ARAB PETROLEUM INVESTMENTS CORPORATION (APICORP) … · 2020. 3. 2. · (51,259) Commitments to...

ARAB PETROLEUM INVESTMENTS CORPORATION (APICORP)

INTERIM FINANCIAL INFORMATION

30 June 2011

Arab Petroleum Investments Corporation

INTERIM FINANCIAL INFORMATION for the six months ended 30 June 2011 CONTENTS Page

Independent auditors’ report on review of interim financial information 1 Interim financial information Condensed statement of financial position 2 Condensed statement of income 3 Condensed statement of comprehensive income 4 Condensed statement of changes in equity 5 Condensed statement of cash flows 7 Notes to the interim financial information 8-11

Arab Petroleum Investments Corporation 3

The interim financial information consist of pages 2 to 11

CONDENSED STATEMENT OF INCOME for the six months ended 30 June 2011 (US$000) 30 June 2011 30 June 2010 (reviewed) (reviewed) Interest income 37,851 26,809Interest expense (27,061) (20,041)Net interest income 10,790 6,768 Net fee income 651 1,090Dividend income 46,789 50,023Loss on re-measurement of trading securities (1) (4)Gain on disposal of available-for-sale securities 63 158Other income 1,350 723Total Income 59,642 58,758 General and administrative expenses (15,401) (11,188)Impairment provision (note 10) (3,406) (57) Profit for the period 40,835 47,513 Per share information - Basic and diluted earnings per share (based on weighted

average number of shares outstanding)

US$ 54.45

US$ 63.35 - Net asset value per share

US$ 1,577

US$ 1,426



CONDENSED STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30 June 2011 (US$000) 30 June 2011 30 June 2010 (reviewed) (reviewed) Profit for the period 40,835 47,513 Other comprehensive income

Transfer to profit or loss on sale of available-for-sale securities (63) -Changes in the fair of available-for-sale securities 1,392 9,021Changes in the fair value of available-for-sale direct equity investments

(709)

11,112

Other comprehensive income for the period

620

20,133

Total comprehensive income for the period 41,455 67,646



CONDENSED STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2011 (US$000) 2011

Share Capital

Legal reserve

General reserve

Available-for-sale fair value reserve

Retained earnings

Total equitySecurities

Direct equity investments

Total

Balance at 1 January 2011 550,000 129,600 161,061 (15,486) 230,223 214,737 85,580 1,140,978

Total comprehensive income for the period: Profit for the period (page 3) - - - - - - 40,835 40,835Other comprehensive income Transfer to profit or loss on sale of available-for-sale securities - - - (63) - (63) - (63) Changes in fair value - - - 1,392 (709) 683 - 683

Total comprehensive income - - - 1,329 (709) 620 40,835 41,455 Issuance of bonus shares (note 5) 200,000 - (200,000) - - - - -Transfer to general reserve for 2010 - - 85,580 - - - (85,580) - Balance at 30 June 2011 750,000 129,600 46,641 (14,157) 229,514 215,357 40,835 1,182,433



CONDENSED STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2011 (US$000) 2010

Share Capital

Legal reserve

General reserve

Available-for-sale fair value reserve

Retained earnings

Total equitySecurities

Direct equity investments

Total

Balance at 1 January 2010 550,000 120,000 108,425 (33,523) 204,097 170,574 52,636 1,001,635

Total comprehensive income for the period: Profit for the period (page 3) - - - - - - 47,513 47,513Other comprehensive income Changes in fair value - - - 9,021 11,112 20,133 - 20,133

Total comprehensive income - - - 9,021 11,112 20,133 47,513 67,646 Transfer to general reserve for 2009 - - 52,636 - - - (52,636) -

Balance at 30 June 2010 550,000 120,000 161,061 (24,502) 215,209 190,707 47,513 1,069,281



CONDENSED STATEMENT OF CASH FLOWS for the six months ended 30 June 2011 (US$000) 30 June

2011 30 June

2010 (reviewed) (reviewed) OPERATING ACTIVITIES

Interest received 35,608 25,600Interest paid (26,801) (21,080)Draw down of syndicated and direct loans (328,716) (201,813)Repayments of syndicated and direct loans 340,475 248,254Placements with banks (18,168) (93,582)Fees received 575 900Payments for operating expenses (15,171) (11,188)Payments for other expenses (955) (1,500)Net payments for other operating assets and liabilities (16,737) 14,097

Cash used in operating activities (29,890) (40,312) INVESTING ACTIVITIES

Proceeds from redemptions and sales of available-for-sale securities 288,754 78,805Purchase of available-for-sale securities (260,242) (140,085)Dividends received from available-for-sale direct equity investments 25,031 25,437Purchase of available-for-sale direct equity investments (3,360) (1,011)Rent received 360 609Purchase of property and equipment (335) (90)

Cash generated from/(used in) investing activities 50,208 (36,335) FINANCING ACTIVITIES

(Repayments) / proceeds of deposits from banks (478,560) 213,650Proceeds from deposits from corporates 537,138 31,229Proceeds from deposits from shareholders 640 898(Repayments) / proceeds from securities sold under agreements to

repurchase (87,863) 109,644

Repayment of term financing - (250,000) Cash (used in)/generated from financing activities (28,645) 105,421 (Decrease)/increase in cash and cash equivalents during the period (8,327) 28,774 Cash and cash equivalent at beginning of the period 15,392 5,967 Cash and cash equivalents at end of the period 7,065 34,741


NOTES TO THE INTERIM FINANCIAL INFORMATION for the six months ended 30 June 2011 1 General Information Arab Petroleum Investments Corporation (APICORP) (“the Corporation”) is an Arab joint stock company established on 23 November 1975. It is owned by the ten member states of the Organisation of Arab Petroleum Exporting Countries (OAPEC):

United Arab Emirates 17% Democratic Popular Republic of Algeria 5% Kingdom of Bahrain 3% Syrian Arab Republic 3% Kingdom of Saudi Arabia 17% Republic of Iraq 10% State of Qatar 10% Socialist People’s Libyan Arab Jamahiriya 15% State of Kuwait 17% Arab Republic of Egypt 3%

The Corporation is an international entity, and operates from its registered head office in Dammam, Kingdom of Saudi Arabia and its Banking unit in Manama, Kingdom of Bahrain. The establishing agreement states that APICORP is exempt from taxation in respect of its operations in the member states. The principal objectives of the Corporation are participation in financing oil and gas related projects and activities, with priority given to those, which benefit the member states. Whereas APICORP’s core project financing and lending activities are not of a cyclical nature, non-interest income from securities in particular is influenced by events in the world’s capital markets and may vary materially from one six-month period to another. 2 Basis of Preparation The interim financial information has been prepared in condensed form in accordance with

International Accounting Standard (IAS) 34, Interim Financial Reporting. The interim financial information does not include all of the information required for full annual financial statements and should be read in conjunction with the audited financial statements of the Corporation for the year ended 31 December 2010

The accounting policies and methods of computation applied by the Corporation in the preparation of

the interim financial information are consistent with those applied in the preparation of the audited financial statements for the year ended 31 December 2010.

3 The interim financial information is not audited but has been reviewed by KPMG. The corresponding

figures for the condensed statement of financial position have been extracted from the audited financial statements for the year ended 31 December 2010. The corresponding figures for the condensed statements of income, comprehensive income, changes in equity and cash flows have been extracted from the reviewed interim financial information for the six months ended 30 June 2010.

4 Due to the nature of the Corporation’s business, the results reported in this interim financial

information may not represent a proportionate share of the overall annual results. 5 At the Extraordinary General Meeting held on 29 May 2011, the Shareholders approved an increase

in the Corporation’s paid up share capital from US$ 550 million to US$ 750 million through the issuance of bonus shares by capitalizing the General Reserves.


NOTES TO THE INTERIM FINANCIAL INFORMATION for the six months ended 30 June 2011 (US$000) 6 Syndicated and Direct Loans 30 June

2011 31 December

2010 (reviewed) (audited) Unimpaired loans - Islamic 649,307 604,530- Conventional 1,895,128 1,953,431Unamortized participation and upfront fees (10,954) (9,333)Collective impairment allowance (6,840) (6,660) 2,526,641 2541,968Impaired loans Non-performing loans (see below) 17,026 17,149Performing loans 18,207 -Allowance for specific impairments (20,376) (17,149)

14,857 - 2,541,498 2,541,968 Impaired (non-performing) loans – fully provided Iraqi companies fully owned by Government of Iraq 51,848 51,848Dividends & interest due to Government of Iraq, offset against defaulted loans (51,382) (51,259)

Net Iraqi loans, after dividends offset (see below) 466 589Others 16,560 16,560Total impaired (non-performing) loans 17,026 17,149 Impaired loans to companies fully owned by Government of Iraq As a result of the 1990-1991 second Gulf war, certain Government of Iraq controlled companies defaulted on loans from the Corporation. Consequently, since 1992 dividends (and non contractual accrued interest thereon) due to the Government of Iraq (a shareholder in APICORP) have not been paid. With effect from 1998, the Corporation reduced impairment allowances against the defaulted loans by the amount of the unpaid dividends, while still carrying the dividends as liabilities in the statement of financial position up to 2003. In May 2003, APICORP Board of Directors adopted a resolution authorizing management, in cases where no settlement is reached, to set-off bad debts owed to the Corporation by companies and public corporations fully owned by any of APICORP's shareholder governments, against accounts held by the Corporation belonging to such bodies and governments including dividends, provided all legal requirements are satisfied and complied with. Accordingly, and until negotiation is undertaken with the Government of Iraq, the Corporation starting from 2003, has made a primary offset of the unpaid dividends (and non contractual accrued interest thereon) due to the Government of Iraq, against the principal amounts of the defaulted loans due from Government of Iraq controlled companies. Since the beginning of default during 1990-92, the Corporation had kept memorandum record for contractual interest and fee on the defaulted Iraqi loans. Total contractual overdue interest and fee on these impaired Iraqi loans as on 30 June 2011 amounts to US $ 129,125 thousands (30 June 2010: 126,076 thousands).


NOTES TO THE INTERIM FINANCIAL INFORMATION for the six months ended 30 June 2011 (US$000) 7 Term Financing 30 June

2011 31 December

2010 (reviewed) (audited) US$ 400 Million loan 2007 – 2012 – fully drawn 400,000 400,000 Interest rate: US$ LIBOR plus 28.5 basis points Unamortized front-end fees for all current facilities (293) (453) 399,707 399,547 The loans are subject to similar financial covenants, with which the Corporation has complied:

• The ratio of total shareholders’ funds to total assets shall at all times be equal to or greater than 20%; and

• The amount of total shareholders’ funds shall at all times be greater than US$ 500 million. 8 Commitments 30 June

2011 31 December

2010 (reviewed) (audited) Commitments to underwrite and fund loans 267,349 342,876Commitments to subscribe capital to available-for-sale direct equity investments 11,130 14,490Guarantee to bank on loans of investee company 14,000 14,000

292,479

371,366


NOTES TO THE INTERIM FINANCIAL INFORMATION for the six months ended 30 June 2011 (US$000) 9 Related party transactions

APICORP's principal related parties are its shareholders. Although the Corporation does not transact any commercial business directly with the shareholders themselves, it does finance companies, which are either controlled by the shareholder governments or over which they have significant influence.

Balances: 30 June

2011 31 December

2010 (reviewed) (audited) Loans outstanding – gross 1,691,554 1,714,062Allowance for specific impairments outstanding (3,816) (589)Dividends & interest due to Government of Iraq, offset against

defaulted loans (51,259)

(51,259)Commitments to underwrite and fund loans 221,872 280,794 Available-for-sale direct equity investments 368,285 365,634Commitments to invest 11,130 14,490Guarantee to bank on loans of investee company 14,000 14,000

Transactions:

30 June 2011

30 June 2010

(reviewed) (reviewed)

Interest income from loans during the period 11,275 11,881Loan fees received during the period 500 354Dividend income recognised during the period 46,680 49,275

Loans to related parties are made at prevailing market interest rates and subject to normal commercial negotiation as to terms. The majority of loans to related parties are syndicated, which means that participation and terms are negotiated by a group of arrangers, of which the Corporation may, or may not, be a leader. No loans to related parties were written off in 2011 and 2010.

10 Exposure to Libya The Corporation has exposures to Libyan Government owned entities comprising loans of US$ 46,858 thousand and available-for-sale direct equity investments of US$ 12,280 thousand as at 30 June 2011. The Management of the Corporation is closely monitoring the situation in Libya and has provided for an impairment loss of US$ 3.4 million on its credit exposure as at 30 June 2011.

ARAB PETROLEUM INVESTMENTS CORPORATION (APICORP) … · 2020. 3. 2. · (51,259) Commitments to...

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