annual report 2003 - bahrain bourse to develop the financial and banking sectors and bolster the...
TRANSCRIPT
H.H. Shaikh Khalifa Bin Salman Al Khalifa
The Prime Minister
H.M. Shaikh Hamad Bin Isa Al Khalifa
King of Bahrain
H.H. Shaikh Salman Bin Hamad Al Khalifa
Crown Prince and Commander-in-Chief of the Bahrain Defence Force
A N N U A L R E P O R T 2 0 0 33
B A H R A I N S T O C K E X C H A N G E2
Bahrain Stock ExchangeAl Hidaya Building No 2, Government AvenueP.O. Box 3203, Manama, Kingdom of BahrainTelephone: (973) 17 261260, Facsimile: (973) 17 256362E-mail: [email protected]: www.bahrainstock.com of the Annual Report 2003
4 The Chairman’s Statement
6 Director’s Message
8 Members of the Board
9 Management Team
10 World Stock Markets Performance During 2003
12 Bahrain Stock Exchange - 2003
14 Key Statistical Data 2002-2003
19 Traded Securities and Instruments
21 Members of the Exchange
22 Listing and Annual Subscription Fees
23 Financial Statements
Contents
Islamic, Local and Foreign Bonds, at a value exceeding US $ 1 billion.
BSE exerted strenuous efforts that resulted in many conventional bonds
and a group of closed shareholding companies and investment funds
listed on the BSE. There remains an ever-increasing goal aiming to offer
multiple investment options and channels for investors, as well as, to
create a more appropriate atmosphere for companies desiring to turn
into public shareholding firms.
In view of the advances of modern technology, and their recent
applications that represent a key element in the activities of stock
exchanges and bourses, BSE attached prior importance to this vital
factor. In 2003, an ambitious plan was carried out to upgrade electronic
systems in order to meet global standards set by the International
Organization for Stock Exchange, and complete all requirements within
a time limit program.
The BSE completed the process of developing its own website, which
contributed to improving its services in terms of quality and volume of
data it offers. Ongoing efforts were exerted to foster human
development, with a main focus on training programs to qualify human
cadres and polish their skills and efficiency at work, this enables the BSE
to develop its operations and assume its role efficiently.
Cooperation and coordination were enhanced between BSE and Bahrain
Institute for Banking and Finance (BIBF) to implement a number of
specialized training programs and courses in securities industry. These
programs were useful to a large spectrum of securities personnel not only
in the Kingdom, but also in the region.
We look forward to the future with optimism and confidence in BSE’s
ability to assume its role properly in bolstering the Kingdom’s pioneering
financial status and developing an appropriate atmosphere for multiple
investment options to attract more investors and encourage them to
benefit from the sound investment climate, supported by solid
infrastructure and wise legislations of the Kingdom, in order to enable
them to diversify their investment portfolio.
To conclude, I would like to express my sincere appreciation and
gratitude to His Majesty King Hamad bin Isa Al Khalifa, His Highness the
Prime Minister, Sheikh Khalifa bin Salman Al Khalifa, and His Highness
the Crown Prince and Commander in Chief of the BDF, Sheikh Salman bin
Hamad Al Khalifa, for their ongoing and limitless support.
Ahmed bin Mohammed Al Khalifa
Governor – Bahrain Monetary Agency
Chairman of Bahrain Stock Exchange
A N N U A L R E P O R T 2 0 0 35
The Chairman's Statement
Last year’s activities witnessed numerous events that positively affected
the economies of the region, and eventually contributed to creating a
healthier environment to promote activities of capital markets in Gulf
States in general and Bahrain Stock Exchange in particular. 2003
recorded a remarkable increase in listing Islamic, Local and Foreign
Bonds, and Shares of a number of Bahraini Closed Shareholding
Companies.
Bahrain Stock Exchange (BSE) has developed an ongoing desire to
further activate its role within an ambitious strategy , adopted by the
Bahrain Monetary Agency (BMA), to work in harmony with other
elements to develop the Financial and Banking sectors and bolster the
Kingdom's pioneering status as the key financial hub in the region for
attracting investments and fostering strong economic and social
development.
There is an integral vision aimed at promoting the Islamic Capital Market
and strengthening the Kingdom's role in this field. Additionally, other
institutions are encouraged to benefit from the available financing
opportunities in order to facilitate expansion projects and boost future
activities. As a result, last year’s activities witnessed the issuance of
B A H R A I N S T O C K E X C H A N G E4
latest in modern technology in its operations, the BSE launched its
website on the Internet in 2003. The site was enabled with services and
facilities, that enable investors to acquire trading indications, price
changes, and traded quantities with immediate access. This will help to
ensure that investors can make the best decision with regard to directing
their investment(s) with the BSE on basis of prompt, reliable, and
accurate sources of information.
The BSE Website also allows investors to receive short messages on their
mobiles or emails, in order to keep informed of the prices and updates
of selected shares and investments.
Last years activities also reflected a remarkable level of coordination
between BSE and BMA, following the initiative adopted by the Kingdom
of Bahrain to assign the BMA with the legislation, monitoring and
supervision over the Capital and Insurance sectors. This advanced level of
coordination was clearly shown in the activities related to the issuing of
Islamic SUKUK, which are instruments issued by the BMA in order to
activate Islamic financial markets.
In 2003, four issues of Government Islamic Lease Sukuk, released by
BMA on behalf of the Government of Bahrain, were listed at a value of
US $ 480 million. In addition, the completion of the first process of
listing international bonds in BSE, through Malaysian Islamic Bonds, (US
$ 600 million), in addition to three conventional bonds (US $ 261
million). Three Bahraini closed companies were listed with total paid-up
capital value of BD 26.2 million, in addition to listing the shares of an
Omani public shareholding company.
BSE continues to pursue its ongoing and dedicated efforts to further
develop its internal work environment to ensure stability and enhance
efficiency at work. To that end, an agreement was signed with a Bahraini
ISO specialization company to enable the BSE’s to acquire an
ISO2000/9001 quality certificate. It is expected to complete the required
formalities in 2004.
As part of its strong belief in fostering external relations with other
financial markets in the region, and benefiting from their expertise and
views, BSE signed a Memorandum of Understanding with Tehran Stock
Exchange in 2003, and participated in a number of specialized internal
and global forums in the field of financial markets and bourses.
I would like to take this opportunity to extend my sincere thanks and
appreciation to the Governor of the Bahrain Monetary Agency and
Chairman of the Bahrain Stock Exchange, His Excellency Sheikh Ahmed
bin Mohammed Al Khalifa, the BSE Board Members, officials, and
personnel, for their dedicated efforts throughout the year to further the
progress and prosperity of Bahrain Stock Exchange.
Special thanks are also extended to the listed companies, for their fruitful
cooperation with BSE in providing it with required information and
ongoing support.
On this occasion, I would like to express my deepest appreciation and
gratitude to His Majesty King Hamad bin Isa Al Khalifa, His Highness the
Prime Minister, Sheikh Khalifa bin Salman Al Khalifa, and His Highness
the Crown Prince and Commander in Chief of the Bahrain Defense Force,
Sheikh Salman bin Hamad Al Khalifa, for their invaluable support.
Fouad Rashid
Director
Bahrain Stock Exchange
A N N U A L R E P O R T 2 0 0 37
Director’s Message
2003 saw a combination of domestic and regional factors that set the
stage for the Bahrain Stock Exchange (BSE) and other Gulf bourses to
achieve positive and distinguished performance at all levels. All elements
of trading in 2003 witnessed a noticeable growth against figures of
2002. Traded shares in terms of value, volume and number of
transactions recorded an increase of 26.40%, 14.86% and 12.73%
respectively, while market value increased by 28.31% compared to 2002.
BSE pursued the development of its work environment and activating the
channels of communication with the Bahrain Monetary Agency, in
addition to promoting a stronger internal work atmosphere. BSE also
continued the process of strengthening relations with Stock Exchanges
in the region, with the aim of increasing the volume of transactions and
fostering its competitive abilities in attracting domestic and foreign
investments.
An agreement was signed in 2003 between BSE and
PricewaterhouseCoopers in order to carry out a comprehensive audit of
its automated systems of trading and central depository, to ensure that
all operations are compatible with internationally recognized standards
as set forth by IOSCO.
In pursuit of its goal to increase the application and utilization of the
B A H R A I N S T O C K E X C H A N G E6
Mr. Fouad A. Rahman RashidDirector
Mr. Jassim A. Karim SalmanDeputy Director for IT & CDS
Mr. Yousif Ahmed Al SharafHead of Finance and Administration Department
Mr. Issa Ebrahim Al AmadiHead of Operations Department
Mr. Abdul Hamid A. GhafferHead of Financial Analysis and Information Unit
Mr. Ali Ahmed Al MansoorHead of Public Relations Unit
Mr. Mohammed Khaled HamedInternal Auditor
A N N U A L R E P O R T 2 0 0 39
Board of Directors Management Team
HE Shaikh Ahmed bin Mohammed Al Khalifa Governor of Bahrain Monetary AgencyChairman
HE Khalid Abdulla Al Bassam* Deputy Governor of Bahrain Monetary AgencyVice Chairman
Mr. Ali Salman Thamer* Bahrain Monetary AgencyCapital Markets Supervision Directorate
Mr. Khalid Mohammed Kanoo Bahrain Chamber of Commerce & Industry
Dr. Essam Abdulla Fakhro Bahrain Chamber of Commerce & Industry
Mr. Adnan Ahmed Yousif*Bahrain Islamic Bank
Dr. Fareed Ahmed Al Mula Bank of Bahrain & Kuwait
Shaikh Mohammed Bin Isa Al KhalifaSecurities & Investment Company
Mr. Abdul Wahab A. Hassan Al Mansoor Indo Gulf Financial Services
* Member of Executive Committee
B A H R A I N S T O C K E X C H A N G E8
2003. The Dow Jones 30 index has increased by 25.3%, Nasdaq 100 by
49.1% and S&P by 26.4%.
The European bourses, though remained sensitive to the movements of
the US Stock markets, have achieved varying levels of performance for
the year. While the FTSE was up by 13.6% and the CAC by 16.1%, the
DAX closed the year advancing by 37.1%.
The Tokyo Stock Exchange ( Nikkie ) was up by 24.5% in 2003. On the
overall Asian scene the Hong Kong Stock Exchange (Hang Seng ) led
other Asian markets rising by 34.9% followed by Singapore, which
advanced by 31.6%.
Arab Financial MarketsThe Arab Stock Markets closed the year 2003 up by 40.9 % compared to
the year 2002 according to the Arab Monetary Fund’s Compound Index,
the best performance ever achieved by these Markets since 1994.
Gulf bourses ended 2003 with considerable gains benefiting from the
improved economic conditions triggered by high oil revenues, which
exceeded the general budgets forecasts, making these countries among
the most attractive markets.
Overall, the Saudi market was the best performer during 2003 rising by
76.2% followed by the Qatar 69.8%, Kuwaiti 63.9%, Jordan 53.8%,
Oman 42.1% and UAE 32.1%, Egypt 24.4%, Casablanca 24%, Tunisia
20%.
The Local MarketThe Bahraini economy grew by 6.8% in the year 2003, thanks to the
diversification policies adopted by the Government. Statistical data
showed a wide base growth in all non-oil sectors of the economy without
any exception, particularly in the financial, manufacturing, transport,
telecommunication, tourism, government services, education and health
sectors. These positive results and the diversified economic base were
behind the attraction of more foreign investments to the Bahraini
market. Foreign investments inflow strongly grew during last year to
reach US$ 218 million compared to US$ 81 million for the year 2002, an
increase of 169%. The main factor behind this significant growth was
the increase in the number of tourists, industrial and financial projects
financed by foreign funds, which gave an indication of healthy
investment climate and improved both investor confidence and the
contribution of non-oil economic sectors in the national economy.
The Bahrain Stock Exchange Index added 515.3 points during 2003 to
close at 2346.3 points compared to 1831.0 points at the beginning of the
year recording an increase of 28.1%.
The performance of sub-indices in The Bahrain Stock Exchange showed
that the Insurance Sector was the best performer for the year closing at
2417.39 points posting a gain of 58.3%, followed by the Commercial
Banks Sector which closed at 2896.9 points representing a growth of
49.8%, and the Hotels and Tourism sector which closed the year at
2337.54 points registering an increase of 41.3%.
During the year, The Bahrain Stock Exchange has witnessed the listing of
3 new Bahraini closed companies and one GCC public share-holding
company with a total paid-up capital of BD 26.2, bringing the total
number of companies listed at The Bahrain Stock Exchange to 44
companies compared to 40 companies at the end of 2002. The Year 2003
has seen the listing of 8 bonds of which 4 were Islamic Government
Sukuk with a total value of US $ 480 million and 3 conventional bonds
with a total value of US$ 261.3 million, in addition to US$ 600 million
Malaysian Islamic bonds issue. The total number of mutual funds listed
on The Bahrain Stock Exchange reached 29 by the end of 2003.
A N N U A L R E P O R T 2 0 0 311
World Stock Markets Performance During 2003
By mid 2003 the US economy started to recover driven by tax cut
coupled with prevailing low interest rates and improvements in the
consumer spending. Despite the growth of the economy at a rate of
3.1% for the year 2003 compared to 2.2% in 2002, the year 2003 growth
figures are still short of the 1999 and 2000 rates when the economy
grew by 3.7% and 4.5% respectively.
The US economy slowed down 2003 in terms of job opportunities with
unemployment reaching 5.7% while the trade deficit as a percentage of
the GDP edged up to 5% against 4.6% for the year 2002. The budget
deficit rose to 3.5% for 2003 compared to 2% in 2002.
On the other hand the European Union economies slowed down for the
year growing by only 0.5%, the lowest among the global major
economies with a budget deficit of 2.8%. Contrary to the easing tax
environment in USA, taxes increased in 2003 in the Eurozone compared
to 2002. The record increase of the Euro against the US Dollar also
remained a source of concern among the Euro zone countries over their
competitive edge in the international arena.
On the Asian front, the Japanese economy positively grew by 2.7%
compared to 0.4% in 2002. The Japanese trade balance stood at 2.5%
in 2003 against 2.3% in 2002.
Global Financial MarketsGlobally, most of the markets posted a noticeable gain at the end of
B A H R A I N S T O C K E X C H A N G E10
� Four government Islamic Securities Issues worth a total of US$480.
� Securities & Investment Co. as the first local brokerage company listed
in BSE with a paid-up capital of BD12.5 million.
� United Finance Company of Oman listed both its shares and convertible
bonds issue.
� Alba floating rate bonds issue worth $200 million.
� Gulf Development Company (Tameer) as the first real estate and the
second closed company listed in BSE with a paid-up capital of
$16 million.
� The Malaysian Global Islamic Sukuk worth $600 million as the first
International Islamic Sukuk listed on BSE.
� United Papers Industries Co. as the third closed company listed in BSE
with a paid up capital of BD3 million.
� United Gulf Bank bonds issue worth $60 million.
Internal Working Environment:The BSE’s management continued focusing on quality assurance in all the
different aspects of its work. An agreement was signed with Itqan
Management Consultant, one of the local specialized agencies in
conducting the ISO quality program. This agreement includes running
training courses to BSE’s staff to qualify them to work according to ISO
9000:2000 that the BSE is expected to qualify to by the end of 2004.
Foreign Relations:The BSE signed a Memorandum of Understanding with Tehran Stock
Exchange to strengthen ties between both Stock Markets and benefits
from the experience that both parties have especially in the area of
training and IT.
Training:Bahrain Stock Exchange organized for the fifth consecutive year the
“Investment Representative Program”, in cooperation with Bahrain
Institute of Banking & Finance. This programe qualifies brokers licensed
by BSE in accordance to the best international standards. It is known
that this program is the same that qualifies brokers licensed by New York
Stock Exchange. This year program was attended by more that 25
participants representing more that 15 Bahraini and non-Bahraini
institutions.
This program provides comprehensive treatment for a broad range of
products, including equity securities, debt securities, options and mutual
funds.
A N N U A L R E P O R T 2 0 0 313
Bahrain Stock Exchange - 2003
In 2003, the Bahrain Stock Exchange (BSE) continued focusing on
developing its technical infrastructure, internal working environment
and the foreign relations in order to ensure a healthy environment that
would participate to increase the volume of trading in BSE and to attract
more investment to the Kingdom. Following are the main objective in
each of the above-mentioned area.
Technical Infrastructure:In regard of high-tech infrastructure, BSE has appointed Price Water
House to implement a compressive auditing on both the automated
trading system (ATS) and Central Depository System (CDS). The objective
of this audit is to ensure that both systems are operated according to the
best international standards applied by the International Organization of
Securities Commissions (IOSCO).
In addition to that BSE has launched its new website that enables
investors to have live access on all BSE’s trading activities and any other
activity that BSE organizes or participate in.
Listing:In coordination with Bahrain Monetary Agency, the following listings
have taken place in BSE during 2003:
B A H R A I N S T O C K E X C H A N G E12
Trading Activities During 2002 - 2003
A N N U A L R E P O R T 2 0 0 315
Key Statistical Data 2002-2003
B A H R A I N S T O C K E X C H A N G E14
No. of Listed Bonds 2002 - 2003
No. of Listed Companies Common Shares Preferred Shares
Bahraini
Non Bahraini
Total
2002
35
5
40
2003
38
6
44
2002
1
1
2003
1
1
Composite Index 2002 - 2003
Composite Index 2002 - 2003
Year end
High
Low
2002
1821.49
1843.27
1690.53
2003
2346.29
2346.29
1727.40
2002
2
2
3
-
2003
4
1
7
2
2002
29
2003
29
Bonds
Corporate
Government
Islamic Leasing Sukuk
Non-Bahraini Bonds
Composite
Banks
Investment
Insurance
Services
Industrial
Hotel & Tourism
2002
1821.49
1934.24
1632.42
1526.80
1697.25
1991.61
1654.83
2003
2346.29
2896.90
1829.41
2417.39
1951.71
2503.31
2337.54
%Chg.
28.81%
49.77%
12.07%
58.33%
14.99%
25.69%
41.26%
Volume
MonthJanFebMarAprMayJunJulAugSepOctNovDecMarketNo. of Trading Days
200291,672,09812,022,80419,686,63139,369,15642,652,83016,632,63627,013,12518,408,68719,031,64136,889,22117,449,39512,303,940
353,132,164247
200351,113,57113,308,75028,219,58140,319,72431,757,05825,384,10324,789,32276,705,14928,493,24935,408,88319,577,12530,526,991
405,603,506
% Chg.-44.24%10.70%43.34%
2.41%-25.55%52.62%-8.23%
316.68%49.72%-4.01%12.19%
148.11%14.86%
Value (BD)
MonthJanFebMarAprMayJunJulAugSepOctNovDecMarket
200216,596,6753,894,2955,069,670
10,115,3018,165,9045,281,0006,596,2015,023,3714,714,4666,958,5464,434,9544,051,100
80,901,482
20039,033,4214,957,4965,418,1529,424,2618,944,3127,928,2736,192,183
12,876,5377,994,749
11,731,8928,028,6199,731,326
102,261,221
% Chg.-45.57%27.30%6.87%
-6.83%9.53%
50.13%-6.13%
156.33%69.58%68.60%81.03%
140.21%26.40%
No. of Transactions
MonthJanFebMarAprMayJunJulAugSepOctNovDecMarket
20022,010
8831,1301,4921,347
9601,085
687754
1,085872672
12,977
20031,239
877725
1,3711,3851,4261,1211,0101,3691,789
8671,450
14,629
% Chg.-38.36%-0.68%
-35.84%-8.11%2.82%
48.54%3.32%
47.02%81.56%64.88%-0.57%
115.77%12.73%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2002 2003
9080706050403020100
Shar
es M
illio
n
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2002 2003
18
16
14
12
10
8
6
4
2
BD M
illio
n
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2002 2003
2100192017401560138012001020840660480300
No. of Listed Mutual Funds 2002 - 2003
A N N U A L R E P O R T 2 0 0 317
Key Statistical Data 2002-2003
The Breakdown of Market Capitalisation by Sector, for the Years 2003 and 2002
B A H R A I N S T O C K E X C H A N G E16
Changes in Market Capitalisation for the Year 20032003 2002 % Change
BD million BD million
Commercial Bank Sector
Investment Sector
Insurance Sector
Services Sector
Industrial Sector
Hotels & Tourism Sector
Total Local Companies
Total Non-Bahraini Companies
Closed Company Sector
Preferred Shares
1,328.46
1,297.25
111.25
833.33
14.94
72.35
3,657.57
2,148.15
0.00
79.17
857.70
1,116.42
95.33
719.29
11.89
49.88
2,850.49
1,608.40
0.00
80.68
54.89%
16.20%
16.70%
15.85%
25.69%
45.05%
28.31%
33.56%
0.00%
-1.87%
0.41%
22.78%
3.04%
1.98%
36.32%
35.47%
0.42%
25.23%
3.34%
1.75%
30.09%
39.17%
Commercial Banks Sector
Investment Sector
Insurance Sector
Services Sector
Industrial Sector
Hotels & Tourism Sector
Commercial Banks Sector
Investment Sector
Insurance Sector
Services Sector
Industrial Sector
Hotels & Tourism Sector
2003
2002
Change In Paid-Up Capital for the BSE Market in 2003
160%140%120%100%80%60%40%20%0%
-20%-40%
129.26%
-29.26%
Percentage Change in Paid-Up Capital for Each Sector as of the Year End 2003
Commercial Banks
Insurance
Services
Industrial
Hotel & Tourism
Bonus Share
88.68%
21.99%
3.55%
15.05%
Delisted
-29.26%
Bonus Share Delisted
100%
80%
60%
40%
20%
0%
-20%
-40%
88.68%
21.99%
3.55%
-29.26%
15.05%
Commercial Banks Insurance Services Industrial Hotel & Tourism
Bonus Share Delisted
Commercial Banks Sector
National Bank of Bahrain
Bank of Bahrain & Kuwait
Ahli United Bank
Bahrain Islamic Bank
The Bahraini Saudi Bank
Investment Sector
Gulf Monetary Group
Arab Banking Corporation
United Gulf Bank
Bahrain International Bank
Investcorp Bank
Bahrain Middle East Bank
Bahrain Commercial Facilities Co.
United Gulf Industries Corp.
Taib Bank
Shamil Bank of Bahrain
Insurance Sector
Bahrain Kuwait Insurance Co.
Al-Ahlia Insurance Co.
Arab International Insurance Co.
Takaful International Co.
Arab Insurance Group
Bahrain National Holding Co.
Services Sector
Bahrain Ship Repairing & Eng. Co.
Bahrain Cinema Co.
National Import & Export Co.
General Trading & Food Processing. Co.
Bahrain Maritime & Mercantile.
Bahrain Telecommunications Co.
Bahrain Car Parks Co.
Bahrain Duty Free Shop Complex.
Industrial Sector
Bahrain Flour Mills Co.
Delmon Poultry Co.
Hotel & Tourism Sector
Bahrain Hotels Co.
National Hotels Co.
Bahrain Tourism Co.
Bahrain Family Leisure Co.
Closed Company
Al-Khaleej Development Co.
Securities & Investment Co.
United Paper Industries
Non-Bahraini Companies
BankMuscat (Oman)
Sudan Telecommunications Company (Sudan)
The International Investor (Kuwait)
International Investment Group (Kuwait)
Qatar Telecommunications Company (Qatar)
United Finance Company (Oman)
Preferred Shares
Investcorp Preferred Shares
A N N U A L R E P O R T 2 0 0 319
Key Statistical Data 2002-2003 Traded Securities and Instruments
B A H R A I N S T O C K E X C H A N G E18
Trading Value in Terms of Legal Entity and Nationality
Trading by Legal Entity
Bahraini G.C.C Non-G.C.C
Trading by Nationality
40%
35%
30%
25%
20%
15%
10%
5%
0%
16.84%
13.43%
4.45% 4.58%
0.00% 0.00%
38.82%
11.30%
0.41%
6.70%
2.64%0.84%
Non-G.C.C
G.C.C
Bahraini
8.63%
4.17%
19.58%39.58%
71.80%
56.25%
2002
2003
Financial Institutions Govermental Institutions Individuals Other Institutions
Listed Companies on the BSE :
Brokerage Firms
ABC Securities
Bank of Bahrain & Kuwait Financial Services
Ahli United Bank
Gulf Securities
IndoGulf Securities
Securities & Investments Co.
TAIB Securities Co.
Gulfinvest Securities
U.G.B Securities
Abdulla Zain Al-Abedin
Nassir Abbas Khosrou
Yousif Al-Ajaji
A N N U A L R E P O R T 2 0 0 321
Traded Securities and Instruments
The Housing Bank Jordan Fund
Islamic Development Bank Unit Investment Fund ($)
SICO Selected Securities Funds (BD)
SICO Assured International Fund (SAIF)
MAN-AHLI Guaranteed 360 E.C Fund ($)
MAN-AHLI Prisma Guaranteed Fund E.C Fund ($)
MAN-AHLI Guaranteed 220 Plus E.C Fund ($)
TAIB American Explorer Fund, Ltd. ($)
TAIB Everest Fund ($)
Taib Healthsciences Fund (Prev. Biomed Fund)
TAIB Crescent Globel Fund ($)
TAIB Currency Fund ($)
TAIB Income Fund ($)
TAIB Rocky Mountain Fund ($)
TAIB Technology Growth Fund ($)
TAIB Thames Fund ($)
BNP Paribas Caravan Fund ($)
First Arabian Equity 2000 Fund ($) (Islamic)
Gulf International Bank Falcon High Yield Defencive Fund ($)
Gulf International Bank Falcon Emerging Markets Bond Fund ($)
Gulf International Bank Faclon Dollar High Yield Fund ($)
Gulf International Bank Global Equity Fund ($)
Gulf International Bank Enhanced Liquidity Fund ($)
Gulf International Bank Falcon US Long/Short Equity
Gulf International Bank Falcon Relative Value Fund ($)
The Investment Trust Fund Investment Trust Capital-Guaranteed GCC Fund (BD)
The Investment Trust Fund Investment Trust Capital-Guaranteed GCC with Minimum Return Fund (BD)
The Investment Trust Fund Investment Trust Capital-Guaranteed Gulf Fund
The First Iran Fund
Long term Government Bonds
Islamic Leasing Sukuk
Islamic Leasing Sukuk (Second Issue)
Islamic Leasing Sukuk (Third Issue)
Islamic Leasing Sukuk (Fourth Issue)
Islamic Leasing Sukuk (Fifth Issue)
Islamic Leasing Sukuk (Sixth Issue)
Government Islamic Securities Leasing - 2008
Corporate
BCFC Bonds (3rd issue)
BCFC Bonds (4th issue)
United Gulf Bank Bond - 2008
ALBA Floating Rate Bonds 2013
Non-Bahraini Bonds
Convertible Bonds United Finance Company SAOG-2008
Malaysian Global Sukuk - 2007
B A H R A I N S T O C K E X C H A N G E20
Listed Mutual Funds As of 31/12/2003
Listed Bonds:
Members of the Exchange
Brokers’ List:
Individual Brokers
A N N U A L R E P O R T 2 0 0 323
Listing and Annual Subscription Fees Financial Statements for the year ended 31 December 2003
B A H R A I N S T O C K E X C H A N G E22
24 Report of the Auditors to the Board of Directors
25 Balance Sheet
26 Income Statement
27 Cash Flows
28 Notes to the Financial Statements
ContentsListing*:0.1% of the company's paid-up capital, with a maximumamount of BD 15,000 and a minimum amount of BD 5,000.
Annual subscription**:1. 0.1% of the first BD10 million of the company's paid
up capital, with a minimum of BD 3,000.2. 0.05% of the amount exceeding BD10 million,
up to BD50 million.3. 0.025% of the amount exceeding BD 50 million, with a
maximum amount of BD 20,000/-.
Central Depositary:1. 0.0125% of the first BD 15 million of the company's paid-up
capital with a minimum of BD 1,000.2. 0.00625% of the amount exceeding BD15 million of the
company's paid-up capital, with maximum gross fees of BD 4,000.
Non-Bahraini EquitiesListing*:0.1% of the company's paid-up capital, with a maximumamount of BD 15,000 and a minimum amount of BD 5,000.
Annual Subscription**:50% of the Bahraini shareholding company.
Local Closed CompaniesListing*: BD1,000.
Annual Subscription:1. 0.025% of the first BD 5 million of the company's paid-up
capital, with a minimum of BD 1,000.2. 0.025% of the amount exceeding BD 5 million, with a
maximum amount of BD 5,000.
Mutual FundsListing*: BD 300Annual Subscription: BD 250
Bonds & Sukuk:Government:Listing*: BD 1,500Annual Subscription**: BD 2,000
Private & Non Bahraini:Listing*: 0.05% of the total value with a minumum of BD 2,000and maximum of BD 5,000.Annual Subscription**: BD 2,000.
Currency Warrants:Listing*: BD 250Annual Subscription: Nil.
Transfer AgentsMembership*: BD 500Annual Subscription: BD 250
Individual BrokersMembership*: BD 500Annual Subscription: BD 250
Brokerage FirmsMembership*: BD 1,000Annual Subscription: BD500
CustodianshipMembership*: BD 1,000Annual Subscription: BD 500
All the above amounts are expressed in Bahraini Dinars (BD).* A one-off payment.** Applicable to companies only, whereby the remaining part ofthe financial year of a company's registration will be taken intoconsideration and charged on a quarterly basis.
Local Equities
For the year ended 31 December 2003 in Bahraini Dinars
A N N U A L R E P O R T 2 0 0 325
Report of Auditors Balance Sheet
We have audited the Financial Statements of Bahrain Stock Exchange as of, and for the year ending, 31 December 2003, as set out
on pages 25 to 33.
Responsibilities of Board of Directors and the Auditors
These Financial Statements are the responsibility of the Board of Directors of Bahrain Stock Exchange, and our responsibility is to
express an opinion on these Financial Statements based on our audit.
Basis of Opinion
Our audit has been conducted in accordance with international Standards for Auditing, which requires placing and implementing
an auditing plan, to reasonably assure that the financial statements are free of any materials mis-statements.
An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles implemented, and the significant estimates made by management, as well
as evaluating the overall Financial Statements presentation. We believe that our audit provides a reasonable basis for our opinion.
The Opinion
In our opinion, the Financial Statements present fairly, in all material respects, the Financial position of Bahrain Stock Exchange as
at 31 December 2003, and the result of its operations and its Cash Flows for the year then ended, in accordance with International
Financial Reporting Standards.
Other Regulatory Matters
In addition, in our opinion, Bahrain Stock Exchange has maintained proper accounting records and the financial statements are in
agreement therewith. To the best of our knowledge and belief, no violations of the Exchange's Internal Regulations have occurred
that might have had a material adverse effect on the operations of the Stock Exchange or its financial position. Satisfactory
explanations and information have been provided to us by management in response to all our requests.
KPMG
Manama – Kingdom of Bahrain
2004
B A H R A I N S T O C K E X C H A N G E24
Current Assets
Cash and balances with banks
Short-term deposit
Account receivables
Other receivables
Specialized Regional Market
Total Current Assets
Non Current Assets
Investment held maturity
Fixed assets
Total Assets
Current Liabilities
Accounts Payables
Payable Expenditures and other Accounts payables
Employees Salaries & Benefits
Specialized Regional Market
Total Liabilities
Net Assets
Total Liabilities and Net Assets
2003 2002Notes
3
4
9
5
6,2
7
8
9
101,468
338,940
70,557
28,875
199,080
738,920
625,911
547,276
1,912,107
57,984
69,660
18,883
199,080
345,607
1,566,500
1,912,107
153,867
879,233
48,051
199,080
199,080
1,280,231
-
736,870
2,017,101
73,955
23,676
15,925
199,080
312,636
1,704,465
2,017,101
Shaikh Ahmed bin Mohammed Al KhalifaThe Chairman
Fouad A. Rahman RashidDirector of the Exchange
The Board of Directors approved the Financial Statements of pages 25 to 33 in 2004
A N N U A L R E P O R T 2 0 0 327
Income Statement Cash Flows
B A H R A I N S T O C K E X C H A N G E26
For the year ended 31 December 2003 in Bahraini Dinars
Income of Operations
Subscription Fees
Registration Fees
Commissions
Other Incomes
Banks Interest
Expenses
Staff salaries & allowances
General & administration expenses
Remuneration of the Board of Directors
Depreciation
Market’s Contribution in Regional Specialized Market
Provision of doubtful
Operation Income Deficit
Subsidy from the Ministry of Finance & national
Economy to the exchange's automation process
Total Income of the year
Balance at the beginning of the year
Balance as at 31st December
2003 2002Notes
2
10
2,6
771,609
7,300
78,917
42,156
27,826
927,808
678,657
370,872
12,400
217,679
-
36,165
1,315,773
(387,965)
250,000
(137,965)
1,704,465
1,566,500
772,695
5,500
71.694
45.513
28,824
924,226
658,164
389,175
13,710
206,077
10,080
-
1,277,206
(352,980)
250,000
(102,980)
1,807,445
1,704,465
Shaikh Ahmed bin Mohammed Al KhalifaThe Chairman
Fouad A. Rahman RashidDirector of the Exchange
The Financial Statements consisting of pages 25 to 33
For the year ended 31 December 2003 in Bahraini Dinars
Operations
Amounts Received from Participants
Comissions & other Income
Staff expenses & allowances
Paid expenses
Board of Directors and Committees' remuneration
Net (outgoing) Incoming Cash Flow from Operation
Investment & Financing Activities
Fixed assets purchased
Purchase of Investment Securities
Bank Interest
Subsidy from the Ministry of Finance & National Economy-
to the Exchange's automation process
Amounts paid for Specialized Regional Market
Cash Flow from Investment and Financing Activities
Net (outgoing) Incoming Cash Flow during the year
Cash and Cash equivalents at the beginning of the year
Cash and Cash Equivalents in 31 December
Cash and Cash equivalents according Balance Sheet
Cash and balances with Banks
Short-term fixed deposits
2003 2002
708,846
96,365
(675,699)
(329,361)
(12,400)
(212,249)
(28,085)
(625,911)
23,553
250,000
-
(380,443)
(592,692)
1,033,100
440,408
101,468
338,940
440,408
786,677
117,207
(681,667)
(363,740)
(13,710)
(155,233)
(110,891)
-
28,824
250,000
(199,080)
(31,147)
(186,380)
1,219,480
1,033,100
153,867
879,233
1,033,100
Shaikh Ahmed bin Mohammed Al KhalifaThe Chairman
Fouad A. Rahman RashidDirector of the Exchange
The Financial Statements consisting of pages 25 to 33
A N N U A L R E P O R T 2 0 0 329
Notes to the Financial Statements
B A H R A I N S T O C K E X C H A N G E28
For the year ended 31 December 2003 in Bahraini Dinars
1. Status and Operations
Bahrain Stock Exchange is considered as an independent organization with its own legal identity, established in accordance with
the Amiri Decree No. 4/1987. The Minister of Commerce and Agriculture has issued the Ministerial Resolution No. 13/1988 to issue
Bye-Law organizing the activities and outline the objectives of the Exchange.
The supervision authority, of the Exchange, was transferred to the Bahrain Monetary Agency during year 2002 in accordance to the
Decree No. 21/2002.
These objectives are summarized in developing the Bahrain Stock Exchange, encouraging savings, upgrading the investment
awareness among the nationals, developing and rationalizing the methods of dealing and developing traded securities and financial
instrument in the Market to serve the economical development operations in the country, and to help in achieving the objectives of
the economic policies and enhancing the financial position of the Kingdom of Bahrain.
The Exchange operation include the supervision securities issuing and facilities providing to facilitate the dealing with authorized
securities in the Market, and provide the needed finance to support the economical development requirements.
2. Significant Accounting Policies
Accounting Standards:The financial statements have been prepared in accordance with the Internatioanal Financial Report Accounting Standards
Promulgated by the Internatioanal Accounting Standard Board.
Accounting Convention:The Financial Statements are prepared under the historical cost convention, same as previouse years.
The most applied Accounting Policies:
Incomes from subscription and registration fees, services, interest from fixed deposits, commission on transfer and other incomes,
which are calculated on maturity.
The fixed assets maintained to be used for administrative purposes, not intended to be sold and calculated as cost less accumulated
depreciation.
The depreciation has been calculated on cost by the straight-line method at annual rates, which are intended to write off the net
cost of the assets over the useful life for each asset:
Furniture, equipments and auto trading system 5 years
Computers and cars 5 years
The fixed Assets which amounted less than BD50 fully depreciated in the year of purchase.
The Financial Statements consisting of pages 25 to 33
For the year ended 31 December 2003 in Bahraini Dinars
2. The Significant Accounting Policies (Continued)
Reduction in the Value of Fixed Assets: The management revises the values of fixed assets on the day of preparing the Balance Sheet, and compares it with the book values
to show if there is permanent reduction in the book value. This reduction, if existed, will be transferred to cash statement.
Accounts Receivable:Is stated net of provision amounts estimated to be uncollectable.
Employee’s Leaving IndemnitiesThe Non-Bahrainis Employees are entitled to leaving indemnities payable under the Bahrain Labour Law, based on the length of
service and final remuneration.
Bahraini Employees are covered by the Pension Fund Commission Regulations to which employers and employees contribute monthly
on a fixed-percentage of salaries basis.
Foreign Currency:Foreign currency transactions have been translated at the rates ruling at the time of the transactions. Financial assets and liabilities
have been translated in to Bahraini Dinars at the market rates ruling on the balance sheet date. All resulting exchange differences
are taken up in the income statement.
Cash and Cash Equivalents:Consist of bank balances and cash on hand and short term fixed deposits, and all investments which are readily convertible into
known amounts of cash which are subject to an insignificant risk of change in value.
3. Accounts Recieivable:
Due Subscription and Regitration Fees
Due Commissions
Due Services fees
Deducted: Provision of doubtful.
The Financial Statements consisting of pages 25 to 33
2003
64,89139,4912,340
106,722(36,165)
70,557
2002
8,073
24,366
2,400
34,839
-
34,839
A N N U A L R E P O R T 2 0 0 331
Notes to the Financial Statements
B A H R A I N S T O C K E X C H A N G E30
For the year ended 31 December 2003 in Bahraini Dinars
4. Other Accounts Receivable
Interest payable
Pre-paid expenses
Others
5. Investment Held Maturity:
Islamic Leasing Sukuk (Kingdom of Bahrain)
Islamic Leasing Sukuk (Kingdom of Bahrain)
6. Fixed Assets
Cost
Balance at 1 January
Additions
Disposals
Reclassification
At 31st December
Depreciation
At 1st January
Depreciation
Disposals
At 31 December
Net Book Value
The Financial Statements consisting of pages 25 to 33 The Financial Statements consisting of pages 25 to 33
2003
6,285
5,888
16,702
28,875
2002
2,013
4,143
7,056
13,212
2006
2008
358,201
267,705
625,906
3%
3,75%
Amount Due Date Interest earnedon investment
1,424,619
28,085
-
-
1,452,704
687,749
217,679
-
905,428
547,276
192,565
8,033
-
(45,168)
155,430
-
-
-
-
155,430
1,384,569
111,549
(71,499)
-
1,424,619
552,512
206,077
(70,840)
687,749
736,870
ProjectUnder
Implement
2003Total
6,120
-
-
-
6,120
4,828
1,224
-
6,052
68
900,237
16,706
-
49,095
966,038
425,916
187,334
-
613,250
352,788
Computers
325,697
3,346
-
(3,927)
325,116
257,005
29,121
-
286,126
38,990
Furniture & Other
Equipments
Cars 2002Total
For the year ended 31 December 2003 in Bahraini Dinars
7. Other Payables
Advance recoveriesAccrued expenses
8. Provision for Staff Entitlements
Leave entitlementsLeaving indemnity and air tickets
The Exchange employs 52 Bahraini nationals and two expatriate as at 31 December 2003 (49 and one employee for the year 2002)
Pension rights and other social benefits for the Bahrainis employees are covered by the Pension Fund Scheme to which the Exchangeand employees contribute monthly on a fixed percentage of salaries basis. The Exchange contributions of Bahraini employees for theyear 2003 amount to BD 55,995 (BD 40,319 for 2002).
Expatriates employed under a specified contract period are entitled to leaving indemnity at the rate of one month's salary for eachyear completed in service.
9. Specialized Regional Market
Total amounts represent receivable and payable related to the Specialized Regional Market that are registered in the Exchange'sbooks till the end of the project and then will be transferred with all the details to the Specialized Regional Market’s management.The entire received amount up to 31st December 2003 paid by the Ministry of Finance & National Economy is BD. 189,000 inaddition to BD. 10,080 paid by the Bahrain Stock Exchange.
10. Other Incomes
Ticker tape incomeRemote trading incomeSubscription in the Investors’ Guide publicationServicesOthers
2003
43269,22869,660
200317,2101,673
18,883
2002
13,6789,998
23,676
200215,056
86915,925
2003
-8,7008,640
14,39010,42642,156
2002
7,500-
6,27014,16017,58345,513
A N N U A L R E P O R T 2 0 0 333
Notes to the Financial Statements
B A H R A I N S T O C K E X C H A N G E32
For the year ended 31 December 2003 in Bahraini Dinars
11. Financial Instrument and Risk Management:
Financial instruments consist of financial assets and liabilities.
Financial Assets include Cash, Short term fixed deposit, Investment held maturity and other receivables.
Financial liabilities of the Exchange include account payable, accrued liabilities and employees benefit.
Accounting policies for financial assets and Liabilities are set out in note (2).
The risk associated with financial instrument and its risk management is explained below.
Interest Rate Risk is the risk that the value of a financial instrument will fluctuate due to changes in interest rates.
The short-term deposit interests are calculated at fixed interest rates and mature within one year. Pricing occurs when funds are
reinvested on maturity of a deposit.
The effective interest rate is the historical rate for the fixed rated instrument carried at cost. The average actual interest rate on
short-term fixed deposit during the year is stood at 1.35% (1.45% in 2002).
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and causes the other party to incur
a financial loss.
Cash is placed with national banks with good credit ratings.
The Exchange is not exposed to credit risk with respect to its financial assets.
Currency risks are the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
All BSE's deposits are in Bahraini Dinars and US Dollar as such the BSE is not exposed to the currency risk.
Interest on short-term fixed deposits are computed on a straight-line basis and accrued within one year.
Reprising occurring when funds are reinvested on maturity of a deposit.
The effective interest rate is the historical rate for a fixed rate instrument carried at cost. The average actual interest rate on
short-term fixed deposits during the year stood at 1.45% (2% in 2001).
Credit risk is the risk that one party to a financial instrument will fail to discharge a obligation and cause the other party to incur
a financial loss.
Cash is placed with national banks with good credit ratings.
The BSE is not exposed to credit risks with respect to its financial assets.
Currency risk is the risk that the value of the financial instrument will fluctuate due to changes in foreign exchange rates.
The Financial Statements consisting of pages 25 to 33
For the year ended 31 December 2003 in Bahraini Dinars
11. Financial Instrument and Risk Management (continued):
All the BSE's deposits are in Bahraini Dinars, and as such the BSE is not exposed to currency risks.
Liquidity risk is that the BSE will encounter difficulty in raising funds to meet commitments associated with financial instruments.
Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.
The management of the BSE is managing the liquidity risk by maintaining cash and cash equivalents at a high level so that sufficient
funds are available, including unutilized credit facilities with banks, to meet any future commitments.
Fair value of financial instruments is the amount for which an asset could be exchanged or a liability settled between
knowledgeable, willing parties in an arm's length transaction. Differences can therefore arise between the book value under the
historical cost method and fair value estimates.
Underlying the definition of fair value is a presumption that the BSE is a going concern without any intention or need to liquidated,
curtail materially the scale of its operations, or undertake a transaction on a adverse terms.
12. Distribution of assets and liabilities:All BSE's assets and liabilities are in Bahrain, and as such the BSE is not exposed to any risk outside Bahrain.
13. Comparative Figures:The comparative figures have been reclassified where necessary to conform with the current year's presentation. Such
reclassification has not affected net income and expenses nor total assets nor accumulated funds previously stated.
The Financial Statements consisting of pages 25 to 33