Managed by JADWA INVESTMENT COMPANY Interim Financial Statements (Unaudited) together with the Independent Auditors Review Report to the Unit-Holders
INTERIM BALANCE SHEET (Unaudited) As at 30 June 2016 ASSETS Notes Cash at bank 4 78,835 4,518,493 Murahaba placements 5 2,607,368,687 154,111,110 Accrued special commission income 11,168,801 88,471 Total assets 2,618,616,323 158,718,074 LIABILITIES Management fee payable 1 (b),6 1,118,997 -- Accrued expenses 22,200 13,690 Total liabilities 1,141,197 13,690 Net assets attributable to Unit-Holders 2,617,475,126 158,704,384 Units in issue (numbers) 23,600,414.97 1,454,023.10 Net assets attributable to each unit 110.91 109.14 The accompanying notes (1) to (9) form an integral part of these interim financial statements. 1
INTERIM STATEMENT OF INCOME (Unaudited) INCOME For the six-months period ended 30 June Notes Special commission income 30,277,464 301,765 EXPENSES Management fee 1 (a),6 (2,259,115) -- Other expenses 1 (a) (22,440) (13,705) Total expenses (2,281,555) (13,705) NET INCOME FOR THE PERIOD 27,995,909 288,060 The accompanying notes (1) to (9) form an integral part of these interim financial statements. 2
INTERIM STATEMENT OF CASH FLOWS (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES For the six-months period ended 30 June Net income for the period 27,995,909 288,060 Adjustment to reconcile net income for the period to net cash used in operating activities: Murabaha placements made during the period (3,893,203,203) (241,029,455) Murabaha placements matured during the period 3,865,609,176 212,796,927 Accrued special commission income (8,605,685) (40,310) Management fee payable 1,118,997 -- Accrued expenses (10,076) (2,354) Net cash used in operating activities (7,094,882) (27,987,132) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from units issued 1,761,071,193 78,476,113 Payment against redemption of units (531,095,025) (18,404,565) Net cash generated from financing activities 1,229,976,168 60,071,548 Net increase in cash and cash equivalents 1,222,881,286 32,084,416 Cash and cash equivalents at beginning of the period 582,401,002 2,462,721 Cash and cash equivalents at end of the period (Note 4) 1,805,282,288 34,547,137 The accompanying notes (1) to (9) form an integral part of these interim financial statements. 3
INTERIM STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNIT-HOLDERS (Unaudited) For the six-months period ended 30 June Net assets attributable to Unit-Holders at beginning of the period 1,359,503,049 98,344,776 Net income for the period 27,995,909 288,060 Changes from unit transactions: Proceeds from issuance of units 1,761,071,193 78,476,113 Payment against redemption of units (531,095,025) (18,404,565) Net change from unit transactions 1,229,976,168 60,071,548 Net assets attributable to Unit-Holders at end of the period 2,617,475,126 158,704,384 UNITS TRANSACTIONS Units Units Units in issuance at beginning of the period 12,398,175.50 902,950.56 Units issued 16,005,248.14 719,810.78 Units redeemed (4,803,008.67) (168,738.24) Net change in units during the period 11,202,239.47 551,072.54 Units in issuance at end of the period 23,600,414.97 1,454,023.10 The accompanying notes (1) to (9) form an integral part of these interim financial statements. 4
NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) 1. THE FUND AND ITS ACTIVITIES Jadwa Saudi Riyal Murabaha Fund (the Fund ) is a trade transactions fund established and managed through an agreement between the Jadwa Investment Company (the Fund Manager ) and the Fund Investors (the Unit-Holders ). The Capital Market Authority s (CMA) approval for the establishment of the Fund was granted in its letter number 443 dated 9 Jumada I 1428 H (corresponding to 26 May 2007). The Fund commenced its operations on 30 June 2007. The Fund aims to generate market returns from short-term Murabaha based trade transactions that are compliant with Shariah principles. In dealing with Unit-Holders, the Fund Manager considers the Fund as an independent accounting unit. Accordingly, the Fund Manager prepares separate interim financial statements for the Fund. The Fund is governed by the Investment Fund Regulations (the regulations) published by CMA on 3 Dhul Hijah1427 H (corresponding to 24 December 2006) detailing requirements for all funds within the Kingdom of Saudi Arabia. The Fund Manager, administrator and custodian of the Fund is Jadwa Investment Company. The books and records of the Fund are maintained in Saudi Riyals. (a) The management of the Fund is the responsibility of the Fund Manager. However, in accordance with the Fund s Agreement, the Fund Manager can delegate or assign its duties to one or more of the financial institutions in the Kingdom of Saudi Arabia and overseas. The Fund Manager charges the Fund a management fee up to 0.5% per annum of the net assets value of the Fund at each valuation day. However, up to the period ended 30 April 2016, the Fund Manager did not charge the Fund any management fees. The Fund Manager has the right to collectively charge the Fund all other expenses related to the management of the Fund, including but not limited to audit fee and legal charges for a percentage not to exceed 1% per annum of the net assets value of the Fund at each valuation day. 2. BASIS OF PREPARATION a) Statement of compliance These interim financial statements have been presented in accordance with generally accepted accounting standards in the Kingdom of Saudi Arabia issued by the Saudi Organization of Certified Public Accountants (SOCPA) and do not include all of the information required for full annual financial statements and should be read in conjunction with the annual financial statements of the Fund as at and for the year ended 31 December 2015. b) Basis of measurement These interim financial statements have been prepared under the historical cost convention, using the accrual basis of accounting and the going concern concept. The interim results may not be indicative of the Fund s annual results of operations. c) Functional and presentation currency These interim financial statements have been presented in Saudi Arabian Riyals (SR), which is the functional currency of the Fund. 5
NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) 2. BASIS OF PREPARATION (CONTINUED) d) Use of estimates and judgment The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. The significant judgment made by management in applying accounting policies and key sources of estimation uncertainty were the same as those that applied to the financial statements as at and for the year ended 31 December 2015. 3. SIGNIFICANT ACCOUNTING AND RISK MANAGEMENT POLICIES The significant accounting policies used in the preparation of these interim financial statements and risk management policies are consistent with those used and disclosed in the annual financial statements for the year ended 31 December 2015. 4. CASH AND CASH EQUIVALENTS Cash at bank 78,835 4,518,493 Murabaha placements with original maturity of three months or less Note 4.1 & Note 5 1,805,203,453 30,028,644 1,805,282,288 34,547,137 4.1 This represent placements with Saudi banks, having sound credit ratings and have maturity up to 9 August 2016. 5. MURAHABA PLACEMENTS Description Annual special commission rate (%) Murabaha placements with original maturity of three months or less 2-3.15 1,805,203,453 30,028,644 Murabaha placements with original maturity of more than three months 2.4-2.93 802,165,234 124,082,466 2,607,368,687 154,111,110 6. RELATED PARTY TRANSACTIONS Related parties of the Fund includes the Fund Manager, Funds managed by the Fund Manager and the Fund Board. In the ordinary course of its activities, the Fund transacts business with Jadwa Investment Company (refer note 1). Transactions with the related parties included in the accompanying interim financial statements are as follows: For the six-month period ended 30 June 6 Management fee 2,259,115 -- Fees for Fund Board meetings (independent Fund Board Directors) Other expenses 8,525 1,000
NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) 6. RELATED PARTY TRANSACTIONS (CONTINUED) The balance resulting from such transaction included in the accompanying interim financial statements is as follows: 30 June 30 June Management fee payable 1,118,997 -- Meeting fees payable to independent Fund Board Directors Accrued expenses 8,525 1,000 The Unit-Holders accounts as at 30 June include units held by the following related parties: Units Units Fund Manager 3,728,881.35 -- Jadwa Investment Fund # 11 70,483.67 -- Jadwa Investment Fund # 12 578,918.83 -- Jadwa Investment Fund # 13 126,134.08 -- Jadwa Investment Fund # 17 86,831.70 -- Jadwa Investment Fund # 14 65,256.23 -- Jadwa Investment Fund # 18 92,189.14 -- Jadwa Investment Fund # 20 54,656.42 -- 7. FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments comprise financial assets and financial liabilities. The Fund s financial assets consist of cash at bank and murabaha placements. Financial liabilities comprise management fee payable. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Murabaha placements are primarily shot term in nature and fair value is not considered to be significantly different than their carrying value. Fair value of other financial instruments approximates their carrying value. 8. VALUATION DAY The Fund s units are valued every business day daily and unit price is announced on the following business day. In accordance with terms and conditions of the Fund, the last valuation date of the period was 30 June 2016 (2015: 30 June 2015). 9. APPROVAL OF INTERIM FINANCIAL STATEMENTS These interim financial statements were approved by the Fund Manager on 8 Dhual Qa Dah 1437H corresponding to 11 August 2016. 7