(Managed by Alawwal Invest Company, previously known as Saudi Hollandi Capital Company) UNAUDITED INTERIM FINANCIAL STATEMENTS 30 JUNE
INTERIM BALANCE SHEET As at Note 31 December (Audited) ASSETS Bank balance 111,099,117 167,106,060 6,609,273 Morabaha placements 4 225,000,000 216,000,000 565,000,000 Held to maturity investments 5 119,140,500 119,766,100 120,398,600 Trading Investment 6 40,230,667 70,082,506 - Accrued income 842,395 3,434,135 3,777,142 Receivables and prepayments 1,431,900 1,539,539 11,636,097 497,744,579 577,928,340 707,421,112 LIABILITY Accrued expenses 85,790 72,121 33,834 NET ASSETS 497,658,789 577,856,219 707,387,278 Units in issue 36,856,954 43,182,434 53,540,028 Per unit value 13.5024 13.3817 13.2123 The accompanying notes 1 to 10 form an integral part of these interim financial statements. 2
INTERIM STATEMENT OF OPERATIONS For the six-month period ended Note INVESTMENT INCOME Special commission income 4,143,782 8,259,415 Trading income, net 7 2,258,534-6,402,316 8,259,415 EXPENSES Management fees 8 (1,349,859) (1,516,310) Other expenses (132,067) (119,665) (1,481,926) (1,635,975) NET INCOME FROM OPERATIONS 10 4,920,390 6,623,440 The accompanying notes 1 to 10 form an integral part of these interim financial statements. 3
INTERIM STATEMENT OF CASH FLOWS For the six-month period ended OPERATING ACTIVITIES Net income from operations 4,920,390 6,623,440 Adjustment for: Unrealized gains on trading investments (366,960) - 4,553,430 6,623,440 Changes in operating assets and liabilities: Morabaha placements (9,000,000) (171,000,000) Held to maturity investments 625,000 10,393,850 Accrued income 2,591,740 (2,062,624) Trading Investment 30,218,799 - Accrued expenses 13,669 33,834 Receivables and prepayments 107,639 (10,884,180) Net cash from (used in) operating activities 29,110,877 (166,895,680) FINANCING ACTIVITIES Proceed from sale of units 142,586,253 604,085,936 Value of units redeemed (227,704,073) (375,950,861) Net cash (used in) from financing activities (85,117,820) 228,135,075 (DECREASE) INCREASE IN BANK BALANCE (56,006,943) 61,239,395 Bank balance (bank overdraft) at the beginning of the period 167,106,060 (54,630,122) BANK BALANCE AT THE END OF THE PERIOD 111,099,117 6,609,273 OPERATIONAL CASH FLOWS FROM SPECIAL COMMISSION INCOME Special commission income received 6,735,522 6,196,791 The accompanying notes 1 to 10 form an integral part of these interim financial statements. 4
INTERIM STATEMENT OF CHANGES IN NET ASSETS For the six-month period ended NET ASSETS AT THE BEGINNING OF THE PERIOD 577,856,219 472,628,763 CHANGES FROM OPERATIONS Net income for operations 4,920,390 6,623,440 CHANGES FROM UNIT TRANSACTIONS Proceeds from sale of units 142,586,253 604,085,936 Value of units redeemed (227,704,073) (375,950,861) Net change from unit transactions (85,117,820) 228,135,075 NET ASSETS AT THE END OF THE PERIOD 497,658,789 707,387,278 UNIT TRANSACTIONS Transactions in units for the period ended are summarised as follows: Units Units UNITS AT THE BEGINNING OF THE PERIOD 43,182,434 36,159,581 Units sold 10,644,094 45,999,089 Units redeemed (16,969,574) (28,618,642) Net (decrease) increase in units (6,325,480) 17,380,447 UNITS AT THE END OF THE PERIOD 36,856,954 53,540,028 The accompanying notes 1 to 10 form an integral part of these interim financial statements. 5
NOTES TO THE INTERIM FINANCIAL STATEMENTS At 1 GENERAL Al Yusr Saudi Riyal Morabaha Fund (the Fund ) is an open-ended fund created by an agreement between Alawwal Invest Company (the Fund Manager ), a subsidiary of Alawwal Bank (the Bank ) and investors in the Fund (the Unit Holders ) and is designed for investors seeking steady capital appreciation with maximum preservation of capital and liquidity. The fund is governed by the terms and condition of its prospectus dated 01 March. The assets of the funds are invested in Morabaha transactions as well as funds and Sukuks. All income is reinvested in the Fund and is reflected in the unit price. The Fund commenced its operations on 11 Shawwal 1422H (corresponding to 26 December 2001). The books and records of the Fund are maintained in Saudi Riyals (). 2 REGULATING AUTHORITY The Fund is governed by the Investment Fund Regulations ( the Regulations ) issued by the CMA on 3 Dhul Hijja 1427H (corresponding to 24 December 2006) and effective from 6 Safar 1438 (corresponding 6 November ) by the New Investment Fund Regulations ( Amended Regulations ). published by the Capital Market Authority on 16 Sha aban 1437H (corresponding to 23 May ), detailing requirements for all funds within the Kingdom of Saudi Arabia. The enhanced requirements of Annexure 5(e) of the Amended Regulations are effective from. 3 SIGNIFICANT ACCOUNTING POLICIES These interim financial statements have been prepared in accordance with the accounting standard on interim financial reporting issued by the Saudi Organization of Certified Public Accountants (SOCPA). The significant accounting policies used in the preparation of these interim financial statements are consistent with those used and disclosed in the annual financial statements for the year ended 31 December and are as follows: Accounting convention The interim financial statements are prepared under the historical cost convention. Cash and cash equivalents Cash and cash equivalents as referred to in the interim statement of cash flows comprise bank balance and money market placements with an original maturity of less than ninety days. Investment valuation 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. Trading investments are valued at their market price as at the interim 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 interim statement of operations. Morabaha placements are carried at cost less provision for any uncollectable amounts. Accrued special commission income as at the period end, is disclosed separately. Investment transactions Investment transactions are accounted for as of the trade date. Zakat and income tax Zakat and income tax are considered to be the obligation of the Unit Holders and are not provided in the accompanying interim financial statements. Revenue recognition Special commission income is recognised on an effective yield basis. Realised gains and losses on investments sold are determined on a weighted average cost basis. Expenses Expenses are recognised based on the accrual method. 6
NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 4 MORABAHA PLACEMENTS 31 December (Audited) Placements with the Bank 124,000,000 151,000,000 154,000,000 Placements with other banks 101,000,000 65,000,000 411,000,000 225,000,000 216,000,000 565,000,000 5 HELD TO MATURITY INVESTMENTS 31 December (Audited) Debt securities Almarai Sukuk IV 49,000,000 49,000,000 49,000,000 Al Hilal Bank Sukuk 35,625,000 35,625,000 35,625,000 Arabian Aramco Total Services Company Sukuk 19,515,500 20,141,100 20,773,600 Saudi British Bank Sukuk III 15,000,000 15,000,000 15,000,000 119,140,500 119,766,100 120,398,600 6 TRADING INVESTMENTS A summary of the investment portfolio on the last valuation date of the period is set out below: Mutual funds Cost Market value International Trade Finance Fund (Sunbullah SAR) Samba Capital 34,863,707 35,176,627 Itqan Fund for Murabahat and Sukuk 5,000,000 5,054,040 39,863,707 40,230,667 31 December (Audited) Falcom SAR Morabaha Fund 70,000,000 70,082,506 7
NOTES TO THE INTERIM FINANCIAL STATEMENTS (continued) At 7 TRADING INCOME, NET For the six-month period ended Realised gains 1,891,574 - Unrealised gains 366,960-2,258,534-8 TRANSACTIONS WITH RELATED PARTIES The Fund is managed and administered by the Fund Manager. For these services the Fund pays a management fee of 0.5% per annum calculated on its net assets under management at each valuation date. Other expenses paid by the Company on behalf of the Fund are charged to the Fund. In the normal course of business the Fund places Morabaha investments in the bank and borrows from the Bank at prevailing market rates. The Bank acts as the Fund s banker and the Fund Manager acts as the custodian to the Fund s investment. During the period the Fund has placed special commission bearing Morabaha placements with the Bank. 9 LAST VALUATION DAY The last valuation day of the period was (: ). 10 RESULTS OF OPERATIONS The results for the interim period may not be indicative of the annual operating results. 8