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Overview
This financial review covers the first nine-month accounting period,
6 Rabi Thani 1421H - 30 Dhull Hijjah 1421H (8 July 2000- 25 March
2001).
ICD started the period with a paid-up share capital of eighty-eight
million one hundred and thirty-three thousand United States Dollars
(USD 88,133,000). ICD registered a net income of two million six
hundred and sixty-one thousand seven hundred and seventy-eight
US Dollars (USD 2,661,778), and this represents a return on equity
of three percent (3%). The net income and the return on equity
both out-performed the targeted net income and return on equity
of two million two hundred thousand US Dollars (USD 2,200,000)
and 2.4 % respectively. Most of the income for the first nine
months is from liquid fund management, and there was no income
from operations due to the non-disbursement of the approved operations.
Share
Capital
The subscribed share capital of ICD is five hundred million US
Dollars (USD 500 million) and will be paid by the members in stages.
IsDB owns 50% of the share capital of ICD and shall pay its subscribed
capital of two hundred and fifty million US Dollars (USD 250 million)
in three consecutive equal annual installments. The public financial
institutions will pay their subscription in five consecutive equal
annual installments. The subscription of member countries in the
share capital of ICD will be paid on their behalf by IsDB out
of its reserves. IsDB shall commence paying the subscriptions
of the member countries when its reserves reach 25% of its subscribed
capital.
The paid-up share capital of ICD for the first accounting period
is eighty-eight million one hundred and thirty-three thousand
US Dollars (USD 88,133,000). This initial share capital was paid
by the following shareholders: Islamic Development Bank, eighty-three
million three hundred and thirty-three thousand US Dollars (USD
83,333,000), Iran Foreign Investment Company, four million US
Dollars (USD 4,000,000), Bank Keshavarsi of Iran, six hundred
thousand US Dollars (USD 600,001), and Bank Melli of Iran, two
hundred thousand US Dollars (USD 200,000). The net income of USD
2.661 million has increased the shareholders equity to USD 90.794
million.
Liquidity
Management
The management of the liquid funds of ICD was entrusted to the
treasury department of IsDB.
The investment of the liquid funds follows the stringent guidelines
of IsDB as well as conformity with the investment guidelines of
ICD. The key objectives of liquid fund management are the preservation
of the capital, the conformity with Islamic principles of Shari'a,
and a reasonable return.
The maturity profile of the liquid funds under placement takes
into account the financial commitments of ICD. The total financing
commitment for the nine-month period is thirty five million two
hundred and ninety-one thousand US Dollars (USD 35,291,000). The
fund available under short-term placement of 1- 3 months was fifty-five
million US Dollars (USD 55,000,000) in addition to the five million
US Dollars (USD 5,000,000) on call account. These are adequate
to meet the approved commitments as well as any commitment that
may arise at short notice, due to the dynamic nature of operations
in the private sector, to enable ICD execute its financing operations
expeditiously.
The bulk of the income (91%) in the first nine-month period is
from the management of the liquid funds. The total income from
commodity placement amounted to four million and seventy-one thousand
seven hundred and thirty US Dollars (USD 4,071,730) and the total
funds in the liquid funds management amounted to eighty-three
million one hundred and thirty-three thousand US Dollars (USD
83,133,000). This represents a return of 5% on the liquid funds.
Operating Results
The net income for the first nine months of two million six hundred
and sixty-one thousand seven hundred and seventy-eight US Dollars
(USD 2,661,778) represents a net income margin of 60%. This means
that for every 1US Dollar earned, only 40 cents have been utilized
to meet the operating cost of ICD.
The total expenses for the nine-month period is USD 1.791 million.
These total expenses consist of staff cost of USD 571,699 (32%
of the total cost), administrative expenses of USD 637,711 (35%
of the total cost), pre-operating expenses of USD 568,113 (32%
of the total cost) and depreciation charge of USD 13,768 (1% of
the total cost). The conservative accounting policies of ICD required
a write-down of the entire pre-operating expenses. The relatively
high administrative expenses are due to the costs involved in
the organization of the inaugural General Assembly of ICD.
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