29th Apr 2013 07:00
European Islamic Investment Bank plc
Results for the year ended 31 December 2012
The Board of European Islamic Investment Bank plc ("EIIB", the "Bank" or the "Company") announces its audited results for the year ended 31 December 2012.
Highlights
Our year at a glance
·; Rasmala asset management and investment banking business acquired and successfully restructured with greater than anticipated efficiency gains
·; Assets under management increased 53%, with strong support from new and existing clients
·; Significant progress in resolving legacy balance sheet positions
·; Board and senior management strengthened
·; New regional distribution capabilities developed
·; EIIB now positioned to offer specialist asset management and financing solutions
How we performed
·; Total operating income of £3.9m (2011 £9.7m)
·; Loss before tax of £0.6m (2011 profit before tax £1.2m), excluding fair value losses and impairments on legacy assets and discontinued operations
·; Loss before tax from continuing operations of £10.1m (2011: £8.5m) including fair value losses and impairments on legacy assets of £4.3m relating to Arcapita, £3.2m relating to Accelerator Technology Holdings, £1.3m relating to Carian Bay and £0.6m relating to DiamondCorp
·; Remaining legacy assets valued at £13.3m based on conservative fair value estimate
·; Staff costs at EIIB (excluding Rasmala) reduced from £5.0m to £2.5m and Other operating expenses reduced from £4.0m to £2.1m
·; Total Assets Under Management including capital seeded by the group £570m (US$922m) (2011: £391m ($603m))
·; Ongoing fee income now some 69% of total operating income
·; Net Asset Value of 6.9 pence per share (2011: 7.5 pence per share)
For further information, please contact:
EIIB plc Tel: +44 (0)20 7847 9900
Zulfi Caar Hydari, CEO
Westhouse Securities Tel: +44 (0)20 7601 6100
Antonio Bossi
CHAIRMAN'S STATEMENT:
At the end of my first full year as Chairman of the European Islamic Investment Bank I am pleased to report that we have made considerable progress in transforming EIIB into a specialist asset management and investment banking group.
Progress
I accepted the role of Chairman of EIIB knowing that the Bank faced many challenges but also that our new strategic investors and management team were committed to transforming EIIB into a market leading asset management and financing business spanning London and the MENA region.
Our transformation journey has involved addressing the Bank's legacy investments, instituting tight cost controls and restructuring the operations of Rasmala, the leading MENA-based investment bank that we acquired in January 2012.
I am pleased to be able to report to shareholders that considerable progress has been made on all of these fronts in a relatively short period of time.
Performance
During 2012, the Bank's operating performance improved substantially. However, this was overshadowed by the losses incurred resolving legacy issues. Total operating income reduced to £3.9m (2011 £9.7m). Tight control of costs resulted in an underlying operating loss before tax, fair value losses and impairments on legacy assets and discontinued operations of £0.6m. This increased to a loss before tax of £10.1m (2011 £8.5m) once legacy provisions of £4.3m relating to Arcapita, £3.2m relating to Accelerator Technology Holdings, £1.3m relating to Carian Bay, £0.6m relating to DiamondCorp and other provisions were taken into account.
The achievement of a near breakeven operating performance before tax and legacy fair value losses and impairments provisions in a year of major change was most encouraging. The loss was considerably less than initial management forecasts, reflecting greater than expected acquisition synergies and demonstrating that the Bank's strategy is beginning to deliver.
Market developments
Our markets present both challenges and opportunities. The MENA region is experiencing a period of unprecedented change. Many of the Arab Turmoil countries remain in political transition, facing pressing social demands, while the Gulf Cooperation Council (GCC) countries are benefiting from high oil prices and political stability. Macroeconomic trends present an equally mixed picture. While stock markets around the world reach new heights, growth across the OECD remains stubbornly low.
In this situation, we continue to believe that the MENA region, positioned as it is at the crossroads between East and West, and benefiting from both a large and growing population and the wealth derived from approximately half the world's proven oil and gas reserves, offers outstanding opportunities.
EIIB is increasingly well positioned to benefit in these markets.
Good governance
The Bank aspires to best practice in corporate governance. The majority of the Board and all the members of its Audit and Nomination and Remuneration committees are Non-Executive Directors.
The composition of the Board has evolved as we seek to improve its effectiveness, independence and diversity. John Wright was appointed to the Board during the year, succeeding Shabir Randeree as Chair of the Audit Committee and Martin Barrow CBE recently joined the Board. We look forward to the benefit of their considerable experience.
Outlook
Our management team and staff have performed well in a challenging year. I thank them on behalf of our shareholders and our clients.
We have made significant progress and we are on our way to achieving our goal of being one of the leading banks in our market, delivering outstanding performance for our clients and consistent returns to our shareholders.
I remain convinced of the fundamental strengths and market opportunities of the MENA region. Our on-the-ground presence and contacts, expert staff, and London-based capability, means that EIIB is well positioned to continue its transformation and development.
__________________________
Abdallah Y. Al-Mouallimi
Chairman
CHIEF EXECUTIVE'S BUSINESS REVIEW:
The past year has been one of transformation for EIIB. As a London listed specialist bank we now provide investment management and financing solutions to private and institutional clients in London and the MENA region.
Results
Results for 2012 started to reflect the benefits of our strategic redirection. Total operating income was £3.9m (2011 £9.7m). Tight cost control contributed to an underlying operating loss before tax of £0.6m, excluding fair value losses and impairments on legacy assets and discontinued operations. Our ongoing businesses (excluding discontinued operations and legacy private equity investments) are now close to breakeven.
The overall loss before tax in 2012 amounted to £10.1m (2011 £8.5m) once fair value losses and impairments on legacy assets of £4.3m relating to Arcapita, £3.2m relating to Accelerator Technology Holdings, £1.3m relating to Carian Bay, £0.6m relating to DiamondCorp and other provisions were taken into account. We have made good progress in resolving EIIB's legacy book.
Our asset management business performed strongly. Discretionary managed assets increased 53% from £391m (US$603m) to £570m (US$922m). EIIB Group's contribution to the AUM stood at £21m (US$35m). New mandates contributed £96m (US$155m) to the increase and existing clients added £101m (US$164m) to their AUMs. Strong investment performance across our flagship funds and investment strategies showed the benefits of our regional expertise and detailed local insights.
The quality of our earnings has improved. Ongoing fee based income represented some 69% of total operating income during 2012 and we expect this proportion to increase in 2013.
These results are considerably better than our original management forecasts and represent a very creditable performance in a year of major change.
Delivering our plans
When the current Board and management assumed the leadership of EIIB in 2011 we moved swiftly to redefine the Bank's strategy, reduce costs and put its operations onto a sound financial footing. Revenues were maintained, while a 50% reduction in staff and a near 49% reduction in the Bank's ongoing cost base resulted in the core EIIB business returning an operating loss (pre tax and fair value losses and impairments on legacy assets) of some £1.6m this year.
We also defined a new business model, based on exiting higher risk, longer term, private equity investments and building more stable income streams by developing the Bank as a specialist asset management and financing business.
To achieve this goal we needed to strengthen our on-the-ground presence in major MENA markets and to develop our asset management capabilities.
The identification, acquisition and development of Rasmala has been the key to the successful delivery of the first phase of this strategy.
Rasmala acquisition
Completing the acquisition, restructuring and integration of Rasmala within the EIIB group has been the outstanding success story of 2012. It was the first step in the realisation of our strategy and has transformed EIIB's structure, capabilities and scale.
Rasmala is headquartered in Dubai and its subsidiary Rasmala Investment Bank Limited is one of the first regional banks to be regulated by the Dubai Financial Services Authority. Rasmala's shareholders include many prominent regional investors, giving it a valuable regional distribution capability, while its offices offer comprehensive regional coverage.
We completed the acquisition of Rasmala in January 2012. Since then we have undertaken a comprehensive restructuring process, focusing on asset management and terminating or reducing non-core business lines, effectively exiting full service investment banking and concentrating on fewer areas.
The restructuring has resulted in significant reductions in headcount and cost base. Staffing levels and operating expenses in 2012 were approximately half those of the two firms in the previous year.
Further efficiency gains have been generated through the sharing of resources and the creation of centres of excellence.
We have now successfully generated the immediate synergies, yielding all the cost savings initially planned. We now believe that there are opportunities to make further operational efficiencies, in 2013.
We have also deleveraged Rasmala's balance sheet by injecting equity and restructuring the bank's debt on more favourable terms. The result has been to reduce finance expenses significantly and defer capital repayments.
While Rasmala made an operating loss of some £1.6m in 2012, this result was significantly better than expected. £1.1m of that loss related to discontinued operations. The business is now right-sized, efficiently structured and beginning to deliver our growth strategy.
Operational development
Rather than completely merging its operations with EIIB, Rasmala is being run as a standalone business within the EIIB group. We are building a range of combined centres of operational excellence to generate cost synergies and enhance product development and distribution capabilities.
The depth of our understanding of the MENA region complements the breadth of our product offering. Rasmala's track record and regional insights have enabled us to attract high quality professionals from across the region and abroad. In the past year we have strengthened senior management, making a number of new appointments in London and Dubai.
We are now concentrating on developing a highly focused and cost conscious culture across the business. We are mindful of the fact that it is the culture of our organisation that will largely determine success, and we are therefore placing particular emphasis on the development of an appropriately prudent and service driven culture in which all of our staff are fully engaged.
Asset management
The Rasmala acquisition has transformed our asset management business. Assets Under Management are now approaching US$1bn and we are on target to achieving our stated aim of having US$3bn of AUM by 2016.
We are focused on developing our wholesale business. Our on-the-ground presence in London and the MENA region gives us access to extensive distribution networks. During the year we strengthened and deepened our relationships with a number of existing partners and entered into additional distribution agreements in the United Arab Emirates and Oman.
We also launched a Global Sukuk Fund and a Leasing Fund. Initial performance has been positive. Building on our in-house capabilities, further such initiatives and product launches are imminent.
The response from our existing client base has been very positive, many of our clients increased their assets under management with us during the year.
We have also attracted a number of significant new client mandates, including our first from the Government Pension Fund of Norway, representing the world's largest sovereign wealth fund.
Overall investment performance remained strong compared to both competitors and industry-recognised benchmarks. The Arabian Markets Growth Equity Fund returned 11.91% (net of all fees and expenses) compared to the S&P Arab Composite Index return of 3.10%. This builds upon the fund's long-term track record.
The Rasmala GCC Fixed Income Fund returned 14.56% (net of all fees and expenses) compared to the Citigroup Corporate AAA/AA Bond Index return of 3.61%, also building upon that fund's long-term track record.
Banking
As part of our strategy to build a long-term stable income stream, we have made significant progress in strengthening our banking operation. During 2012, the Bank has repositioned itself as a product manufacturer in addition to its natural role as a conduit between the MENA region and the London market. Not only do we have the capability of linking investors to opportunities through our established origination and distribution channels, we have also developed in-house product structuring capability.
We now offer various types of Islamic banking products and services with particular emphasis on Property Finance, Trade Finance, Lease Finance, Structured Products and Arranging Sukuk. We see these products and services as being a growth area for our London office, particularly as capital from the MENA region flows into the London market.
This 'flight to quality' can only benefit us, as a London listed bank, adhering to the regulatory requirements in London and the other jurisdictions in which we operate. We welcome effective regulation, believing that it will benefit firms of probity and substance such as ours.
In addition, our adherence to Islamic banking principles stands us in good stead in an economic environment in which ethical considerations are deemed increasingly important by both investors and issuers.
Exiting legacy investments
We have made good progress in quantifying and exiting our legacy private equity investments and our position was somewhat improved by the £4.8m (US$8.1m) arising on the sale of our remaining interest in Arcapita which occurred in 2013.
Our remaining legacy assets have now been reduced to £13.3m which includes £6.7m inherited as a result of our acquisition of Rasmala. After careful evaluation we have recognised fair value losses in some of these investments to present the most accurate fair value estimate. We will continue to seek an orderly exit from our remaining legacy investments and are determined to optimise the returns from exiting them.
Share buyback
Historically, the Bank has been constrained in its ability to make distributions by the lack of distributable reserves. Last year we reduced the share premium account, transferring £20m to distributable reserves to enable us to make distributions. However our plans were subsequently delayed pending finalisation of our long term capital requirements in consultation with the regulator.
After taking into account our distributable reserves and future capital requirements the Board decided to approve a share buyback program.
We remain committed to offering clients and shareholders the security of a strong balance sheet.
Market review
Despite socio-political pressures, we believe that the markets of the MENA region offer outstanding prospects. The countries of the GCC have some of the highest growth rates in the world and a combination of sovereign wealth derived from hydrocarbon reserves, the need for increasing infrastructure spend, rising income, demographics and location should ensure long-term growth.
In the short term, prospects for the GCC remain healthy. The IMF predicts GDP growth of 3.7% in 2013 for the GCC overall, but more importantly non-oil GDP growth of 5.5%. This compares with their forecast of 3.5% Global GDP growth and only 1.5% G7 growth.
In financial market terms, with global interest rates at record low levels, sukuk yields now below 3% and global markets beginning to show some degree of growth, we believe that investors will increasingly seek dividend-yielding equity investment opportunities.
Our strategy
Our strategy going forward is to:
·; expand via joint ventures and acquisitions;
·; manage and exit legacy Private Equity assets;
·; grow the proportion of ongoing, annuity type, income from business lines such as asset management;
·; grow our Assets Under Management to US$3bn by 2016; and
·; develop specialised product manufacturing and distribution capabilities.
Prospects and outlook
EIIB is now well positioned to capitalise on market trends and to deliver each aspect of our strategy.
We have achieved a great deal in a relatively short time, delivering what we set out to do despite the challenging economic environment.
We believe that we are well positioned in asset management in the MENA region and intend to grow our market share in the next phase of our development.
Our share price performance during 2012 remained flat; however, we are continuing to deliver the strategic realignment of the Bank and in 2013 we will begin to focus attention on translating our success into improved share price performance.
Acknowledgements
Last year we set the future direction of EIIB. We are succeeding against a challenging economic backdrop thanks to the dedication and hard work of management and staff. They are effecting the necessary changes, while remaining focused on delivering outstanding service and results for our clients.
Finally, I would like to thank our Chairman, Abdallah Al-Mouallimi, and the Board for their wise counsel and unstinting support. I believe the transformation of EIIB is on course and we can look forward to the future with confidence.
__________________________
Zulfi Caar Hydari
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2012
2012 | 2011 | |||
£ | £ | |||
Income | ||||
Income from financing and investing activities | 2,519,480 | 2,271,401 | ||
Returns to financial institutions and customers | (340,632) | (267,164) | ||
Net margin | 2,178,848 | 2,004,237 | ||
Foreign exchange losses | (89,260) | (357,614) | ||
Trading income | 1,069,536 | 335,067 | ||
Fees and commissions | 2,683,401 | 255,320 | ||
Loss on quoted equity investments designated at fair value | - | (2,422,223) | ||
Gain on investment in funds and sukuk designated at fair value | 693,041 | - | ||
Loss on private equity investments designated at fair value | (3,094,754) | (2,234,648) | ||
Profit on sale of oil and gas properties | - | 11,948,638 | ||
Oil and gas gross profits | - | 181,274 | ||
Other operating income | 458,889 | - | ||
Total operating income | 3,899,701 | 9,710,051 | ||
Expenses | ||||
Net provision for impairment of financing arrangements | (4,270,712) | (6,516,914) | ||
Staff costs | (5,718,129) | (4,999,698) | ||
Depreciation and amortisation | (266,742) | (271,581) | ||
Other operating expenses | (3,707,462) | (4,030,215) | ||
Oil and gas overheads | - | (2,386,985) | ||
Third party interest in consolidated funds | (14,170) | - | ||
Operating loss before tax | (10,077,514) | (8,495,342) | ||
Tax credit/(charge) | 200,106 | (2,886,188) | ||
Loss from continued operations | (9,877,408) | (11,381,530) | ||
Loss from discontinued operations | (1,143,511) | - | ||
Loss for the year | (11,020,919) | (11,381,530) | ||
Other comprehensive income | ||||
Deferred tax credit on oil and gas development assets | - | 1,243,393 | ||
Net change in fair value of available-for-sale securities | 816,761 | 250,619 | ||
Tax charge | (200,106) | - | ||
Total comprehensive loss for the year | (10,404,264) | (9,887,518) | ||
Loss attributable to: | ||||
Equity holders of the Bank | (10,086,141) | (14,897,286) | ||
Non-controlling interest | (934,778) | 3,515,756 | ||
(11,020,919) | (11,381,530) | |||
Total comprehensive loss attributable to: | ||||
Equity holders of the Bank | (9,469,486) | (14,646,667) | ||
Non-controlling interest | (934,778) | 4,759,149 | ||
(10,404,264) | (9,887,518) | |||
Earnings per share | ||||
- basic | (0.57p) | (0.87p) | ||
- diluted | (0.54p) | (0.87p) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2012
2012 | 2011 | |||
£ | £ | |||
Assets | ||||
Cash and balances with banks | 13,624,694 | 11,264,010 | ||
Due from financial institutions | 62,547,116 | 96,137,614 | ||
Available-for-sale securities - sukuk | 51,442,122 | 29,444,026 | ||
Investments in funds designated at fair value | 7,180,464 | - | ||
Private equity financial assets designated at fair value | 13,315,897 | 16,202,800 | ||
Fair value of foreign exchange agreements | 797,669 | 5,407 | ||
Assets held for sale | 5,821,454 | - | ||
Investment properties | 1,738,458 | - | ||
Goodwill | 11,546,400 | - | ||
Property, plant and equipment | 331,227 | 99,211 | ||
Intangible assets | 27,471 | 56,939 | ||
Other assets | 3,322,473 | 5,723,135 | ||
Total assets | 171,695,445 | 158,933,142 | ||
Liabilities | ||||
Due to financial institutions | 26,731,508 | 15,223,142 | ||
Due to customers | 95,637 | 100,000 | ||
Fair value of foreign exchange agreements | 39,309 | 818,205 | ||
Liabilities held for sale | 3,144,191 | - | ||
Other liabilities | 8,921,872 | 3,430,427 | ||
Third party interest in consolidated funds | 3,831,361 | - | ||
Current tax liability | - | 9,011,800 | ||
Total liabilities | 42,763,878 | 28,583,574 | ||
Shareholders' equity | ||||
Share capital | 17,790,994 | 17,656,585 | ||
Share premium account | 96,569,263 | 116,219,800 | ||
Capital redemption reserve | 599,040 | 599,040 | ||
Treasury shares | (2,117,015) | (2,117,015) | ||
Special reserve | 20,000,000 | - | ||
Fair value reserve on available-for-sale securities | 602,706 | (13,949) | ||
Share based payment reserve | - | 376,138 | ||
Foreign exchange reserve | (10,814) | - | ||
Accumulated losses | (13,673,201) | (4,051,196) | ||
Total equity attributable to the Bank's equity holders | 119,760,973 | 128,669,403 | ||
Non-controlling interest | 9,170,594 | 1,680,165 | ||
Total equity | 128,931,567 | 130,349,568 | ||
Total equity and liabilities | 171,695,445 | 158,933,142 | ||
|
Zulfi Caar Hydari
Chief Executive Officer
26 April 2013
Share capital | Share premium account | Capital redemption reserve | Treasury shares | Special reserve | Share based payment reserve | Fair value reserve on AFS securities | Fair value reserve on O&G development assets | Foreign exchange reserve | Accumulated losses | Non controlling interest | Total equity - Group |
| ||||||||||||
£ | £ | £ | £ | £ | £ | £ | £ | £ | £ | £ | £ |
| ||||||||||||
| ||||||||||||||||||||||||
Balance at 1 January 2011 | 17,656,585 | 116,219,800 | 599,040 | (2,117,015) | - | 136,138 | (264,568) | 10,216,883 | - | 629,207 | 4,005,242 | 147,081,312 |
| |||||||||||
Cost of share based payment arrangements | - | - | - | - | - | 240,000 | - | - | - | - | - | 240,000 |
| |||||||||||
Transfers | - | - | - | - | - | - | - | (10,216,883) | - | 10,216,883 | - | - |
| |||||||||||
Additional capital | - | - | - | - | - | - | - | - | - | - | 3,730,375 | 3,730,375 |
| |||||||||||
Distributions | - | - | - | - | - | - | - | - | - | - | (10,814,601) | (10,814,601) |
| |||||||||||
17,656,585 | 116,219,800 | 599,040 | (2,117,015) | - | 376,138 | (264,568) | - | - | 10,846,090 | (3,078,984) | 140,237,086 |
| ||||||||||||
Net change in fair value of available-for-sale securities | 250,619 | - | - | - | - | 250,619 |
| |||||||||||||||||
(Loss)/profit for the year | - | - | - | (14,897,286) | 3,515,756 | (11,381,530) |
| |||||||||||||||||
Deferred tax credit on oil & gas development assets | - | - | - | - | 1,243,393 | 1,243,393 |
| |||||||||||||||||
Total comprehensive income | 250,619 | - | - | (14,897,286) | 4,759,149 | (9,887,518) |
| |||||||||||||||||
| ||||||||||||||||||||||||
Balance at 31 December 2011 | 17,656,585 | 116,219,800 | 599,040 | (2,117,015) | - | 376,138 | (13,949) | - | - | (4,051,196) | 1,680,165 | 130,349,568 |
| |||||||||||
| ||||||||||||||||||||||||
Balance at 1 January 2012 | 17,656,585 | 116,219,800 | 599,040 | (2,117,015) | - | 376,138 | (13,949) | - | - | (4,051,196) | 1,680,165 | 130,349,568 |
| |||||||||||
New shares issued | 134,409 | 349,463 | - | - | - | - | - | - | - | - | - | 483,872 |
| |||||||||||
Cost of share based payment arrangements | - | - | - | - | - | 87,998 | - | - | - | - | - | 87,998 |
| |||||||||||
Share premium transfer | - | (20,000,000) | - | - | 20,000,000 | - | - | - | - | - | - | - |
| |||||||||||
Transfer relating to share based payments | - | - | - | - | - | (464,136) | - | - | - | 464,136 | - | - |
| |||||||||||
NCI arising on business acquisition | - | - | - | - | - | - | - | - | (10,814) | - | 9,946,081 | 9,935,267 |
| |||||||||||
17,790,994 | 96,569,263 | 599,040 | (2,117,015) | 20,000,000 | - | (13,949) | - | (10,814) | (3,587,060) | 11,626,246 | 140,856,705 |
| ||||||||||||
| ||||||||||||||||||||||||
Net change in fair value of available-for-sale securities | 816,761 | - | - | - | - | 816,761 |
| |||||||||||||||||
Tax | (200,106) | - | - | - | - | (200,106) |
| |||||||||||||||||
Loss for the year | - | - | - | ( 10,086,141) | (934,778) | (11,020,919) |
| |||||||||||||||||
Distributions | - | - | - | - | (1,520,874) | (1,520,874) |
| |||||||||||||||||
Total comprehensive income | 616,655 | - | - | (10,086,141) | (2,455,652) | (11,925,138) |
| |||||||||||||||||
| ||||||||||||||||||||||||
Balance at 31 December 2012 | 17,790,994 | 96,569,263 | 599,040 | (2,117,015) | 20,000,000 | - | 602,706 | - | (10,814) | (13,673,201) | 9,170,594 | 128,931,567 |
|
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2012
| 2012 | 2011 | ||
£ | £ | |||
Cash flows from operating activities | ||||
Operating loss | (10,077,514) | (8,495,342) | ||
Operating loss on discontinued operations | (1,143,511) | |||
Adjusted for: | ||||
Net provision for impairment of financing arrangements | 4,270,712 | 6,516,914 | ||
Loss/(gain) on private equity investments designated at fair value | 3,094,754 | (2,234,648) | ||
Gain on investment in funds and sukuk designated at fair value | (693,042) | - | ||
Depreciation and amortisation | 266,742 | 271,581 | ||
Loss on disposal of plant & equipment | - | 422,262 | ||
Charges for share awards | 87,998 | 240,000 | ||
Net (increase)/decrease in operating assets: | ||||
Due from financial institutions | 29,319,786 | (10,926,339) | ||
Quoted equity investments designated at fair value | - | 11,914,897 | ||
Financing arrangements | - | 11,250,000 | ||
Available-for-sale securities - sukuk | (21,181,336) | (11,026,613) | ||
Investment in funds designated at fair value | (6,487,420) | - | ||
Private equity financial assets designated at fair value | (207,851) | 368,374 | ||
Investment property | (1,738,458) | - | ||
Oil & gas properties | - | 26,362,666 | ||
Other assets | (12,615,263) | (5,383,109) | ||
Net increase/(decrease) in operating liabilities: | ||||
Due to financial institutions | 11,508,366 | (4,814,369) | ||
Due to customers | (4,364) | (921,055) | ||
Other liabilities | 5,185,607 | (141,375) | ||
Taxation: | ||||
Corporation tax settled | (9,011,800) | - | ||
Net cash (outflow)/inflow from operating activities | (9,426,594) | 13,403,844 | ||
Cash flows from investing activities | ||||
Purchase of property, plant and equipment | (469,291) | (495,870) | ||
Net cash outflow from investing activities | (469,291) | (495,870) | ||
Cash flows from financing activities | ||||
Capital from minority shareholders on acquisition | 9,946,081 | 3,730,373 | ||
Payments to minority shareholders | (1,520,874) | (10,814,601) | ||
Subscriptions to consolidated funds | 3,831,362 | - | ||
Net cash inflow/(outflow) from financing activities | 12,256,569 | (7,084,228) | ||
Net increase in cash and cash equivalents | 2,360,684 | 5,823,746 | ||
Cash and cash equivalents at the beginning of the year | 11,264,010 | 5,440,264 | ||
Cash and cash equivalents at the end of the year | 13,624,694 | 11,264,010 |
1 Segmental information
The Bank focuses on MENA markets and for 2012 centred on the following three core businesses.
(a) Banking - encompassing deposit taking, provision of financing, treasury services, structured products, investing in funds and Islamic banking products and services with particular emphasis on property finance, trade finance, lease finance and arranging sukuk
(b) Asset Management - encompassing institutional asset management and private wealth management services to private and institutional clients in the MENA region
(c) Private Equity - includes a diversified portfolio of legacy assets
These core business lines were the Group's strategic business units ('SBU'). Each SBU offers different products and services, and was managed separately based on the Group's management and internal reporting structure. SBU activities are monitored by the Bank's management committees and the Board which is provided with internal management reports on a monthly basis.
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax and is reviewed by Group executive management and the board of directors. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
2012 | Banking | Asset Management | Private Equity | Discontinued Operations | Total |
£ | £ | £ | £ | £ | |
Revenue from external customers | 3,924,012 | 2,490,092 | 1,427,940 | - | 7,842,044 |
Returns to external customers | (340,632) | - | - | - | (340,632) |
Fair value gain on investments | 693,043 | - | (4,294,754) | - | (3,601,711) |
Operating income | 4,276,423 | 2,490,092 | (2,866,814) | - | 3,899,701 |
Loss after tax from continuing activities | (3,349,826) | (2,285,448) | (4,242,134) | - | (9,877,408) |
Loss from discontinued operations | - | - | - | (1,143,511) | (1,143,511) |
Other comprehensive income after tax | 616,655 | - | - | - | 616,655 |
Total comprehensive income | (2,733,171) | (2,285,448) | (4,242,134) | (1,143,511) | (10,404,264) |
Depreciation and amortisation | (66,791) | (168,104) | (31,847) | - | (266,742) |
Segment assets | 142,178,706 | 10,379,388 | 13,315,897 | 5,821,454 | 171,695,445 |
Segment liabilities | 34,969,202 | 4,650,485 | - | 3,144,191 | 42,763,878 |
Capital expenditure | |||||
Plant and equipment | 609,678 | - | - | - | 609,678 |
Intangible assets | - | - | - | - | - |
2011 | Banking | Private Equity | Total | |||
£ | £ | £ | ||||
Revenue from external customers | (173,369) | 436,594 | 263,225 | |||
Returns to external customers | (267,164) | - | (267,164) | |||
Fair value gain on investments | - | 9,713,990 | 9,713,990 | |||
Operating income | (440,533) | 10,150,584 | 9,710,051 | |||
Loss after tax | (12,223,134) | 841,604 | (11,381,530) | |||
Other comprehensive income after tax | 250,619 | 1,243,393 | 1,494,012 | |||
Total comprehensive income | (11,972,515) | 2,084,997 | (9,887,518) | |||
Depreciation and amortisation | (190,106) | (81,474) | (271,581) | |||
Segment assets | 128,723,562 | 30,209,580 | 158,933,142 | |||
Segment liabilities | 18,968,749 | 9,614,825 | 28,583,574 | |||
Capital expenditure | ||||||
Plant and equipment | 347,109 | 148,761 | 495,870 | |||
Intangible assets | - | - | - | |||
The above comparatives have been reclassified to reflect the reportable segments established by management in 2012.
The financial information included within this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012 were approved by the directors on 23 April 2013. The report of the auditors on these accounts was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not include a statement under section 498 of the Companies Act 2006.
A copy of the annual report and accounts for the year ended 31 December 2012 is now available on the Company's website, www.eiib.co.uk and will be posted to shareholders in due course.
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