATIONS For the six-month period ended INVESTMENT INCOME Note Trading income 7 82,625 52,965 EXPENSES Performance fee 9 - (7,701,623) Management fee 9 - (3,510,000) Administration 9 (65,452) (116,789) (65,452) (11,328,412) NET INCOME (LOSS) FROM OPERATIONS 17,173 (11,275,447) The attached notes 1 to 11 form part of these interim financial statements. 3

5 STATEMENT OF CASH FLOWS For the six-month period ended OPERATING ACTIVITIES Net income (loss) from operations 17,173 (11,275,447) Adjustment for: Movement in unrealised loss of trading investment 98, ,779 Changes in operating assets and liabilities: Trading investments 3,819,213 6,758,255 Investments in real estate properties (3,688,081) (1,823,141) Advances to suppliers 87, ,959 Payable to suppliers 135,767 (2,330,296) Other payables related to contracts 262, ,790 Management fees payable (1,755,000) - Administration payable 57,421 83,215 Performance fees payable - 7,701,623 Net cash (used in) from operating activities (965,587) 653,737 (DECREASE) INCREASE IN BANK BALANCE (965,587) 653,737 Bank balance at the beginning of the period 1,021,053 5,371,328 BANK BALANCE AT THE END OF THE PERIOD 55,466 6,025,065 The attached notes 1 to 11 form part of these interim financial statements. 4

6 STATEMENT OF CHANGES IN NET ASSETS For the six-month period ended NET ASSET VALUE AT THE BEGINNING OF THE PERIOD 320,112, ,471,450 CHANGES FROM OPERATIONS Net income (loss) from operations 17,173 (11,275,447) NET ASSET VALUE AT THE END OF THE PERIOD 320,129, ,196,003 UNIT TRANSACTIONS Transactions in units for the period ended 30 June are summarised as follows: Units Units UNITS AT THE BEGINNING AND END OF THE PERIOD 35,100,000 35,100,000 The attached notes 1 to 11 form part of these interim financial statements. 5

7 NOTES TO THE INTERIM FINANCIAL STATEMENTS 1 GENERAL Al Mubarak Diyar Jeddah Real Estate Fund (the Fund) is a Shariah compliant closed-ended real estate fund created by an agreement between Arab National Investment Company (the Fund Manager) and investors (unit holders) in the Fund. The investment objective of the Fund is for of raw land into serviced parcels of land and to construct several buildings and then the sale of such developed land and buildings. The Fund was established on 29 Muharram 1432H (corresponding to 04 January 2011) as per approval from the Capital Market Authority (CMA).The Fund has fixed unit holders subscriptions for a limited duration of three and a half years from the closing date extendable for an additional period not to exceed one year. The Fund is designed for investors seeking to invest in real estate properties in the Kingdom of Saudi Arabia in accordance with Islamic principles ( Sharia ). The Fund commenced its operations on 01 Jumad Awal 1432H (corresponding to 5 April 2011). The Fund s interim results may not be an accurate indicator of the annual results of the operations. The books and records of the Fund are maintained in Saudi Riyals (). 2 MATURITY OF THE FUND As per the terms and conditions of the Fund, the Fund s duration was completed on 5 October, including the extended period of one year. Due to some legal disputes on a minor segment of the investment properties, the Fund Manager is unable to liquidate the Fund and dispose of the investment properties in order to return the proceeds to the unitholders. The Fund Manager has intimated its inability of liquidation to all the unitholders and the CMA. The matter is currently in the court of law and based on the legal opinion, the Fund Manager believes that the outcome would be in favour of the Fund as the other party to the dispute has no legal justification of its claim. Accordingly, the Fund will be liquidated once the final outcome of the legal proceedings is finalised. 3 REGULATING AUTHORITY The Fund is governed by the Real Estate Investment Fund Regulations (the regulations) issued by CMA on 19 Jumada Thani 1427H (corresponding to 15 July 2006) detailing requirements for all real estate funds operating within the Kingdom of Saudi Arabia. 4 SIGNIFICANT ACCOUNTING POLICIES The interim financial statements have been prepared in accordance with the Standard on Interim Financial Statements issued by the Saudi Organization for Certified Public Accountants. The significant accounting policies adopted are as follows: Accounting convention The interim financial statements are prepared under the historical cost convention modified to include the measurement of fair value of trading investment. Investment valuation Investments which are purchased for trading purposes are valued at their market price as at the balance sheet date. Unrealised gains and losses on the revaluation of investments and realised gains and losses on the disposal of investments are recognised in the statement of operations.investments in real estate properties are carried at cost. Development, developer fees, fund consultant engineer fees and project consultant engineer fees incurred to date are capitalised and included in the carrying value of the real estate.the fair value of investments in real estate properties is disclosed in the note 6 to the interim financial statements Revenue recognition Revenue arising on sale of plots of service lands and residential/commercial buildings is recognised when a sale has been consummated, i.e. a contract is signed and legal title has transferred. Realised gains and losses on the disposal of investments are recognised in the interim statement of operations.trading income includes all gains and losses from changes in fair value of financial assets held as trading investment. Realised gains and losses on trading investment sold are determined on a weighted average cost basis. Investment transactions Investments transactions are accounted for as of the trade date. Zakat and income tax Zakat and income tax is the obligation of the unit holders and is not provided for in the interim financial statements. 6

8 NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) 5 TRADING INVESTMENTS The composition of the trading investment portfolio is summarised below: Market Value Investments in Al-Mubarak SAR Trade Fund 5,928,257 5,620,122 Market Value 31 December Investments in Al-Mubarak SAR Trade Fund 9,845,632 9,439, June Market Value Investments in Al-Mubarak SAR Trade Fund 11,789,503 11,362,271 Investments in Al-Mubarak SAR Trade Fund are unrated. The Fund also does not have an internal grading mechanism. The investment is in the mutual fund managed by the Fund Manager which is exposed to credit risk. However, the Fund Manager seeks to limit its mutual funds credit risk by monitoring credit exposure. 6 INVESTMENTS IN REAL ESTATE PROPERTIES The composition of the investment in real estate properties on the last valuation day is summarised below: Project description Development incurred Total cost excluding including Land at north-east Jeddah 237,625,704 86,911, , ,787, ,713,969 7

9 NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) 6 INVESTMENTS IN REAL ESTATE PROPERTIES (continued) 31 December Project description Development incurred Total cost excluding including Land at north-east Jeddah 237,625,704 83,223, ,849, ,787, ,514, June Project description Development incurred Total cost excluding including Land at north-east Jeddah 237,625,704 81,701, ,327, ,787, ,114,781 The investment in real estate properties are carried at historical cost. The fair value of investments in real estate properties is based on an average of two market value obtained from the independent valuers. These values are subject to the independent valuers estimation uncertainties. The land was purchased from two owners, Al Rajhi Development Co. and Hamad Moh d Ben Saidan & Partners Real Estate Investment Co. The Fund also paid a purchase commission of 5,795,749 to Hamad Moh d Ben Saidan & Partners Real Estate Investment Co. This purchase commission is included in the cost of land. As the Fund is not legally permitted to own real estate in the Kingdom of Saudi Arabia, the title deeds to the real estate properties are registered in the name of Mr. Saleh Bin Rashid Bin Abdul Rehman Al Rashid, Chairman of Arab National Bank (the Bank) in his personal capacity, who acts as a custodian of the title deeds. The Fund Manager has entered into an agreement with Hamad Moh d Ben Saidan & Partners Real Estate Investment Co. (the Developer) to provide a project management services in relation to the of the projects. Against this project management services, the fund is liable to pay fees to the developer at 10% of the total contracts values under their management excluding the cost of land and purchase commission. The same been capitalised in the real estate project. Till date, the Fund also paid fees of 2,620,000 (: 2,620,000) and 2,768,333 (: 2,168,333) to a fund consultant engineer and a project consultant engineer respectively during the period. These fees are also capitalised in the real estate project. 7 TRADING INCOME Trading income, net for the six month period ended 30 June are summarised as follows: Movement in unrealised loss of trading investment (98,162) (188,779) Realised gains on sale of trading investment 180, ,744 82,625 52,965 8

10 NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) 8 EFFECT ON NET ASSET VALUE IF INVESTMENTS IN REAL ESTATE PROPERTIES ARE FAIR VALUED In accordance with Article 22 of the Real Estate Investment Funds Regulations issued by CMA in the Kingdom of Saudi Arabia, the Fund Manager evaluates the Fund s assets based on an average of two evaluations prepared by independent evaluators. However, in accordance with generally accepted accounting standards in the Kingdom of Saudi Arabia, investment in real estate properties are carried at cost in these interim financial statements. i) The unrealised gain on real estate properties based on real estate evaluations (fair value) are set out below: 31 December 30 June of investment in real estate properties (refer note 6) 647,713, ,514, ,114,781 value of investment in real estate properties (refer note 6) 324,537, ,849, ,327,231 Unrealised gain based on real estate evaluations 323,176, ,665, ,787,550 Units in issue 35,100,000 35,100,000 35,100,000 Per unit share in unrealised gain based on real estate evaluations ii) The net asset values, using the fair values of the real estate properties are set out below: 31 December 30 June Net asset value, at cost as presented in these interim financial statements 320,129, ,112, ,196,003 Unrealised gain based on real estate evaluations (refer note 8 (i)) 323,176, ,665, ,787,550 Net asset at fair value 643,305, ,777, ,983,553 iii) The net asset value per unit, using the fair values of the real estate properties are set out below: 31 December 30 June Net asset value per unit, at cost as presented in these interim financial statements Impact on net assets value per unit on account of unrealised gain based on real estate evaluations (note 8 (i)) Net asset value per unit at fair value

11 NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) 9 TRANSACTIONS WITH RELATED PARTIES The Fund pays the Fund Manager a management fee of 2% per annum of the initial subscriptions of the Fund. Additionally, the Fund Manager has charged administration of 65,452 (: 116,789) during the period as per the terms of the Fund. The Fund Manager has entered into an agreement with the developer to provide services in connection with the management of the marketing efforts of the project. The Fund Manager has paid down payment of 100,000 (: 100,000) as per the agreement The unit holders account included units held as follows. Units 31 December Units 30 June Units Held by the Developer 8,775,000 8,775,000 8,775,000 Held by the Fund Manager 964, , ,539 9,739,539 9,739,539 9,739, LAST VALUATION DAY The last valuation day of the period was (30 June ). 11 APPROVAL OF INTERIM FINANCIAL STATEMENTS The interim financial statements were approved by the Fund s Board of Directors on 4 Dhul-Qadah 1437H (Corresponding to 7 August ). 10