Half Yearly Report

European Islamic Investment Bank plc

("EIIB" or the "Company")

Interim Financial Statements - 30 June 2012

Highlights

·; Total comprehensive income of £0.6m

·; Post acquisition integration of Rasmala proceeding according to plan

·; Solid fund performance and positive response from client base

·; John Wright appointed as Non-Executive Director and Audit Committee Chairman

For further information please contact:

EIIB plc Tel: +44 (0)20 7847 9900

Zulfi Caar Hydari, Chief Executive

Keith McLeod, Finance Director & Deputy CEO

Westhouse Securities Tel: +44 (0)20 7601 6100

Antonio Bossi

Chief Executive Statement

Financial results

Results for the first half of the year were encouraging. Total operating income was £4.6m for the period to 30 June 2012 (period to 30 June 2011: £9.7m) and resulted in Total comprehensive income of £0.6m including a provision of £0.28m relating to Diamondcorp. This outcome is ahead of management expectations given market conditions and the task of restructuring and integrating Rasmala.

The bank maintained its strong capital adequacy, regulatory and liquidity ratios. EIIB had total assets of £182m at 30 June 2012 (£159m at 31 December 2011) and a minimum regulatory capital requirement thereon of £21.8m (£8.9m at 31 December 2011). The Regulatory Capital at 30 June 2012 stood at £104m (£116m at 31 December 2011) which is 4.8 times the required minimum.

Post acquisition integration of Rasmala

EIIB completed the acquisition of a controlling stake in Rasmala in January 2012 and immediately commenced an orderly integration process which is now in train and progressing to plan. The business has been restructured to focus on Asset Management and non-core business lines have been terminated or scaled back. Rasmala's bank debt has also been restructured on favourable terms thereby significantly reducing the annual cost of debt and deferring capital repayments. Overall the restructuring plan has resulted in significant reductions in headcount and the cost base.

Efficiency gains are being generated through operational integration of back office functions and asset management capabilities. In the second half of the year we expect to integrate our investment banking activities as well.

In April, we launched our first new product since the acquisition, a Global Sukuk Fund. It is still early days for the fund but initial performance has been positive. Further such initiatives and product launches are underway.

The response from our client base has been very positive, most notably inflows from Commercial Bank of Dubai increased 43% and our Palestine Fund witnessed asset growth of 67%. In Egypt our Export Development Bank Money Market Fund increased by $25m demonstrating continued client confidence even in challenging markets. Our performance has been broadly positive illustrated by the Arabian Markets Growth Equity Fund up 4.87% and the GCC Fixed Income Fund up 5.33% in the period.

Capital distribution

Until recently EIIB was constrained in its ability to return capital to shareholders by the lack of distributable reserves. In July we addressed this issue through a reduction in the Share Premium account, transferring £20m to Distributable Reserves. We are now reviewing options for possible future capital returns to shareholders and expect to reach a conclusion early next year after having finalised our long term capital requirements in consultation with the regulator.

Outlook

While the economic outlook in our core MENA markets remains broadly positive, the global outlook continues to be challenging.

We are concentrating on integrating Rasmala, continuing our relentless focus on cost control, strengthening our investor coverage capabilities and developing a range of compelling new products.

We are also starting to evaluate potential bolt-on acquisition targets that might contribute, on suitable terms, to EIIB's growth and the consolidation of our chosen markets.

This is a year of consolidation for EIIB. We have made considerable progress, there is much still to do, but we have a clear path and we are on the way to becoming a market leader in MENA with the ability to offer international investors unrivalled access to the region.

Zulfi Caar Hydari

Chief Executive

Condensed consolidated statement of comprehensive income for the six months ended 30 June 2012 (unaudited)

Condensed consolidated statement of financial position at 30 June 2012 (unaudited)

These condensed consolidated interim financial statements have been approved by the Board of Directors and are signed on their behalf on 27 September 2012, by:

Zulfi Caar Hydari Keith McLeod

Chief Executive Finance Director and Deputy Chief Executive Officer

 Condensed consolidated statement of changes in equity for the six months ended 30 June 2012 (unaudited)

Condensed consolidated cash flow statement for the six months ended 30 June 2012 (unaudited)

Notes to the condensed consolidated interim financial statements (unaudited)

At 30 June 2012

1. Principal activities and authorisation of the financial statements

European Islamic Investment Bank plc ('EIIB' or 'Bank' or 'Company') was incorporated as the first independent, UK based Islamic investment bank managed on a wholly Sharia'a compliant basis. The activities of the Bank are focused on servicing clients internationally through the provision of: banking services encompassing deposit taking, provision of financing, treasury services, structured products and trading in Islamic and Sharia'a compliant securities; investment management encompassing quoted equities, private equity and real estate; and financial services encompassing corporate finance, custody, trust and fund administration activities and business advisory services.

The Bank is a company incorporated in the UK which was established on 11 January 2005 and received authorisation from the FSA on 8 March 2006 to carry on activities as an investment bank.

The interim condensed consolidated financial statements of the Bank and its subsidiaries (the 'Group') for the six months ended 30 June 2012 were authorised by the Board of Directors for issue at its meeting on 27 September 2012.

The condensed consolidated financial statements of the Group as at and for the period ended 30 June 2012 are available at www.eiib.co.uk

2. Accounting policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2011.

3. Acquisition of a controlling stake in Rasmala Holding Company Limited ('Rasmala')

Rasmala is the Holding Company of an investment banking group operating in the Gulf Cooperation Council ("GCC") countries and Egypt, specializing in asset management, investment banking, brokerage and research. Rasmala was one of the first regional investment banks to be licensed by the Dubai Financial Services Authority with expertise and relationships in the region maintained through its regulated subsidiaries in the UAE, Saudi Arabia, Egypt and Oman. Rasmala serves a wide range of private and institutional clients including government institutions, corporations, family offices and high net worth individuals.

On the 5th January 2012, EIIB acquired a majority (67%) of management shares (the "Management Shares"). Rasmala Holding Company Limited's constitution provides that the holders of the Management Shares have the right to appoint the majority of directors to the board of Rasmala. The consideration payable in respect of the management shares will be satisfied over a period of up to two years by the issue of up to 98,565,000 new ordinary shares in EIIB ("EIIB Shares") at a price of 3.6 pence per EIIB Share.

EIIB also extended a convertible financing facility of US$16m to Rasmala, with a maturity of 12 months from 5th January 2012. The financing facility is convertible into newly issued ordinary shares in Rasmala Holdings Limited ("Rasmala Shares"), subject to certain post completion adjustments. The maximum shareholding of EIIB is capped at 56.8% of the ordinary shares in Rasmala. EIIB converted US$11m of the financing facility into 84.7m of ordinary shares in Rasmala during June 2012. There are defined acceleration events which could lead to the Redemption of the remaining part of the loan note prior to the first anniversary.

Notes to the condensed consolidated interim financial statements (unaudited)

At 30 June 2012

EIIB acquired 6.9m of ordinary shares in Rasmala from a single investor. The agreement between EIIB and the investor provides that during the two year period from 5th January 2012 EIIB has the option to sell all of the holding acquired under this agreement to the investor, for the original consideration, if the loan notes are redeemed (discussed above) or an offer has been made by EIIB to acquire the entire shareholding of Rasmala. If the option is not exercised, during the two year period, EIIB will transfer these shares back to the investor at the expiry of the two year period at the same price.

The transaction has positioned EIIB as a leading financial services company specialising in the GCC, Levant and North Africa region with strong distribution capability, privileged deal flow, long term investor relationships and Islamic financing capability. 

4. Subsequent events

The following significant events occurred subsequent to the interim reporting period;

(a) Following an application by EIIB, the Court of the Chancery Division approved a £20m transfer from share premium to a non-capital reserve during July 2012.

(b) EIIB issued 13,440,860 (out of 98,565,000) ordinary shares of 1 pence each as per its agreement with the investor (note 3 above) as part settlement of the consideration due in connection with the strategic investment by the Company in Rasmala, these were admitted to trading on AIM during September 2012. Following this issuance, the new total number of shares in the capital of EIIB with voting rights has increased to 1,779,099,413 ordinary shares.