AMWAL BROKERAGE LLC FUJAIRAH- UNITED ARAB EMIRATES INTERIM FINANCIAL INFORMATION AND REVIEW REPORT FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2007

Transcription

1 AMWAL BROKERAGE LLC FUJAIRAH- UNITED ARAB EMIRATES INTERIM FINANCIAL INFORMATION AND REVIEW REPORT FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2007

2 Amwal Brokerage LLC Interim Financial Information and Review Report For the Six-Month Period Ended June 30, 2007 Table of Contents Page Report on Review of Interim Financial Information 1 Balance Sheet 2 Statement of Income 3 Statement of Changes in Equity 4 Statement of Cash Flows 5 Notes to the Interim Financial Information 6-15

3 2 71 FSO 7-Interim Deloitte & Touche (M.E.) Al-Fujairah National Insurance Co. Bldg., Suite 63 P.O. Box 462, Fujairah United Arab Emirates Tel : +971(9) Fax: +971(9) ing balance sheet of Amwal Brokerage LLC - Fujairah, 30, 2007 and the related statements of income, changes in -month period then ended, and a summary of significant ry notes. Management is responsible for the preparation financial information in accordance with International '. Our responsibility is to express rmation based on our review. The comparative figures were extracted from un-audited f income, changes in equity and June 30, 2006 are not presented as this is the first information for a six-month period. on Review Engagements 241 0, ed by the Independent Auditor of the Entity". A interim financial information consists of making inquiries, primarily of persons for financial and accounting matters, and applying analytical and other review A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that come aware of all significant matters that might be identified in'an audit. Accordingly, express an audit opinion. attention that causes us to believe that the not give a true and fdr view of the financial Amwal Brokerage LLC, Fujairah as of June 30, 2007, and of its financial and its cash flows for the six-month period then ended, in accordance with Accounting Standard 34: Interim Financial Reporting. onsulting. Financial Advisory. Member of Deloitte Touche Tohmatsu

4 a1 Brokerage LLC irah- United Arab Emirates As of June 30, December 31, Un-audited Un-audi ted and cash equivalents otal current liabilities vision for employees' end of service indemnity otal Shareholders' Funds tal Liabilities and Shareholders' Funds e accompanying notes form an integral part of this i n teri m I financial information. were

5 Amwal Brokerage LLC 3 Statement of Income (In Arab Emirates Dirhams) Six-month Three-month period ended period ended June 30, June 30, Note Un-audited Un-audited Commission income 132, ,972 Interest and other income 328, ,990 General and administrative expenses 11 ( 1,137,520) ( 741,072) Loss for the period ( 676,225) ( 303,110) ========== ========== The accompanying notes form an integral part of this interim financial information.

6 Amwal Brokerage LLC 4 Fujairah - United Arab Emirates Statement of Cash Flows (In Arab Emirates Dirhams) Share Accumulated capital losses Net Un-audited Un-audited Un-audited Balance at December 31, ,000,000 ( 342,338) 9,657,662 Capital introduced during the period (Note 10) 20,000,000-20,000,000 Loss for the period - ( 676,225) ( 676,225) Balance at June 30, ,000,000 ( 1,018,563) 28,981,437 ========= ======== ========= The accompanying notes form an integral part of this interim financial information.

7 Amwal Brokerage LLC 5 Statement of Cash Flows (In Arab Emirates Dirhams) Cash flows from operating activities Six-month period ended June 30, 2007 Un-audited Loss for the period ( 676,225) Depreciation of property and equipment 327,617 Provision for employees end of service indemnity 12,169 Movements in working capital ( 336,439) Increase in trade and other receivables ( 1,449,970) Increase in trade and other payables 486,371 Increase in due to related parties 7,368,070 Net cash generated from operating activities 6,068,032 Cash flows from investing activities Purchase of property and equipment ( 1,443,127) Cash used in investing activities ( 1,443,127) Cash flows from financing activities Capital introduced 20,000,000 Increase in Fujairah Investment Company LLC current account 11,965,421 Cash generated from financing activities 31,965,421 Net increase in cash and cash equivalents during the period 36,590,326 Cash and cash equivalents at the beginning of the period - Cash and cash equivalents at the end of the period (Note 5) 36,590,326 ========== The accompanying notes form an integral part of this interim financial information.

8 Amwal Brokerage LLC 6 Notes to the Interim Financial Information 1. General information Amwal Brokerage LLC (the Company ), is a limited liability company established on May 17, 2005 in accordance with the provisions of UAE Federal Commercial Companies Law No. 8 of 1984, as amended, to undertake professional brokerage services in local securities and commodities markets in accordance with the rules and regulation of the Emirates Securities and Commodities Authority. The Company was licensed by the Emirates Securities and Commodities Authority to practice brokerage services effective March 5, 2007 under registration number 98. The paid up capital of the Company is 30,000,000 contributed by the Shareholders as follows: No. of Shares Amount Share capital % M/s. Fujairah Investment Company LLC 29,700 29,700, H.H. Sheikh Saleh Bin Mohammad Al Sharqi , ,000 30,000, ======= ======== ====== This is the first interim financial information prepared by the Company for a six-month period. Profits and losses are distributed between Shareholders based on their shareholding in the Company. The Company's registered address is P.O. Box 7220, Fujairah, United Arab Emirates. 2. Adoption of new and revised Standards During the period, the Company has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (the IFRIC) of the IASB that are relevant to its operations and effective for annual reporting periods beginning on January 1, The Company has adopted IFRS 7: Financial Instruments Disclosures, which requires disclosures that enable users to evaluate the significance of the Company's financial instruments and the nature and extent of risks arising from those financial instruments.

9 Amwal Brokerage LLC 7 2. Adoption of new and revised Standards (continued) IAS 1 Amendment - Presentation of Financial Statements This amendment requires the Company to make new disclosures to enable users of the financial statements to evaluate the Company's objectives, policies and processes for managing capital. Adoption of these Standards and Interpretation did not have any effect on the financial position or performance of the Company. 3. Significant accounting policies The interim financial information has been prepared in accordance with International Financial Reporting Standards (IFRS). This interim financial information is presented in United Arab Emirates Dirham s () since that is the currency of the country in which the Company is domiciled. The following is a summary of the significant accounting policies adopted: Basis of preparation The interim financial information has been prepared on the historical cost basis, except for the financial instruments which were measured at fair value. Financial instruments Financial assets and financial liabilities are recognized on the Company s balance sheet when the Company has become a party to the contractual provisions of the instrument. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other shortterm highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

10 Amwal Brokerage LLC 8 3. Significant accounting policies (continued) Financial instruments (continued) Trade and other receivables Trade and other receivables are measured at fair value. Where applicable, an appropriate allowance is recognized in the income statement when there is an objective evidence that the amount is irrecoverable. Trade and other payables Trade and other payables are measured at fair value. Revenue recognition Rendering of services Revenue from providing services is recognized when services are rendered to customers. Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable. Property and equipment Property and equipment are carried at cost less accumulated depreciation and any identified impairment loss. Subsequent costs are included in the asset s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement when incurred. Depreciation is charged so as to write off the cost of property and equipment, over their estimated useful lives, using the straight-line method, as follows: Years Office furniture and fixtures 3-4 Office equipment 4 Motor vehicles 3

11 Amwal Brokerage LLC 9 3. Significant accounting policies (continued) Impairment At each balance sheet date, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). All losses are included in the income statement. Provision for employees end of service indemnity Provision for employees end of service indemnity is made in accordance with the UAE labour laws, and is based on current basic remuneration and cumulative years of service at the balance sheet date. Statutory reserve In accordance with United Arab Emirates Federal Companies Law Number 8 of 1984, as amended, the Company has to establish a statutory reserve by appropriation of 10% of net profit for each year. The Shareholders general assembly may cease appropriations to statutory reserve once its balance reaches 50% of the paid up share capital. This reserve is not available for distribution except as stipulated by the Law. Provisions Provisions are recognized when the Company has a present obligation as a result of a past event, which it is probable, will result in an outflow of economic benefits that can be reasonably estimated. Foreign currencies Transactions in foreign currencies are translated into United Arab Emirates Dirhams at the rate of exchange ruling on the date of the transaction. Monetary assets and liabilities expressed in foreign currencies are translated into Arab Emirates Dirhams at the rate of exchange ruling on the balance sheet date. Gain or losses resulting from foreign currency transactions are taken to the income statement.

12 Amwal Brokerage LLC Critical accounting judgements and key sources of estimation uncertainty In the process of applying the Company s accounting policies, which are described in Note 3 to the interim financial information, management has made the following judgements that have the most significant effect on the amounts recognized in the interim financial information: Depreciation of property and equipment Property and equipment are being depreciated based on their anticipated useful lives as estimated by management. Impairment of assets values At each balance sheet date the management reviews the assets values to determine that their book values have not exceeded amounts recoverable from them. The management estimates the recoverable amount of various assets individually or based on the cash generating unit to which the individual asset belongs. Allowance for doubtful debts At each balance sheet date, the management conducts a detailed review of various receivable balances, an allowance for doubtful debts is established, where applicable, based on this review, management experience and prevailing economic conditions. Key sources of estimation uncertainty There were no key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period.

13 Amwal Brokerage LLC Cash and cash equivalents As of June 30, December 31, Un-audited Un-audited Cash on hand 86 Bank balances: Current accounts 6,261,917 - Term deposits 30,328,323-36,590,326 - ======== ======== 6. Trade and other receivables As of June 30, December 31, Un-audited Un-audited Trade receivables 1,080,505 - Prepaid expenses 368,269 3,357 Staff and other receivables 18,683 14,130 1,467,457 17,487 ======== ========

14 Amwal Brokerage LLC Property and equipment Cost Office furniture and Motor Office fixtures vehicles equipment Total Un-audited Un-audited Un-audited Un-audited At December 31, ,570 61, ,574 1,955,644 Additions during the period 28,931-1,414,196 1,443,127 At June 30, ,501 61,500 2,353,770 3,398,771 Accumulated depreciation Charge for the period 122,189 10, , ,617 At June 30, ,189 10, , ,617 Carrying amount At June 30, ,312 51,250 2,158,592 3,071,154 ======= ====== ======== ======== At December 31, ,570 61, ,574 1,955,644 ======= ====== ======== ========

15 Amwal Brokerage LLC Trade and other payables As of June 30, December 31, Un-audited Un-audited Non trade accounts payable 283,900 - Provision for leave salary and air passage 53,150 - Advances from customers 149, ,371 - ======== ======== Non trade accounts payable represents amounts due to suppliers against purchase of property and equipment. 9. Related party transactions During its normal course of business, the Company enters into transactions with parties that fall within the definition of a related party as contained in International Accounting Standard No. 24: Related Party Disclosures. Related parties comprise of companies and entities under common ownership and/or common management and control and key management personnel. At the balance sheet date, amounts due to related parties were as follows: As of June 30, December 31, Un-audited Un-audited Fujairah National Group LLC 7,516, ,830 Fujairah National Properties LLC 5,255-7,521, ,830 ======== ========

16 Amwal Brokerage LLC Related party transactions (continued) The nature of significant related party transactions and amounts involved were as follows: Six-month Three-month period ended period ended June 30 June 30, Unaudited Unaudited Purchases of property and equipment 12,800 12,800 The management decides on the terms and conditions of the transactions and services received/rendered from/to related parties and their repayment schedules. 10. Share capital During the six-month period ended June 30, 2007, the Shareholders introduced additional capital of 20 million in order to meet the amended licensing requirements set by the Emirates Securities and Commodities Authority. 11. General and administrative expenses General and administrative expenses include the following major expenses: Six-month Three-month period ended period ended June 30 June 30, Unaudited Unaudited Salaries and benefits 290, ,650 Depreciation 327, ,055 Telephone and fax 163,301 91,886 Government and licenses fees 119, ,289 Bank charges 101,178 51,124

17 Amwal Brokerage LLC Commitments and contingent liabilities As of June 30, December 31, Un-audited Un-audited Bank guarantees 20,000,000 20,000,000 Capital commitments 149, , Financial instruments Interest rate risk The Company s exposure to interest rate risk is limited to its term deposits. Exchange rate risk There are no significant exchange rate risks as substantially all financial assets and financial liabilities are denominated in Arab Emirates Dirhams, other G.C.C. currencies or US Dollars to which the Dirham is fixed. Liquidity risk The credit risk on liquid funds is limited because the counter-parties are banks with high credit ratings assigned by international credit-rating agencies. Credit risk The Company s principal financial assets are banks current accounts, trade and other receivables. The Company s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. At the balance sheet date, one customer accounted for 100% of the total outstanding trade receivables. There are no significant concentrations of credit risk to debtors outside the industry in which the Company operates.