al shamal islamic bank- khartoum · 9- mr. mohamed yahia eljaldi 10-mr. ibrahim musa alkhaliefa...

Al Shamal Islamic Bank- KhartoumPublic Limited Company

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The Message of the Bank

At the Islamic Bank, we endeavor for comprehensiveness of Islam in order to achieve pioneering in the banking performance by talent-developing of the human being & utilizing the ongoing banking technology & contributing in achieving the desired economical & social development so as to provide integral solutions that satisfy concerned stake holders.


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Contents

S.N. Subject Page

1 Directory of HQ, branches & affiliate company 6

2 Board of Directors 7

3 Sharia Supervisory Board 7

4 Main Executive 8

5 National & International Economic Indicators 9

6 Chairman’s address 10

7 Bank’s Activity in the year 2007 14

8 Balance Sheet as of 31.12.2007 17

9 Income Statement as of 31.12.2007 18

10 Cash Flow Statement as of 31.12.2007 19

11 Changes in Equity Statement as of 31.12.2007 20

12 Notes on the Financial Statements. 21

13 External Auditor’s Report. 29

14 Report of Sharia Supervisory Board 30

15 Resolutions of the 18th Annual General Meeting. 31

16 Correspondents’ Network. 32


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Public Limited Company

23 July 1985Establishment

2nd January 1990CommencementCommercial Banking on Islamic PrinciplesActivities

90 Million Sudanese PoundsAuthorized share capital

Sixty Four Million & Six Hundred Thousand Sudanese PoundsPaid up capital

Al Shamal Islamic Bank- Khartoum


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Tower Branch Tel: (+249-1)83795721-83795722- 83795723 Fax: 83795720 P.O. Box 10036 Khartoum Postal code 11111Khartoum Branch Tel: (+249-1) 83783043-83782192-83772054 Fax: 83785098 P.O. Box 10036 Khartoum Postal code 11111Omdurman Branch Tel: (+249-1) 87553330- 87554606 Fax: 87554606 P.O. Box 1462 Omdurman - Sudan Postal code 14411Saggana Branch Tel: (+249-1) 83489282- 83493059 Fax: 83460714 P.O. Box 118 Saggana Khartoum Sudan Postal code 12215Alsouque Almahali Br. Tel: (+249-1) 83420183 Fax: 83420182 P.O. Box 5268 South Khartoum Sudan Postal code 12216Dongola Branch Tel: (+249-241) 823839 Fax: 241-822292 Postal address - DongulaGedarif Branch Tel: (+249-441) 843481 Fax: 441-843479 P.O. Box 234 Gadarif- Sudan Postal code 32211Souque Libya Branch Tel: (+249-1) 87591149 Fax: 87582970 P.O. Box 1951- Omdurman- Sudan Postal code 14418Alsouque Alarabi (Kh) Br. Tel: (+249-1)83782583- 83782588 Fax: 83783921 P.O. Box 44861 Central Khartoum Sudan Postal code 11114Industrial Area (Kh) Br. Tel: (+249-1) 83472837- 83472847 Fax: 83472849 P.O. Box 5267 Kh. south Postal code 12211Port- Sudan Branch. Tel: (+249-311) 826044- 826042 Fax: 311-826046 P.O. Box 546 Port Sudan- Sudan Postal code 33311Alhafeer Branch Via Dongla Br. Fax+249-248 822034Indus. Area (Kh. North) Br. Tel: (+249-1) 85331141- 85330528- 85331145 Fax: 85331141 P.O. Box 1336 Kh. North- Sudan Postal code 13312Wad Medani Br. Tel: (+249-511) 861526- 844367- 843567 Fax: 511-840445 P.O. Box 570 Wad Madani- Sudan Postal code 21111Souque Shabi Om. Br. Tel: (+249-1) 87454156 Fax: 87554316 P.O. Box 2056 Elshaabi Omdurman – Sudan Postal code 14417Kosti Branch Tel: (+249-571) 822230 Fax: 571-824850 P.O. Box 302 Kosti- Sudan Postal code 27711Elkalakla Br. Tel: (+249-1) 83722001 Fax: 83722002

The Subsidiary Company: The modern International Investment Company Al Shamal Islamic Bank Building Sayed Abdarahman St. Tel:83776768 Fax:83776026

Head Quarters’ Address

Operating Branches

Elsayed Abdurrahman St.. Eastern Khartoum- SudanP.O Box: 10036, Khartoum- Sudan Postal Code: 11111Tel: (+249-1) 83773111- 83779474- 83779078 – 83782925Fax: (+249-1) 83773585- 83774277-83782586Swift: isbssdkh Website: www. alshamalbank.comE-mail: [email protected]


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Mr. Al Baqir Yousif Mudawi President of the Board of Directors

Board of Directors Members:2- Mr. Gaafar Osman Fagier 3- Eng. Abdel Alrahman Abd Allah Mahjoub 4- Mr. Badraldden Salih Abdul Radi5- Mr. Abd Allah Idrees Fadul 6-Mr. Sulaiman Mohamed Ahmed 7- Mr. Abdaljalleel Alnazir Alkaruri8- Dr. Ziyada Abd Allah Ziyada9- Mr. Mohamed Yahia Eljaldi10-Mr. Ibrahim Musa Alkhaliefa

Secretary, Board of DirectorsMr. Zainalabeddeen Salih

SHARIA SUPERVISORY BOARD:1- Mowlana. Mukhawi Mudawi Mukhawi Chairman2- Dr. Abdelwahid Osman Mustafa Member3- Mr. Mohamed Ali Yousif Member

Secretary, Sharia Supervisory Board: Mohy Eddin Mahmoud Eltoum

AUDITORS:Messers: Azhary & Company.

Board of Directors

LEGAL ADVISOR:Mr. Mohamed Yousif Mohamed


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Mr. Satti Mohamed Satti Technology & Marketing ManagerMr. Ahmed Altahir Sidahmed Deputy Manager of Planning, Research & Training Dept.Mr. Mutasim Abdelaziz Fagier Investment & Funding Manager Mr. Ghazi Abdelhai Foreign Relations & Banking Affairs ManagerMr. Ibrahim Abdelmoneim Zayed Risk ManagerMr. Salah Sidahmed Bandi Internal Control & Inspection ManagerMr. Usama Ali Ibrahim Financial Affairs ManagerMr. Albashier Mohamed Ahmed Deputy Manager of Legal Dept.Mr. Salah Hassan Ahmed Administrative Affairs & Human Resources Manager

MAIN EXECUTIVES

Mr. Mohamed Bushra Khalaf Allah Mr. Abdulla Nouredin Ahmed Kamal Elsheikh Eltyeb G. M. Assistant for Financial & G.M. Assistant for Investment G.M. Assistant for Administrative Affairs & Planning Affairs & Technology

General ManagerMr. Abdelmoneim Hassan Sayed


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Economical indicators are considered to be the base on which the planning of policies is built. So it becomes necessary to seek guidance through local as well as international indicators so as to make the Bank’s supposed budgets more realistic. In the following, there are some economic indicators at both local & international levels:

World EconomyThe world economy showed remarkable decrease in its growth rate, for it decreased from 5.4% in 2006 to 5.2% by the end of September 2007. This rate is expected to increase up to 5.5% in the year 2008. On the standard of the African continent, the rate of growth witnessed a slight increment from 5.6% in 2006 to 5.7% by the end of September 2007. An increase of up to 6.2% in the growth rate is expected in 2008. As to the Middle East countries, the growth rate reached 5.6% in 2006 & 5.9% by the end of September 2007. Yet, the expectations point out to its decrease to 5.5% in the year 2008.

Sudanese National Economy1. Economical Growth Rate:

National economy’s growth rate increased from 9% in 2006 to 10.6% by the end of September & it is expected to increase up to 10.7% in 2008, which is regarded as a good indication for the Sudanese economic growth in its various sectors, especially in the exports sector, of which the outcome increased after the oil revenues came into the Sudanese exports system.

2. Inflation Rate:Inflation rate decreased from 16% in 2006 to 8.4% by the end of September 2007.

3. Exchange Rate: Exchange rate for the local currency (Sudanese pound) showed a noticeable stability in exchange of the American dollar during the time from December 2006 till December 2007, with the value of two pounds for a dollar. This price is expected to decrease during the year 2008 as a result of the Central Bank policies that call for disengagement from the dollar & employing the dealings with the Euro instead.

Reference: The Annual Report - Bank of Sudan

National & International Economic Indicators


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In The Name Of Allah, The Most Gracious, The Merciful

Praise be to Allah! Enough to be a witness between me & you.Peace & blessing be upon Prophet Mohamed (PBUH), his family & his companions. Dear honorable members of the general assembly, Dear representatives of the Bank of Sudan,Dear representatives of Khartoum Stock Exchange,Dear members of Board of Directors,Dear guests, Dear employees,

Assalamu alaikum wa rahmatu Allah wa barakatuhToday, I am honored & happy to address your revered eighteenth General Assembly to acquaint with the performance of your bank & its successive achievements through the terminated financial year in 31-12-2007.Dear brothers:We meet today with your respectable gathering to listen to your serious debate & your sound opinions on the general performance & the financial registers of your prosperous Foundation for the past year, and also take along your opinions, suggestions & directives, which we shall depend on to plan your bank policies & its general directives in the frame of its strategic plan for the five coming years to achieve the desired aims (with Allah’s aid & grant).Honorable brothers:The accelerating changes in the economical & investment fields witnessed in our country under the informational outburst are a big challenge to all the economical, investment & funding foundations. Your firmly established pioneering Foundation will bear its responsibility in the best possible way with the efforts of the staff & senior officers, God willing.The financial year 2007 had been a big challenge in the Bank’s successful progress by God’s will. The Bank kept on remedying big complications in order to ascend to a progressive position in an acutely competitive environment where there is no place for a weak foundation (& it did). Moreover, your brothers in the Board of Directors have done their very best to lead the ship to safety with the efforts of the Executive Administration, together with the participation of all the employees whose efforts & persistence made great effect in developing the resources, improving the performance, supporting the Bank’s financial status & lifting it from the stumbles that affected the Bank from time to time. Your Board of Directors continued its constructive efforts to upgrade & improve the performance. They included reviewing the entire Bank’s financial, managerial & investment plans through approximately eight intensive meetings in addition to its Managerial Committee meetings, which amounted to ten meetings. There were also meetings of various experts & specialized committees established by the Bank to be guided by their experience & helped in the Bank’s framework, investment & managerial

The Board of Directors Chairman’s address to the 18th General Assembly of Share Holders:

Mr. Al Baqir Yousif Mudawi President of the Board of Directors


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plans. The result was the following: 1. Setting up the Bank according to the directives of the Central Bank of Sudan, especially in what concerns the reconciliation of the Bank’s capital status. According to your honorable resolution (No 17) of the previous year to raise the Bank’s nominal capital up to SDG90.000.000 & then place on the market its shares for the general underwriting; the outcome of the Bank’s paid capital rose up to more than 64 million pounds, which is reflected on the vast increment in the title as explained in the table which will follow. 2. Efforts have been continually exerted to reorganize the setting up as follows:a. Two extra assistants have been appointed for the general managers to shorten the managerial shade. b. Establishment of four new administrations:-I Banking Affairs Administration to be directly responsible for everything that concerns the activities of the Bank’s banking branches, administrative bodies & take direct care of its cadre in terms of backing, training, rehabilitating and updating work procedures as well as observe its performance. II. Since marketing plays an important, central & essential role in setting up the programs & plans for the Bank & the flow of information about their activities in an environment where there is increasing competition in the banking market, an independent marketing administration has been established under the control of the General Manager. It is provided with active qualified cadre in the field of marketing & Banking services to work with high competency so as to preserve the Bank’s clients & attract other distinguished individuals. Because the international work is bound with marketing, this department is named “Information & Marketing Department”. IV. Since human resources are the generating power for any activity, they deserve intensive care. So the independence of the employees’ affairs is confirmed apart from the administration affairs under the name of “Human Resources Administration” which is authorized to take care of all that concerns whoever is related to the Foundation in regard to their occupational & living affairs & follow their promotion in the Foundation. III. Since training & work perfection are both the base of the continuation of any institution seeking to improve & grow, an independent department was established under the name of Training & Total Management Department; the aim of which is not only to perform the job, but also to perform it perfectly with distinction & with the employees’ satisfaction. C. The Department of Investment have been reformed & it is the Bank’s main stay to establish a section to be in close contact with following up the Bank’s investment operations, help & direct in the performance of some operations in order to keep away from deviating in the execution, which may lead to difficulty. D. In the framework of reconstructing the Bank, emendation & updating work procedures have taken place, including the financial, managerial & investment sections, along with activating group-work, saving a great deal of transparency & insuring the participation of all the employees in decision making. All this effort exerted in planning & executing the reconstruction of the Bank’s set up, represents the ice breaking for setting the Bank’s strategic plan, set in accordance with the Central Bank’s currency policies & the State’s economical, financial, developmental & social policies. The execution of all these policies will be completed during the five coming years so as to place the Bank (God willing) in the lead of the banking system. In this instance, we stress & concentrate on the continuous efforts in the following domains:1. The close follow-up with the Bank’s difficult debts especially before the courts. We have succeeded in getting back most of them & settled as well as rearranged others, wherein the difficult debts proportion decreased to the exploited roof from the proportion of 29.13% in the year 2006 to 1.06% by the end of December, 2007, due to extinguishing some operations with the approval of the Bank of Sudan, besides the efforts of the Bank’s executive Administration.


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2. Attraction of new clients leads to increasing the Bank’s financial resources which leads in turn to an increment in the total of assets, deposits, funding, equities & income. The expenses are as follows: * Total of Assets: 440 – 544 24%* Total of Deposits 241 – 271 13%* Total of Funding 135 – 190 41%* Total of Equities 10 – 61 584%* Total of Incomes 23 – 29 26%* Total of Expenses 19 – 25 31%For more information, you can go back to page (10) of this Report.3. The continuation in applying modern banking technologies, which had an obvious contribution in developing the electronic banking in the Bank under umbrella of raising the efficiency of the apparatus. This has been completed by 95%. It also raised the net’s efficiency by increasing the capacities & installing protection systems to the appliances as well as operating the phone bank system.4. The recommendations of the working environment improvement committee have been approved with continuous care to create an environment which encourages the employees to exert more effort for the sake of improving the Foundation. 5. Continuing the successive serious attempts to support & develop our foreign relations to create strong foreign relations with banks & funding institutions in the Arabian, European & Asian regions. We have had some achievements & the efforts are still going on. Up to now, the outcome is that the number of correspondence has reached 19 & the facilities offered by the rate of 33%.

6. Activating the role of the Modern International Company in the investment sector & make attempts to obtain endorsements to establish Market Company, along with forming a real state committee to get funds so as to complete the Burj building where it has encouraging contacts in this domain. 7. The restoration of the exchange office of Sug Sitta in Al-Haj Yousif has been completed, as your Bank has joined a confederation group formed by the Bank of Sudan in order to pave the way for making strong banking entity that is composed of:-

* Al Shamal Islamic Bank* Al Ahlly Bank* Sudan Islamic Bank * Al Tadamon Islamic Bank Their most important duties are:-

- appointing various portfolio investments - achieving the greatest amount of cooperation among the group.- information constructing - coordination in liquidity administration- development of resources & funding strategic projects.- forming investment portfolios

Honorable Brothers:The continuation & progression of this Bank is our foremost concern. Therefore, we should all work to preserve this Bank, its reputation, its pioneering role in the banking field & to fulfill the above mentioned theme in no other choice than to do the following: 1.Making good use of the capital excessive increment which results from the continuation of

the Bank & the support of Sudan Central Bank. 2.Attracting more deposits whether local or foreign & borrowing from the Central Bank.


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3.Developing the means of control precautions in the bank. Honorable Gathering! Should we not have a halt in this quick Report to show & direct due praise & respect to the note worthy men of the Bank who deserve such acknowledgement? Our thanks, appreciation & gratitude to our virtuous brother; Osman Salman, former president of the Board of Directors of this honorable Establishment.The Bank started to recover in his time, came out of its depression & started to get back to its course of construction & development. By virtue of his esteemed efforts & hard work to obtain support for the Bank’s capital to fulfill the requisites of restructuring; he succeeded in convincing the Central Bank of Sudan to take share in the Bank’s capital. He managed to obtain the approval of the National Fund for the social insurance & Dan Fodio Foundation’s approval to raise their shares in the Bank’s capital. The efforts exerted through his true believe in the message of the Bank, played a crucial role within the group of the financial foundations that supports development at the national level. These efforts raised the Bank’s capital to the status mentioned in the beginning of this speech.

We pray to Allah to give Mr. Salman good health & well being. We also hope that all his efforts will succeed in what he is now in charge of & that his presence with us will continue, for we are still enjoying his presence with us through consultation & advisory services in any matters concerning the Bank. We also express our thanks & gratitude to our brothers, Dr.Khalid Ahmed Mohamed Salih & Abbas Munier, former members of the Board of Directors, for the efforts & participation in the Bank’s progress. Our gratitude is also extended to the Bank of Sudan for its sincere backing to our Bank & its commissioner’s personal attention & help in adjusting the Bank’s course. I would also like to bid Dan Fodio & the National Fund for Social Insurance a special gratitude for their keenness & support to see the Bank perform its message effectively in development consolidation. Finally, I do thank you honorable brothers, members of the Board of Directors & the Bank’s employees who exert their efforts, regardless of the difficult financial situations. I would also like to say thank you to the Sharia Supervisory Board and for the two honorable brothers, the Legal Auditor & Legal Consultant & for our honorable clients for their honest cooperation.

We must not forget to extend our thanks on your behalf to our friends in the financial & banking corporations for their role in consultancy & for providing us with vital data & information as well as training our employees in the Bank.

Thanks to God, before & after everything. Wassalamu alaikum wa rahmatu Allah

Al Baqir Yusif MudawiChairman of the Board of Directors


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The shareholder’s Annual General Assembly Meeting was held earlier this year due to the considerable efforts of those who prepared for this assembly within the institution in addition to the efforts exerted by the certified auditor. In response to the resolution of the 17th general assembly of the shareholders which was held in April 20th, 2007 to raise the Bank’s capital up to SDG90.000.000, the capital of the Bank increased from SDG16.110.864 to SDG64.634.323 by an increment rate of 301.7%, leading to the improvement & development of the Bank’s services that the Bank offers, through using modern technology & qualifying the working cadre to carry on its duty. New methods were introduced in managing the Bank’s performance according to the requirements of the Central Bank of Sudan & its policies to develop the banking & finance services using modern mechanical technology & training employees to use it in order to create the desired comprehensive employee & seek to provide a distinct banking service in respect of presentation, effort exerted, cost of reduction & rapidity of accomplishment, which had a good impact in increasing the Bank’s revenues & credits more than the previous year 2006. Board of directors’ ActivitiesIn reaction to the banking industry’s recent development at the international, regional & domestic levels, it is our duty to set forth strategies & plans to achieve our desired goals during the year 2007, to drive forward the Bank’s march so as to become in the lead of Sudanese banks. According to the Bank>s strategic planned vision for the period of 2008-2012, based on the following requirements: 1. Reconstructing the Bank in conformity with the Central Bank of Sudan to go along with the developments in:* increasing the Bank’s capital,* improving the work environment, * completion of the Bank’s systematic & organizational structure, * continuing development & using banking technologies. 2. approval of the five-year plan for the period of 2008-2012.3. setting a publishing plan to present the bright style of the Bank.Financial Status The Bank has witnessed a perceivable improvement in its financial status by the end of 2007 compared to 2006. the following table shows that (please refer to table No (1) in the following:

particulars 2006 2007Rate of change Or

Variation ratioTotal Assets 440.171.493 544.183.041 24%

Cash & Banks 66.377.347 91.923.223 38%Total Finance 135.220.393 190.366.942 41%

Net Fixed Assets 13.292.623 13.854.894 4%Total Debosits 241.006.343 271.518.415 13%Owners Eguity 10.485.040 61.278.788 584%

Investment Activities: The mass finance granted had reached SDG190.366.942 during 2007 compared to SDG135.220.393

Bank’s Activities During 2007


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in 2006.2056 investment operations were financed in the various economic sectors. 80.14% had been offered through “Murabaha”, 17.02% through “Musharaka”, 2.84% through other forms. The commercial sector got 65% of the total granted finance. After it, came the handicrafts & the vocational, 16%. The industrial 7%, export 2.3%, agricultural 4%, transport sector 4% & other sectors 1.7%. The total of operations cleared during the year 2007 reached 1376 operations, while the investment in the investment portfolios reached 9.570.850 pounds, securities 60.882.000 pounds. Profits from direct financing totaled 16.219.000 pounds, securities revenue 6.978.000 pounds. The percentage of default loans from actual investment went down from 29.13% in 2006 to 7.06% at the end of 2007, due to terminating some operations - with the agreement of Sudan Central Bank - in addition to the good efforts of the Executive Administration of the Bank. Banking TechnologyThe Bank continued its pioneering role in the field of electronic banking rapidly. Having connected the branches & the administrations of the Bank through an electronic network, the Bank executed many activities during the year 2007, based on what had been planned previously. This can be explained in the following: 1. Shares system was analyzed and programmed. 2. A system of introducing & following up the decisions of the Management was, made.3. Programs were modified to be compatible with the Electronic Clearance. 4. Technical Supervision for the system of Clearance.5. Capacities have been increased, to raise the competence of the net. 6. Four ATM machines have been operated.7. Supervision, issuing & following up with the cards of the ATM.8. A system of securing the machines at the Administrations & branches against viruses was installed. 9. SMS Phone Banking system has been operated. 10. Continuous maintenance & following up with the machines & programs. 11. Programs have been modified to be compatible with the currency modification from Dinar to Pound. 12. Efforts are exerted to raise the efficiency of communications through transferring the net to the net fiber system. 13. Efficiency of the machines have been raised by changing 95% of them. 14. Preparations have been made regarding the introduction of Hafeer branch into the Net. 15. Five new ATM machines have been bought. 16. A system of hot transfers has been set up with Al Rajhi Banking & Investment. As for the aspect of training & rehabilitation, the Administration participated in many seminars & conferences relative to the banking technology as well as providing the chance for training Sessions in the field of banking technology for the Administration employees, in addition to our participation in many technical committees. Foreign Currency & Relations:In this field, the following has been achieved: 1.Increasing the banking facilities with some foreign correspondence at 50% with the Bank of Beirut & the Arabian Bank for Investment & Trade, Abu Dhabi, as examples. 2.Modernizing the hot transfers program to Arabic language with the Al Rajhi Banking & Investment,


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Kingdom of Saudi Arabia, through the internet to be paid in minutes for the beneficiaries in Sudan. 3. The start of making agreements with some European & Asian banks to expand the network of foreign correspondents, such as the Chinese Bank & Birhad Commercial Bank in Malaysia.4. Improving the status of foreign currency resources of the Bank through entering in investment transactions, the financing of which reached USD11.000.000 (eleven million dollars) by the end of 2007. Training & rehabilitation of the employees: For our believe in the importance of training & improving the abilities of the employees in order to improve & develop the performance of the Bank, 29 training sessions were executed, with the participation of 675 individuals (17 training sessions were at the Training Center of the Bank) where they received training on the best of banking technologies in the field of banking & administrative work, in addition to our participation in the sessions held by the Central Bank of Sudan, the Union of Sudanese Banks in collaboration with the Union of Arabian Banks & the sessions held by the Sudanese Academy of Banking & Monetary Sciences. We also participated in many foreign sessions with 10 participants in order to match the developments in the international banking system. The following table explains the executed programs & participants

Program Participants in 2006 Participants in 2007 Rate of growthTechnological program 154 229 49%Banking Work 160 146 (9%)English Language 22 60 173%Administrative Work 150 240 60%Outside courses 5 10 100%Total 491 685 373%

Administrative Affairs & Human Resources:The activities of the Administration were represented by many achievements in 2007, some of which are: 1. Support of Head Quarters (HQ) & branches with sixteen new cars. 2. Completing the Administration & branches structure by appointing sixty three employees of bachelor’s degree & two computer programmers in addition to supporting the Legal Department by appointing a legal consultant. 3. Arranging to set up four new administrations as decided by the Committee of Restructuring & Technology, which are: Human Resources Administration, Training & Quality Control, Marketing & Public Relations & Banking Affairs. 4. Re-opening Suq Sitta office at Haj Yousif, which was the desire of the citizens & merchants of the area & a support to the financial activities & banking work in the same area. 5. Old cheques of our clients were changed for new ones after the change of currency from Dinar to Pound during a short period of not more than two months. 6. Inserted assets were provided with the balance of 2007 for all the administrations & branches by 95%7. Used cars & computers were disposed of as well as all the surplus furniture in stores. 8. Work is going on to acquire offers of financing the completion of Burj Al Shamal (Al Shamal Tower).


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Particulars Note 2007 2006

Current Assets:

Cash & cash equivalent 3 91923223 66377347

Deferred account receivable 4 148647752 73171206

Investments 5 96243441 101514077

Investments in associates 2428162 2263313

Long terms investments 6 1500831 1500831

Other assets 7 141864915 170217853

Other debit balances 8 47719823 11834243

Net Non-current assets 9 13854894 13292623

Total assets 544183041 440171493

Liabilities:

Current and saving accounts 10 200756398 191507464

Other liabilities 11 176080357 197898380

Provisions 12 3843495 2587890

Bank of Sudan loan 40000000 0

Net liabilities 420680250 391993734

Unrestricted investment account 13 62224003 37692719

Total liabilities and unrestricted 482904253 429686453

Net Assets 61278788 10485040

Owners Equities:

Authorized & paid - up capital 64634323 16110864

Issue fees 93650 93650

Reserves 14 7078249 6851220

Assets revaluation reserve 4899306 4899306

Accumulated losses 15 -17469997 -20305990

Profit for the year 2043257 2835990

Total owners equities 61278788 10485040

Total Contra accounts 219344797 93828170

Mr. Al Baqir Yousif Mudawi Mr. Badr Aldeen Salih Abdul Radhi Mr. A. Elmonem Hassan Sayed Chairman of the Board of Member of the Board of Directors General Manager Directors

Balance Sheet As At 31st December 2007 (SDG)


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Particulars Note 2007 2006

Revenue From:

Account receivable 16 12334079 9313150

Investments 17 10862792 7789020

Sub-total 23196871 17102170

Less: Returns on unrestricted Investment 18 -5502544 -3441930

Sub-total 17694327 13660240

Add: Returns on banking services 19 9480452 8564340

other income 1586380 1135260

Total revenue 28761159 23359840

Expenses:

General & Administrative expenses 20 25119607 19212910

Bank of Sudan penalties 74000 -

Depreciation provision 1297266 1310940

Total expenses 26490873 20523850

Profits before tax and Zakat 2270286 2835990

Tax and Zakat provision - -

Total profits (losses) 2270286 2835990

Reserves 227029 -

Net profits/losses for the year 2043257 2835990


Income Statement As At 31st December 2007 (SDG.)


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Particulars 2007 2006

Net profit for the year 2043257 2835990

Adjustments:

Depreciation of Non-current assets 1297266 1310940

Allowance for provision risk investment 2853445 590306

Other Assets 28188089 31538650

Allowance for impairment 1255605 692790

Impairment loss allowance 1500000 1314910

Deferred Account Receivable -78329985 -25493650

Increase in debtors -37385583 -1877900

Increase in creditors 18181977 -20818310

Total adjustment -62439186 -12742263

Net cash flow from operating activities -60395929 -9906274

Cash Flow From Investing Activities:

Purchase of Non-current assets -1859537 -1366480

Sales of Non-current assets 0 0

Net cash flow used in investment activities -1859537 -1366480

Cash flow from finance activities:

Investment owners> equity 24531284 5915780

Short term investment 5270636 -18996110

Current and saving accounts 9248934 972810

increase in capital 48523459 0

increase in reserves 227029 0

Net cash flow used from financial activities 87801342 -12107520

Net increase (decrease) in cash and cash equivalent 25545876 -23380273

Cash and cash equivalent opening balance 66377347 89757620

Cash and cash equivalent closing balance 91923223 66377347


Cash Flow Statement for the Year Ending 31st December 2007 (SDG)


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Notes on the Financial Statements Accounts

Establishment and Activities: Islamic Bank is a public limited company, registered in Khartoum-Sudan on 23.7.1985 according to the companies Act 1925. It commenced business on 2.1.1990. Activities are carried out in accordance with Islamic rules through headquarters at Alsayed Abdelrahman Street & its seventeen branches spreading throughout the SudanIn addition to the international modern investment company as a subsidiary company.

Accounts are prepared on the historical cost convention .

1) The bank used a historical cost convention and accrual basis accountancy principle in registering its financial statements.

Non-current assets have been revaluated in 1997.

2) The financial statements of the bank are not unified with the financial statements of theInternational Modern Investment Company (limited) which is owned by the Bank (99%), according to the Bank of Sudan Regulation No. 25/2002 dated 21/9/2002.3) Non-current Assets are depreciated by the straight line method, based on its expected life. The depreciation is calculated according to the rates determined by the Chamber of Taxation.4) Foreign exchange transactions were recorded in Sudanese Pound at the exchange rate prevailing at the time of its occurrence. Assets and liabilities appeared in the balance sheet at The exchange- rate prevailing at the balance sheet date, which was equivalent to 2 Sudanese Pounds for the Dollar at 31.12. 20075) Revenues and losses from «Musharaka”, and “Salam” operations are recognized when an investment operation is completely settled. Revenue from «Murabaha” is recognizedwhen an amount of the initial investment and the profits are fully repaid.6) Provision for doubtful debts are computed according to the Central Bank>s bases & standards bearing in mind the debts that the Central Bank agreed to be set off losses against the profits in the following ten years. 7) The investments appear in the capital sharing in the list of the financial position by the cost, without deducting the provision for its reduced value.8) The Bank activities are subject to the Sharia Supervisory Control.9) The Bank is subject to the Zakat & taxes to the chamber of taxation.(10) Non-current investment accounts profits are calculated on semi annual bases. The BankPermits drawing or adding to what is called Mobile Investment Accounts along with the right of the accounts owner in the income by the end of the period. Set off:The Bank works towards setting off long term impairment losses from the profits which will be achieved during the following ten years.

Note No.(1):Accounting Policies:


22

Particulars 2007 2006

Note No.(3):

Cash and Cash Equivalent:

Cash in hand-local currency 11977289 5672185

Cash in hand-foreign currency 815552 1086891

Cash at Bank of Sudan 34413748 24100349

Legal reserve-Bank of Sudan 24370774 26457300

Foreign correspondent 19984569 8889049

Automated teller machine (ATM) 361291 171573

Balance as shown in the balance sheet 91923223 66377347

Note No. (4):

deferred Account Receivable:

Murabahat and salam 155125501 76795516

Less: Provision for investment risks -6477749 -3624310


Note No.(5):

Short term investment:

Bills receivable 120000 22200

Musharakat 26211724 49561645

stocks 248628 0

Stocks and shares 60882000 43067000

Other investments 7746246 8753752

Foreign investments 1034843 109480


Note No.(6):

Long Term Investment:

Modern International Company 1167000 1167000

Anaam Company 5150 5150

National Petroleum Company 102000 102000

Kajabar Electricity Company 200000 200000

Electronic Banking Service Company 26681 26681


Notes To The Financial Statement Accounts (SDG.)


23

Particulars 2007 2006Note No. (7):Other Assets: Clearance-local 317617 1297065Clearance-foreign 0 0Staff loans 6258864 4766087Stores 464171 491041Unified Free Market 0 5341646Branches current account 112652593 148444341Dealing room - foreign 18225689 3721421Foreign Currency Revaluation differentials 17800 0The Humanitarian Aid & Develop .Org. 0 400000Re-signers Obligations 2685 3185Commission on cheques of electronic clearance 9217 0Deferred expenses 0 250000Impounded guarantees 28575 45Prepayment 741450 691389Other debtors (Soqia organization) 38566 0Difference in Kalakla Branch 1293698 1289648Khalafalla & others 826041 826041Hot transfers 249473 669639Accrued revenues (Shahama) 738476 2026305Balance as shown in the balance sheet 141864915 170217853Note No.(8): Other Debtors: loss from investment operations 2393653 2659614previous years Losses 7815277 8683641Abdul-haleem ali ahmed 292955 0A.rahman M.Alsheikh 1697105 0MOHD. Hamad zeyadah 799349 0Tareef company 300413 0A.Basit mohd. Ahmed 225185 0Marbel art company 31323 0Alrudwan debts 28697609 0Free zone debts 5341646 0Loss on Mudaraba With Abd Alla Abd Albaset 1625308 1805998Allowance for impairment -1500000 -1314910Balance as shown in the balance sheet 47719823 11834343

Notes To The Financial Statement Accounts ( SDG.)

Note No.(9/A): Net Non-Current Assets: Land & buildings 9367267 9367267Machinery, cars, furniture & computer 12554058 11473091Total 21921325 20840358Less: Depreciation -8066431 -7547735Net Non-current assets 13854894 13292623


24

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25

Particulars 2007 2006Note No.(10): Current & Saving accounts: Current accounts-local 166344663 161972865Current accounts-foreign 10807233 10755467Saving accounts-local 23604502 18779132Balance as shown in the balance sheet 200756398 191507464Note No.(11): Accrued expenses 146929 98289Foreign exchange market 16345160 1135888National transfer 27685 37776Cash margin against L/C 5811050 8709397Bills payable and certified cheques 8796556 19117988Pilgrimage housing cheques 5766 5766Difference in exchange on foreign currency 36690 393860Clients cheques under collection 251918 259121Dividend 62975 66802Inward transfer-local 511395 260534Outward transfers under settlement 7767 7424Suspended profits of murabahat 20873145 10237637Board of Directors Remuneration 78467 62617Local currency cheques under settlement 0 0Un-cleared cheques 0 23180Cash margin against local guarantees 2726964 3096763Investment accounts profits-local 4873086 3261855Blocked accounts balances 32648 33994Fees of prosecution authority 14000 14000Trusts under demand 460931 530795Umelqura office trusts 665 665Audit fees 30000 38000Staff subsidy 1457301 963630Clearance cheques 409493 374815

Unpaid foreign transfers 0 205000Blocked amounts 26256 89425Students National Fund 0 1013Speed cash 0 56103Inward transfer-foreign 138798 54945Branches current accounts 112652593 148444341Investment operations(branches) 0 180000Amount referred from kalakla branch differences 136756 136757Prohibited profits-local 21690 0

Notes To The Financial Statement Accounts ( SDG.)


26

Social insurance 17450 0Printed cheques books 330 0Profits on deposits Of bank of Sudan 125893 0Balance as shown in the balance sheet 176080357 197898380Note No. (12): Provision: Provision for Zakat 25000 25000Provision for post service benefits 3818495 2562890Balance as shown in the balance sheet 3843495 2587890Note No.(13): Unrestricted Investment Accounts: Investment accounts-local 55763204 32475419Investment accounts-foreign 6460799 5217300Balance as shown in the balance sheet 62224003 37692719Note No.(14): Reserves: The statuary reserve 227029 -The general reserve 6851220 6851220Balance as shown in the balance sheet 7078249 6851220Note No.(15): Accumulated Losses: Accumulated Losses -17469997 -20305990Balance as shown in the balance sheet -17469997 -20305990

Note No.(16): Income from sales receivable: Returns from murabahat 12284515 9302790Returns from salam 49564 10360Total as shown for income statement 12334079 9313150Note No.(17): Income from investments: Returns from musharakat 3884837 2024800Returns from stocks and shares 6977955 5764220Total as shown for income statement 10862792 7789020Note No. (18): Unrestricted investments accounts Share in profits: Returns from investments accounts-local 5130773 3093980Returns from investments accounts-foreign 371771 347950Total as shown for income statement 5502544 3441930Note No.(19): Revenues From Bank Services: Commission received from current account 2105620 1829230Commission received from transfers 2127649 1905240Commission received from L/C 2825894 2722110Commission received from L/G 860386 336960


27

Commission received from bills pf exchange 11494 4610Commission received from exchange off foreign currency 689746 517340Returns on foreign currency 656759 0Revenue from technology 10018 0Other revenues in foreign currency 145374 867240Investment deposit share 47512 381610Total as shown for income statement 9480452 8564340

Note No.(20): General & Administrative Expenses: Salaries & allowances 4633106 3922380Traveling & living expenses 464310 419380Stationery & printed materials 148980 140240Communications expenses 423650 343590Hospitality expenses 105444 80570Electricity & water 445375 422220Legal advisory expenses 33967 12360Insurance 70451 31200Donations & grants 105469 95570Rents & rates 1012381 890050Consultancy & research 22112 18860Subscriptions(Professional & Scientific Co.) 747112 578380Training 310632 282260Generators & running expenses 82875 72690Vehicles running expenses 348594 303850Board of directors expenses 170189 164090Board of directors remuneration 150000 120000Computer expenses 299898 173000Bank of Sudan commissions 99688 101580Marketing & advertisement expenses 117734 94420Computer maintenance 40345 15790Furniture& equipments maintenance 95791 85360Rentals of deferred expenses 250005 250000Doubtful receivable 3841454 837010Cash insurance 0 25040Audit fees 60000 53000Staff subsidy 1450000 963630Legal advisory remuneration 10000 10000Social service 56155 58240Post service benefits 1700000 1250000Correspondent expenses 31412 28890Medicine 970285 771170Uniform 931378 781000

Aieds Grant 920029 1244640

Marriage grant 13500 9000

National Service 180 340

Leave expenses 1302740 1308930


28

Subscription in journals, books & magazines 14187 14110

Carriage & transport 16612 15250

Safety & security 291003 258160

Cleanliness & health 139321 119760

Annual report expenses 17750 11860

Sharia Supervisory Board expenses 36243 25280

Fees & stamps 113761 5410

General meeting expenses 59378 59560

Money sorting expenses 286608 271800

Buildings maintenance 157686 83110

Foreign currency feeding expenses 72768 197810

Allowances for Impairment on loans 1500000 1314910

Social Insurance 649049 557000

Rehabilitation expenses 300000 0

Prior year tax accounts 0 320160

Total as shown for income statement 25119607 19212910

Bills of investments-under collection 127302468 51945767

Outstanding bills not paid 12011076 2895328

Local bills 359868 41088

Client commitments for guarantees/ local 17076588 9864600

Client commitments for guarantees/ foreign 2985224 0

Foreign bills 0 0

Declaration of Customer Against own resources 6458052 10754038

Customer acceptance of pledges made 15002907 17751349

Client commitments written of debts 32043938 0

Export>s proceeds 576000 576000

Converted bills morabahat foreign to local currency 5528676 0

Total 219344797 93828170


29

AUDITORS REPORT FOR THE MEMBERS OFAlSHAMAL ISLAMIC BANK

We have audited the financial statements from pages (18) to (21) which have been prepared under the historical cost convention and the accounting policies set out in Note No. (1), page (22).Respective Responsibility of Directors and Auditors:The company’s Directors are responsible for the preparation of the financial statements & Indices. It is our responsibility to form an independent opinion, based on our audit, on these statements and present our opinion to you.

Basis of Opinion:We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

First, a Report of Performance is Attached with This Report. Secondly, the bank assets include an other debit balances of 47719823 SDG (fourty seven million, seven hundred ninteen thousand & eight hundred twenty three pounds) explained note No. (8) in the balance sheet, losses of previous years & not other debit balances, which must be removed from the Bank assets and transffered to liabilities side, until gradually impaired in ten years, according to Central Bank of sudan’s regualtions.

Opinion:Except as in the above paragraph, in our opinion, the financial statements give a true and fair view of the state of the Islamic Bank affairs as at 31th.December.2007 and of its Profit for the year then ended and have been properly prepared in accordance with the Companies Act 1925.

Mohamed El Sayed Ahmed El Azhari Chartered Certified Accountant


30

Praise be to Allah, the Generous Governor! Blessings & peace be upon Saydna Mohamed (PBUH).

Report of Sharia Supervisory Board for the Year Ending in 31.12.2007.The Board of Sharia Supervisory of Al Shamal Islamic Bank presents its annual report in accordance

with its responsibilities & functions based on article (74) from the basic charter of the Bank. Hence, according to the control & audit standards of the Islamic Financial Institutions No (1) issued by the Accounting Auditing Organization (A.A.O.) for the Islamic Financial Institutions-Bahrain.

1. The Sharia Supervisory Board has reviewed the used principles & contracts related to the dealings & applications offered by the Bank during the above indicated period in order to show an independent opinion as to whether the Bank had been acting according to Sharia rules & principles. The task was also to show whether the Board’s Fatwa’s decisions & directives had been adopted in the Bank’s dealings.

2. The responsibilities of the Board are joint & integrated with the Administration’s role in assuring the Bank’s execution of its activities according to Sharia rules, while the Board of Sharia Supervisory must be responsible for setting methods, training & issuing of Fatwas for corporations with the help of the internal inspection & auditing departments & expresses its opinions accordingly.

3. The Board had examined the documentations & procedures based on testing samples from the Bank’s operations. It consulted specialized persons from inside & outside the Bank in order to obtain information & explanations considered necessary to supply the Board with sufficient evidence to confirm that the Bank acted according to Sharia rules & principles.

4. The Board proceeded its meetings where it held (31) meetings, considered (101) topics & issued (67) resolutions as well as (34) Fatwas.

5. The Board assembled with the managers of the Following departments: Investment & Finance, Foreign Relations, Banking Affairs & the Functioning branches: Al Sajana,

Al Burj, Al Suq Al Shaby, Suq Libya, Kallakla Al Laffa, Omdurman, Wad Medani, Khartoum Industrial Area & Al Suq Al Arabi-Khartoum

The Board became aware of the performance of the above mentioned departments & their branches as well as their replies to inquiries & commissioned the Bank’s Executive Administration to circulate its Fatwas, resolutions & observations upon the performance for the welfare of all the employees as stated in the Board’s journal.

6. The Board had investigated the External Auditor as to whether he had audited the financial statements according to the Islamic Financial Institution’s Standard No. (4).

The Board examined the External Auditor as to whether the Bank was complying with Sharia rules & principles, checked his report as well as the balance sheet he had prepared for the Bank concerning the following:

- Revenue resources shared with the investment deposits. - Method of calculating Zakat & loss deductions from Zakat base. 7. The Board’s Opinion: a. Most of the contracts & interactions ratified by the Bank during the financial year ending in

31-12-2007 & examined by the Board went in accordance with Sharia rules & principles. The board directed the executives to correct the errors in some dealings contracts.

b. The distribution of the elicit gains & loading the loss on the investment accounts, as directed by the board, complies with the base that was set before.

The Board would like to thank the Bank’s Administration for its cooperation & for answering the Board’s inquiries in all that enabled it to perform its duty.

Success is granted by God

Dr. Mohamed Ali Yousif AhmedMember

Dr. Abd Al Wahid Osman MustafaMember

Mawlana: Mukhawi Mudawi MukhawiChairman of the Board

Sharia Supervisory Board For Islamic Bank 6th Session


31

Held on Friday 18th of April 2008, At Half Past Seven pm at the Bank’s Burj (Tower), Assayed Abdarahman Street1.Approval of the Board of Directors’ report, audited financial statements , Legal Auditor’s

report & the Sharia Supervisory Board’s report for the financial year ending on 31/12/2007.

2. Authorization of the Board of Directors to appoint a legal auditor & specify his fees 3. Authorization of the Board of Directors to appoint the members of Sharia Supervisory

Board & specify their Incentive. Electing the following gentlemen as members of the Bank’s Board for the new term: Dr. Ziada Abdallah Ziada Eng. Ibrahim Musa Al Khaleifa Mr. Tajeldeen Ibrahim Hamid Mr. Badr aldeen Salih Abdul Radhi Mr. Sulaiman Mohammed Ahmed Mohammed Mr. Abdallah Idrees Fadul Sheikh Idrees Mr. Abdulrahim Mohammed Bakheit Mr. Mohammed Yahia Mohammed Aljaldi

Resolution of the 18th General Committeefor the Bank’s Shareholders

Zain Al Abdeen Salih Board of Directors’ Secretary


32

CORRESPONDENTS NET WORK:

ARAB WORLD: Dubai Islamic Bank – Dubai. Faisal Islamic Bank Of Egypt – Cairo. Arab Bank For Investment And Foreign Trade - Abu Dhabi. National Commercial Bank – Saudi Arbia. Alrajhi Banking & Investment Co. Saudi Arabia. The Arab Investment Bank Co. Bahrain. Mashreque Bank Dsc – Dubai. Saba Islamic Bank – Sanaa. Bahrain Islamic Bank – Bahrain. Qatar Islamic Bank – Doha. Abu Dhabi Islamic Bank – Abu Dhabi. Bank Of Beirut – Beirut. Arab Banking Corporation-Manama

EUROPE: BRITISH ARAB COMMERCIAL BANK – LONDON. COMMERZ BANK – FRANKFURT. Al Baraka Turkish Finance House Istanbule.

al shamal islamic bank- khartoum · 9- mr. mohamed yahia eljaldi 10-mr. ibrahim musa alkhaliefa...

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