SAIB Trade Finance Fund (Managed by Alistithmar for Financial Securities and Brokerage Company)

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1 (Managed by Alistithmar for Financial Securities and Brokerage Company) FINANCIAL STATEMENTS 31 DECEMBER

4 BALANCE SHEET As at 31 December Notes ASSETS Cash and cash equivalents 4 143,660,357 20,798,690 Money market placements 5 692,546, ,819,578 Held to maturity investments 6 5,000,000 29,266,509 Trading investments 7 285,875,291 55,916,111 Accrued income 7,858,945 5,298,346 Other receivable 111, ,980 1,135,052, ,204,214 LIABILITIES Risk allowance 9 6,078,955 5,118,164 Accrued expenses 110, ,751 6,189,396 5,418,915 NET ASSETS 1,128,863, ,785,299 Units in issue 83,967,726 38,023,572 Per unit value The accompanying notes 1 to 13 form part of these financial statements. 3

5 STATEMENT OF OPERATIONS Year ended 31 December Notes INVESTMENT INCOME Special commission income 17,251,111 14,653,073 Trading income 8 4,856, ,651 22,107,710 14,806,724 EXPENSES Management fees 9 (4,964,174) (3,035,901) Risk allowance 9 (960,791) (1,147,872) Service charges 9 (32,879) (39,886) Other expenses 10 (71,921) (305,731) (6,029,765) (4,529,390) NET INCOME FROM OPERATIONS 16,077,945 10,277,334 The accompanying notes 1 to 13 form part of these financial statements. 4

6 STATEMENT OF CASH FLOWS Year ended 31 December Note OPERATING ACTIVITIES Net income from operations 16,077,945 10,277,334 Adjustment for: Movement in unrealised gains on trading investments (3,829,710) (880,007) Changes in operating assets and liabilities: Money market placements (295,727,262) 251,671,733 Held to maturity investments 24,266, ,511,831 Trading investments (226,129,470) (53,655,010) Accrued income (2,560,599) 272,797 Other receivable (6,403) 102,354 Risk allowance 960,791 1,147,872 Accrued expenses (190,310) (564,925) Net cash (used in) from operating activities (487,138,509) 380,883,979 FINANCING ACTIVITIES Proceeds from units sold 1,103,540, ,648,800 Value of units redeemed (493,539,845) (604,946,417) Net cash from (used in) financing activities 610,000,176 (382,297,617) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 122,861,667 (1,413,638) Cash and cash equivalents at the beginning of the year 20,798,690 22,212,328 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 4 143,660,357 20,798,690 Operational cash flows from special commission income Special commission income received 14,690,512 14,925,870 The accompanying notes 1 to 13 form part of these financial statements. 5

7 STATEMENT OF CHANGES IN NET ASSETS Year ended 31 December NET ASSET VALUE AT THE BEGINNING OF THE YEAR 502,785, ,805,582 CHANGES FROM OPERATIONS Net income from operations 16,077,945 10,277,334 CHANGES FROM UNIT TRANSACTIONS Proceeds from units sold 1,103,540, ,648,800 Value of units redeemed (493,539,845) (604,946,417) Net change from unit transactions 610,000,176 (382,297,617) NET ASSET VALUE AT THE END OF THE YEAR 1,128,863, ,785,299 UNIT TRANSACTIONS Transactions in units for the year ended 31 December are summarised as follows: Units Units UNITS AT THE BEGINNING OF THE YEAR 38,023,572 67,337,345 Units sold 82,918,363 16,996,120 Units redeemed (36,974,209) (46,309,893) Net increase (decrease) in units 45,944,154 (29,313,773) UNITS AT THE END OF THE YEAR 83,967,726 38,023,572 The accompanying notes 1 to 13 form part of these financial statements. 6

8 NOTES TO THE FINANCIAL STATEMENTS 31 December 1 GENERAL SAIB Trade Finance Fund (the Fund) is an open-ended investment fund created by an agreement between the Fund Manager and investors (the Unitholders) in the Fund. The Fund commenced operations on 30 June The Fund is designed for investors seeking capital preservation and high liquidity through exposure to Shariah compliant assets. All income is reinvested in the Fund and is reflected in the unit price. Alistithmar for Financial Securities and Brokerage Company (Alistithmar Capital), wholly owned subsidiary of the Saudi Investment Bank (The Bank) is the Fund Manager, Broker and Custodian of the Fund. 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) published by Capital Market Authority (CMA) on 3 Dhul Hijja 1427H (corresponding to 24 December 2006) and effective from 6 Safar 1438H (corresponding 6 November ) by the New Investment Fund Regulation published by the Capital Market Authority on 16 Sha aban 1437H (corresponding 23 May ), 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 at fair value of trading investments. Cash and cash equivalents For the purposes of cash flow statement, cash and cash equivalents consist of bank balances and money market placements with an original maturity of three months or less Investment valuation Money market placements are carried at cost. Equity investments which are purchased for trading purposes are valued at their market price as at the balance sheet date. Investments in mutual funds are valued on the basis of net asset values published by the Fund Manager. Investments that are bought with the intention of being held to maturity are carried at cost (adjusted for any premium or discount on an effective yield basis), less permanent decline in value. Investment transactions Investment transactions are accounted for as of the trade date. Revenue recognition Special commission income is recognised on an effective yield basis. Trading income includes movement in unrealised gains (losses) from changes in fair value, realised gains (losses) from sale of trading investments and dividends from trading investments. Realised gains (losses) on trading investments sold are determined on a weighted average cost basis. Other income is recognized when earned. Zakat and income tax Zakat and income tax are the obligations of the Unitholders and are not provided for in the accompanying financial statements. Foreign currencies Transactions in foreign currencies are translated into Saudi Riyals at the rates of exchange prevailing at the dates of the transaction. Assets and liabilities in foreign currencies at the balance sheet date are retranslated at the rates of exchange ruling at that date. Resulting exchange gains and losses are taken to the statement of operations. 7

9 NOTES TO THE FINANCIAL STATEMENTS (continued) 31 December 4 CASH AND CASH EQUIVALENTS Bank balances 8,660,357 20,798,690 Money market placements with an original maturity of three months or less 135,000, ,660,357 20,798,690 5 MONEY MARKET PLACEMENTS Murabaha placements with other banks 692,000, ,184,043 Murabaha car financing placements with the Bank 546, , ,546, ,819,578 Money market placements comprise placements with commercial banks with minimum investment grade credit rating and have an original maturity of more than three months from date of placement. The average variable special commission rate on the placement as at 31 December is based on market rate. 6 HELD TO MATURITY INVESTMENTS Sukuk: Spichem 5,000,000 5,000,000 Saudi British Bank - 12,152,699 Awwal Bank (formerly known as Saudi Hollandi Bank) - 12,113,810 5,000,000 29,266,509 7 TRADING INVESTMENTS 8 Cost Market value % of market value Mutual funds Al Qawafeel Commodities Trading Fund 83,057,394 84,240, Al-Sunbullah Riyal Fund 80,672,100 81,941, Al Rajhi Commodities Fund 76,602,987 77,463, Falcom Fund 31,037,726 32,100, Al Awal Capital Murabaha SAR Fund 9,800,000 10,130, ,170, ,875, Cost Market value % of market value Mutual funds Falcom Fund 20,037,726 20,477, Al-Sunbullah Riyal Fund 15,203,011 15,441, Al Qawafeel Commodities Trading Fund 10,000,000 10,011, Al Awal Capital Murabaha SAR Fund 9,800,000 9,985, ,040,737 55,916,

10 NOTES TO THE FINANCIAL STATEMENTS (continued) 31 December 8 TRADING INCOME, NET Movement in unrealised gains 3,829, ,007 Realised gains (losses) 1,026,889 (726,356) 4,856, ,651 9 TRANSACTIONS WITH RELATED PARTIES The Fund pays a management fee calculated at an annual rate of 0.50% of the net asset value at each valuation date. The management fees reflected in the statement of operations represent the fees charged by the Fund Manager during the year. Additionally, administration expenses paid by the Fund Manager on behalf of the Fund are reimbursed from the Fund, subject to a maximum administration expense of 0.20% of net asset value per annum. At each valuation date, the Fund pays to the Bank service charges annually at 5.5% of the Fund s car financing placements with the Bank. The Fund calculates a risk allowance at an annual rate of 10% of net income from operations at each valuation date. The risk allowance is in respect of the credit risk on Fund s assets. The risk allowance reflected in the statement of operations represents the allowance charged during the year. The Bank acts as the Fund s banker. The Unit holders account at 31 December, included units held as follows: Units Units Held by the Bank 7,700,126 7,700,126 Held by the Fund Manager 4,515, ,219 Held by employees of the Fund Manager - 12,425 12,216,033 8,328, OTHER EXPENSES Audit fees 30,000 30,000 Shariah board member fees 18,500 20,765 Foreign exchange loss 8, ,666 CMA fees 7,500 7,500 Tadawul fees 5,000 5,000 Fund board member fees 2,800 2,800 71, ,731 9

11 NOTES TO THE FINANCIAL STATEMENTS (continued) 31 December 11 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 sensitivity of the income is the effect of the assumed changes in special commission rates on the special commission income for one year, based on the floating rate financial assets and financial liabilities held as at 31 December. A hypothetical 10 basis points change in the weighted average special commission rates of the floating rate financial assets balances at 31 December would impact special commission income by approximately 5,000 (: 29,000) annually in aggregate. There are no floating rate special commissions bearing financial liabilities. 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 exposed to credit risk for its Cash and cash equivalents, money market placements, held to maturity investments, accrued income and other receivable. The Fund Manager seeks to limit its credit risk by monitoring credit exposures. The Fund does not have a formal internal grading mechanism. Credit risk is managed and controlled by monitoring credit exposures, limiting transactions with specific counter-parties, and continually assessing the creditworthiness of counter-parties. Credit risks are generally managed on the basis of external credit grading of the counterparty. The table below shows the maximum exposure to credit risk for the components of the balance sheet. Cash and cash equivalents 143,660,357 20,798,690 Money market placements 692,546, ,819,578 Held to maturity investments 5,000,000 29,266,509 Accrued income 7,858,945 5,298,346 Other receivable 111, ,980 Total exposure to credit risk 849,177, ,288,103 Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in releasing funds to meet commitments associated with its financial liability. 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 the subscriptions and redemptions of units daily and it is, therefore, exposed to the liquidity risk of meeting Unitholders redemptions. The Fund s securities are considered to be readily realisable and the units can easily be redeemed at any time. The Fund Manager monitors the liquidity requirements on a regular basis and seeks to ensure that sufficient funds are available to meet any 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 views the Saudi Riyal as its functional currency. The Fund s financial assets and liabilities are denominated in Saudi Riyals and US Dollars and as the Saudi Riyal is pegged to the US Dollar, the Fund is not exposed to significant currency risks. 10

12 NOTES TO THE FINANCIAL STATEMENTS (continued) 31 December 12 FAIR VALUES OF FINANCIAL INSTRUMENTS Financial instruments comprise financial assets and financial liabilities. The Fund s financial assets consist of bank balances, money market placements, held to maturity investments, trading investment and accrued income. 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 investment in mutual fund, fair value is determined by reference to net asset value as published by the Fund Manager. The fair values of financial instruments, which are otherwise carried at cost, at 31 December, are set out below: Sukuk: Spichem 5,000,000 5,000,000 Saudi British Bank - 12,000,000 Awwal Bank ( formerly known as Saudi Hollandi Bank) - 12,000,000 5,000,000 29,000, LAST VALUATION DAY The last valuation day of the year was 31 December (: 31 December ). 11

SAIB Trade Finance Fund (Managed by Alistithmar for Financial Securities and Brokerage Company)

SAIB Trade Finance Fund (Managed by Alistithmar for Financial Securities and Brokerage Company) (Managed by Alistithmar for Financial Securities and Brokerage Company) UNAUDITED INTERIM FINANCIAL STATEMENTS 30 JUNE INTERIM BALANCE SHEET As at ASSETS Note 31 December (Audited) Bank balance 40,748,165