Al-Awail Company for Micro Finance
Taiz / Republic of Yemen
Financial Statement and
Auditor's report
For the Financial Year Ended on 31st December 2006
0
Al-Awail Company for Micro Finance
Taiz / Republic of Yemen
Financial Statement and
Auditor's report
for the Financial Year ended on 31st December 2006.
Data contained
Subjects
Page No
- Auditor's report.
- Balance Sheet
.
- Statement of income (revenue).
- Cash inflow Statement.
- List of changes in Share holder's rights (equity).
- Complemented clarification (notes).
0
1
2
3
4
5
6-13
Auditor's report
Messrs / Chairman and Members of the Board of Directors
Al-Awail Company for Micro funding / TAIZ
Salutation,
We have audited the enclosed list of the financial statement of Al-Awail Company for smallest
funding / Taiz, acted into the Balance Sheet as of 31/12/2006, statement of income, cash inflow
statement for the period ended at that date. These financial statement is of Company's Management
responsibility and ours responsibility is to give opinion on the financial statement in the light of
auditing.
Our auditing has been made according to customary International auditing standard which requires
putting the plan and executing the auditing works for obtaining reasonable assurance about; that the
financial statement is free of any effecting or essential mistakes. Auditing procedures includes
examination inspection to the documents and supportive evidence on the amounts and the
clarifications included in the financial statement as a specimen. It also includes evaluating the policies
and accounting principles followed, and the important estimations prepared by the Management, also
the correctness of the general display of the financial statement. We belief that the auditing procedure
adopted by us provides reasonable foundation that enables us to give our opinion upon the financial
statement indicated above.
The statement of income haven't included deposits interest (dollar) in the bank ,so it has been added to
ownership rights directly as exhibit (13-d ).
With the exception of it's effect, we consider that the data in the financial statement enclosed with it's
complemented clarifications in exhibit (1) to exhibit (18) expresses fairly the financial position of the
Company, working results, cash inflow as of the financial year ended on 31st December 2006,
according to accounting policies adopted in exhibit (3) and it matches with what is shown by the books
and accounting registers for the said period.
Sofyan Ali Shamsan
Chartered account
Sana'a: 31/3/2007
Chartered accountants register No (187)
0
Al-Awail Company for Micro Finance
Balance Sheet
as of 31st December 2006
Assets
Current assets
Cash in hand
Cash in bank
Loans submitted to clients after
allocation
Short term investment
Other debt balance
Total of current assets
Fixed assets
Net cost of Office Furniture &
Equipment (after Depreciation)
Incorporation expenses balance
Total of fixed assets
Total of Assets
Liabilities and Share holder's
rights (equity)
Current liabilities
Short term borrowing
(commercial average)
Foreign Financers
Other credit accounts
Total current liabilities
Donations and Share holder's
rights (equity)
Capital
Donations and U.N.D.P
contribution
Net income (loss) accumulated
Total of donations and Share
holder's rights (equity)
Total of liabilities and Share
holder's rights (equity)
Exhibit
31st December 2006
Yemeni Riyals
31st December 2005
Yemeni Riyals
3
4
5
1.522.285
2.754.115
42.533.439
1.003.525
2.408.186
23.792.726
6
7
27.619.718
9.181.187
83.610.744
31.209.555
4.555.944
62.969.936
8
2.215.517
2.429.362
46.664
2.262.181
85.872.925
68.201
2.497.563
65.467.499
9
19.453.894
17.311.918
10
4.251.640
9.951.394
33.656.928
4.251.640
6.062.560
27.626.118
12
13
1.760.400
52.553.205
1.760.400
37.924.066
14
(2.097.608)
52.215.997
(1.843.085)
37.841.381
85.872.925
65.467.499
Exhibits enclosed from (1-18) is considered an inseparable part of this data.
Amr AlMutawakkil
Anisa M. Hassan
Financial Manager
Executive Manager
0
Al-Awail Company for Micro Finance
Statement of Income
as of 31st December 2006.
2006
Revenue
Revenue collected on current loans
Revenue of interest on saving
account
Other revenue
Total of financial revenue
Financial expenditure on
borrowing
Interests on borrowed funds
Financial income margin
Less: allocation for doubtful debts
Net margin income
Operating expenses
Administrative and general expenses
Fixed assets depreciation
Total of operating expenses
Net operating income (loss) for the
year
Balance of revenue (loss) at 1st of
January
Net income (loss) at 31st of
December
2005
Exhibit
Yemeni Riyals
Yemeni Riyals
15
15.408.088
311.914
11.011.932
308.942
16
944.130
16.664.132
832.874
12.153.748
17
(1.479.223)
15.184.909
(579.609)
14.605.300
(2.078.437)
10.075.311
(148.072)
9.927.239
18
8
(14.060.492)
(799.332)
(14.859.824)
(254.524)
11.075.523
720.348
(11.795.871)
(1.868.632)
(1.843.084)
25.547
(2.097.608)
(1.843.085)
Exhibits enclosed from (1-18) is considered an inseparable part of this data.
Amr AlMutawakkil
Financial Manager
Anisa M. Hassan
Executive Manager
0
Al-Awail Company for Micro Finance
Cash inflow statement
as of 31st December 2006
2006
Yemeni Riyals
Cash inflow from operating activities
Net income (loss) from operating
Depreciation amendment
Allocation on doubtful debts
Increase in the total of borrowing portfolio
Decrease in other debit balance
Increase in other credit balance
Increase in short term borrowing
Net cash inflow from operating (1)
Cash inflow from investment activities
Increase in short term investment
Increase in fixed assets
Net investment cash inflow (2 )
Cash inflow from financing activities
Increase in contribution
Increase in U.N.D.P donations for lending
Increase in U.N.D.P donations for operating
Increase in foreign financers
Increase in Dollars deposits revenue
Net funding cash inflow (3 )
Net cash inflow (1+2+3)
Cash balance at the opening
Cash balance at the end of the period
31st December
2005
Yemeni Riyals
( 254.524)
799.331
579.609
(19.320.322)
(4.625.243)
3.888.834
2.141.976
(16.790.339)
(1.868.632)
698.811
148.072
(9.320.274)
3.790.776
1.286.921
5.186.012
( 78.314)
3.589.837
(563.950)
3.025.887
(12.163.222)
(310.694)
(12.473.916)
13.877.499
751.640
14.629.139
864.687
3.411.711
1.760.400
7.540.159
3.848.400
789.254
13.938.054
1.385.824
2.025.887
4.276.398
3.411.711
Exhibits enclosed from (1-18) is considered an inseparable part of this data.
Amr AlMutawakkil
Financial Manager
Anisa M. Hassan
Executive Manager
0
Al-Awail Company for Micro Finance
Statement of changes in Share holders rights (equity)
As of 31st December 2006
Capital
YR
Balance at 1st
January 2006
UNDP
UNDP
Deposits
Loss/Profit
donation for donation for investment Accumulated
lending YR operating YR revence YR
YR
Total
YR
1.760.400
24.410.560
10.548.479
2.965.027
(1.843.085)
37.841.341
Donation received
during the year
-
13.877.500
-
751.639
-
14.629.139
Net profit (loss)
during the year
-
-
-
-
(254.524)
(254.524)
1.760.400
38.288.060
10.548.479
3.716.666
(2.097.608)
52.215.997
Balance as of 31st
December 2006
Exhibits enclosed from (1-18) is considered an inseparable part of this data.
0
Al-Awail Company for Micro Finance
Taiz / Republic of Yemen
Complementary Notes to the Financial Statements
As at 31 December 2006.
1- Incorporation & activities.
- Al-Awail Company or smallest funding is a Yemen joint-Stock anonymous Company incorporated
in Taiz on 1/9/2004 by a group of Social Personalities in addition to Social fund for Development
according to rules of the Company's Law No (22) for the year 1997.
- The Company practices its activities on base of Ministerial decree No (270) for the year 2004, and
Commercial Registration No (3171/41) in expansion of the activities of small and handicraft
Establishment Development Project, in Taiz, one of the Micro Start programs project in Yemen
financed by the United Nations Development Program who commenced its activities in the yea 2000
until 31/12/2004, through providing financing services and development small projects and the smaller
especially among the category of women's handicrafts that of limited income, by supporting it with
continuous small loans in an aim to improve the living standard to come out from the circle of poverty
and participate in solving the problem of unemployment.
- the Company was incorporated with U.N.D.P support through transferring all the rights and financial
& moral obligations to the Small Establishment Development Project & Handicraft (Micro Start
project) to the Company as a donation submitted by the U.N.D.P as shown at the end of the audited
financial position of the project in 31/12/2004.
Recently the Company practices its activities in the city of Taiz through 3 branches which are: Sina
branch, AlCamp branch and Gamal Street branch.
2- Important accounting policies followed:
2-1
Accounts are prepared according to the principles of cost at the date.
2-2
Depreciation of fixed assets are made on base of fixed installment method and on base of
depreciation rate shown in exhibit ( * ).
2-3
The Company is following the principle of maturity in registering its expenses, except of that
the Company does not registers the interest and charges on loans granted to clients – as accrued
revenue – until only collected (according to the principles of cash).
2-4
Deals made in foreign currency (dollars) are registered in equivalent value in local currency on
base of exchange rate in the beginning of transaction period. Deposits in dollars are not re-evaluated in
YR at the bank on the date of Balance Sheet on base of exchange rate prevailed at the date.
2-5
Interest granted by the Bank on deposits donated by U.N.D.P in dollars are added directly to
the ownership rights and not to the Statement of Income.
3- Cash in hand
Collected loans installment Cash
Miscellaneous expenses Cash
Total cash in hand
0
31st December 2006
1.226.900
295.385
31st December 2005
921.380
82.145
1.522.285
1.003.525
4- Cash in Bank:
Commercial Bank(Taiz) saving A/4/356215/1/20/0
Commercial Bank (Taiz) saving A/4/356215/1/20/1
Commercial Bank (Taiz) saving A/4/356215/1/20/2
Total Cash in Bank
31st December 2006
31st December 2005
2.662.781
88.365
2.969
1.955.294
351.289
101.603
2.754.115
2.408.186
-Account No (1/20/1) is used for facing operating expenditures and depositing other revenues with the
exception of collected loans installment.
-Account No (1/20/02) is specialized for facing incorporation expenditures (the Head Office and the
Branches) as per the financer's request at the time.
5- Existing loans (borrowing portfolio):
Balance of the existing loan / balance of the borrowing portfolio with client (original loans) amounted
until 31/12/2006 Yemeni riyals (43.848.906) as per the following details:
Balance
loans
Allocations
of
Net balance of
loans
31st December 2006
Number of
Yemeni riyals
clients
2810
43.848.906
31st December 2005
Number of
Yemeni riyals
clients
2258
24.528.584
-
(1.315.467)
-
(735.858)
2810
42.533.439
2258
23.792.726
* Balance of Borrowing Portfolio at 31st December represents the original loan, does not include the
interest or the charges on loans which is shown in an separate account among the other current asset
accounts (exhibit 7).
* The Management counts allocations for doubtful debts at 3% for facing the risk of losing the loans
from the balance of the portfolio (original loan), no loan was made a bad debt during the year as the
non settlement did not reach the limit of losing it / bad debt.
* Statement of loan at books accounting totally proven while the loan automatic system was bing
discounted and it was not possible on 31/12/2006 to analyze the loans at branch level ( name and
location).
* The Company grants small loans to handicraft women of limited income for the sake of lightening
the poverty through granting individual loans or loans under the guarantee of the groups against 2%
charges monthly, loans are collected with the charges on monthly installment for individual loans and
weekly installment for groups' loans.
0
6- Deposits at the Commercial Bank (dollars):
A(0354059)
A(0356215)
Balance of deposit
account
31st December 2006
$
YR
165.117
27.619.718
165.117
27.619.718
31st December 2005
$
YR
122.458
19.604.580
61.147
11.604.975
183.605
31.209.555
* The deposit (dollars) remained in was submitted to the Commerce Bank as a guarantee against
direct facilities for the Company (to overdraw in riyals) ,and it has been collected both of deposit in
this year in on account with an interest of 3% per year.
Both deposits are considered as a donation submitted by the UNDP (see the exhibit No 9).
-Deposit was not evaluated in foreign currency on 31/12/2006 at the exchange rate in this period;
moreover , the differentiate amount of evaluation on this date (at the exchange rate 198/5 riyals per
dollar) reach around (5.156.007) riyals.
7- Other debit balances (other current assets):
Client debts / non collected revenue
Prepaid expenditure
Miscellaneous debt
Total of Other current assets
7-1
7-2
31st December 2006
8.821.334
38.000
321.853
9.181.187
31st December 2005
4.384.546
29.020
142.378
4.555.944
Represents clients balance / non collected interests. Volume of revenue expected on loans with
clients within the installment of loans at maturity date.
Details of the prepaid expenditure balance at 31/12/2006
Prepaid maintenance
Prepaid stationary
Total prepaid expenditure
31st December 2006
38.000
38.000
0
31st December 2005
17.500
11.520
29.020
8- Fixed Assets:
8-1
Cost
January 2006
Additions during
the year
Disposals during
the year
Total cost at
31/12/2006
Depreciation
Depreciation rate
Depreciation on
1/1/2006
General
depreciation
Accumulated
depreciation on
31/12/2006
Book value
On 1/1/2006
On 31/12/2006
Office
Equipment
and Material
Office
Furniture
Photocopier
Machines
Installations
Total
1.592.155
548.950
1.606.810
-
1.094.680
-
109.000
15.000
4.402.645
563.950
-
-
-
-
-
2.141.105
1.606.810
1.094.680
124.000
4.966.595
20%
1.029.114
10%
330.855
20%
568.488
20%
44.825
1.973.282
374.378
160.681
218.936
23.800
777.795
1.403.492
491.536
787.424
68.625
2.751.077
563.041
737.613
1.275.955
1.115.274
526.192
307.256
64.175
55.375
2.429.363
2.215.518
Inventory was made for the Furniture and office equipment on 31/12/2006 with the Management's
knowledge.
Constituent expenses: constituent expenses balance amounted on 1st January 2005 to (46.664)
riyals and the amount which was put off and loaded on the Statement of Income for the year
2006 reach to (21.537) riyals.
8-2
9- Short term borrowings (overdraw) :
overdrawn balance as of 31 December 2006 amounted as following:
2006
YR
Balance of borrowing as of 1/1/2006
17.311.918
Balance of borrowing as of 31/12/2006
19.453.894
-
-
2005
YR
12.125.905
17.453.894
The Company draws from the current account No (0354059) with the Commercial Bank / Taiz,
against facility of deposit guarantee in Dollar, and counts an interest of 14% annual as per the
facility contract signed with the Company.
Interest on debts which the company has beard during 2006 against short term borrowing
amounted to (1.479.223) riyals.
0
10- Foreign financers (U.N.D.P):
Balance as of 1st January 2006
Additions during the year
YR
4.251.640
-
Balance of Foreign financer's as of 31/12/2006
4.251.640
-
Foreign financer's account is mediated by stipulated donations submitted by the U.N.D.P to
face the incorporation expenditure in which the donor has stipulated not to change it to
ownership rights except when the Company fulfills these conditions. It represents the Credit
balance as of 31/12/2006 of the donation which is not yet used.
11- Other Credit Accounts:
31st December 2006
31st December 2005
Revenue under collection*
Due expenditures (accrued)*
Allocation end of service bonus
Miscellaneous creditors
8.821.334
505.460
102.120
522.480
4.384.546
459.073
807.170
411.771
Total of Other credit accounts
9.951.394
6.062.560
11-1- Revenue under collection
It's represented the amount of loans revenue which isn't collected from clients until 31st December,
whereas, this revenue are not recognized until collected with the loans installment at maturity, this
account is faced on the assets side by the accounts of (clients/ interest not collected).
11-2- Due expenditure balance as of 31/12/2006.
Represents the expenditures which is considered a burden on the financial year yet not paid until the
31st December (according to the accounting maturity principles) and the details of the balance is as
follow:
YR
Due expenses for Electricity and Water (accrued)
23.220
Due incentives (accrued)
161.600
Due expenses for Telephone and Post (accrued)
23.200
Due expenses for auditing (accrued)
257.790
Due expenses for salaries
39.650
Total due expenses (accrued)
505.460
0
12- Share holder's capital:
Allowed shares permitted are counted 5000 shares, with the par value of 1000 riyals of each share,
share holder's (equity) details are as follow:
Ser Name of Share
Holder /
Organizers
Number of
shares
subscribed
1
2
3
4
5
6
Sheikh/ Ali
AbdulMuti
AlGunaid
Sheikh/ Ahmed
Ali Ahmed
Gamel
Dr. Ameen
Saleh AlBahr
Dr. Hasan
Mohamed
AlOdaini
Mr. Hafez
Abdullah Fadel
Social
Development
Fund
Total
Percentag
e%
Paid / Riyals
740 shares
Value of
shares
subscribed
/ Yr
740.000
Riyals
Percentage %
14.8%
92.150
740 shares
740.000
14.8%
92.250
648.000
87/57
740 shares
740.000
14.8%
92.000
648.000
87/57
740 shares
740.000
14.8%
92.000
648.000
87/57
740 shares
740.000
14.8%
92.000
648.000
87/57
1.300 shares
1.300.000
26%
1.300.000
-
-
5.000 shares
5.000.000
100%
1.760.400
3.240.00
0
64/80%
87/57
13- U.N.D.P donations:
a- U.N.D.P donations for lending
Riyals
Dollars
Donation's balance as of 1st of January 2006
Paid during the recent year
24.410.560
13.877.500
145.441
70.000
Balance of the donation for lending
as of 31/12/2006
38.288.060
215.441
-U.N.D.P submitted the above mentioned donation for Small and Handicraft Establishment
Development Project as per the agreement signed between the Women Federation commencing the
year 2000, whereas, the amount of agreement reach to 150.000 Dollars of which 105.000 was
specialized for facing lending activities directed for craftsman and poor women, the donation was
deposited at the time with the Yemen Commercial Bank as a deposit with guarantee and the rest
amount of the agreement's value (45.000) Dollar was specialized for facing the operating expenses.
-U.N.D.P donation was added by amount (40.000)dollars and (70.000) dollars for the company
account in the bank for facing lending activity in 2005,2006 .
0
b- Operating donation:
Balance of the donation as of 1st January 2006
Advance during the recent year (Prepaid)
Balance of the donation for Operating
As of 31/12/2006
Riyal
7.279.719
7.279.719
Dollar
45.000
45.000
Riyal
3.268.760
Dollar
17.804
3.268.760
17.804
c- Incorporation donation :
Balance of the donation as of 1st January 2006
Donations submitted during the year
Balance of donation as of 31/12/2006
Balance of the above mentioned donation represents what is used only for the incorporation as per
UNDP conditions and the rest remained with the account of the financers (as obligation).
d- Return on deposits investment(dollars) with the Yemen Commercial Bank Taiz.
31st December 2006
31st December 2005
Riyals
Dollars
Riyals
Dollars
Balance 1/1
Interest added during the year
Total return on deposits in Dollars
2.965.027
751.639
3.716.666
18.082/58
4.259/23
22.341/81
2.175.773
789.254
2.965.027
13.598/58
4.484
18.082/58
Deposits Investment return in Dollars is added directly to the ownership right and not to the Statement
of Income as revenue to face the debit interest which the Company bears on lending (overdrawn), and
that has shown decrease in the statement of Income with the amount the Balance of return on deposits,
even it has no financial effect that worth to be mentioned on ownership rights.
Worth to mention the Statement of Income as of 31st December 2006 has shown a net loss of
(13.598/58) dollars that is (2.175.773) riyals.
14- Net income (loss) for the previous and current year:
2006
Riyals
Balance (loss) surplus as of 1/1/2006
(1.843.084)
(loss) surplus during the recent year
(254.524)
2005
Riyals
25.547
(1.868.632)
Net balance (loss) as of 31/12/2006
(1.843.085)
(2.097.608)
15- Interest and charges collected on Client's loans:
Revenue on loans granted to clients are recognized at the time of collection, and the balance an
amounts (15.408.088) riyals, revenue collected from Clients on loans granted to them by the Company
and been settled on installment including the charges on this loans.
0
16- Other revenues:
Group charges
Penalty on delay
Employees reprimand
Client books and other charges
2006
Riyals
406.625
457.140
50.425
29.940
2005
Riyals
309.300
403.075
56.599
63.900
Total of Other revenue
944.130
832.874
17- Debit interest on borrowing from Banks (overdraw):
The Company overdraws on base of the facility by the Yemen Commercial Bank Taiz / Branch with
an interest of 14% annual under Dollars deposit's guarantee, Debit interest amounted on this facility
during the year (2006) an amount of (1.479.223) riyals.
18- Administrative and general expenditures:
2006
Riyals
9.798.555
349.175
715.550
98.550
367.500
243.250
121.290
960.000
211.770
298.300
25.507
140.270
16.740
277.645
257.790
42.000
800
135.800
14.060.492
Wages and Salaries
Incentives, Allowances and Bonuses
Social insurance
Foreign subscription
Traveling expense
Postal, Telephone and Fax
Electricity and Water
Rents
Office Equipments and Printing material
Judicial expenses
Banking charges
Maintenance and repairs
Training expenses
Miscellaneous and entertainment
Auditing
Advertisement and promotion
System modernization
Travel allowance
Other expenses
Total administrative and general expenses
Fixed assets depreciation
Total of operating expenses
799.332
14.859.824
0
2005
Riyals
6.570.585
615.119
359.730
96.475
267.740
292.445
109.111
760.000
317.495
244.200
91.593
229.162
71.145
217.790
464.753
44.000
215.880
95.550
12.750
11.075.523
14.859.824
11.795.871