25th Sep 2014 07:00
European Islamic Investment Bank plc
("EIIB" or the "Company")
Interim Financial Statements - 30 June 2014
Highlights
· Financial performance for the six months to 30 June 2014 in line with management expectations
· Operating income increased 68% to £6m (period to 30 June 2013: £3.6m)
· Operating profit of £0.9m, compared favourably to a loss of £0.75m in the same period 2013 (2013: full year profit before tax from continuing operations £1.5m)
· Assets under management (AUM) including capital seeded by the Group stood at US$1,123m (31 December 2013: US$1,176m)
· Strong capital adequacy, regulatory and liquidity ratios maintained
For further information please contact:
EIIB plc Tel: +44 (0)20 7847 9900
Zulfi Caar Hydari, Chief Executive
Westhouse Securities Tel: +44 (0)20 7601 6100
Antonio Bossi
Chief Executive Statement
Financial results
During the first half of 2014 the Group delivered satisfactory financial performance.
Total operating income for the period to 30 June 2014 was £6.0m (period to 30 June 2013: £3.6m). Total expenses for the period were £5.1m (2013: £4.3m). The resulting Operating profit for the period was £0.9m (2013: loss of £0.75m).
The bank also maintained its strong capital adequacy, regulatory and liquidity ratios.
Commentary
In the first half of the year we continued on our path of transforming EIIB into a market leading asset management and financing business, headquartered in London and focused on the Gulf Cooperation Council (GCC) countries.
The GCC market remained buoyant, with IPOs from GCC countries, representing the majority of all Middle East and North Africa (MENA) IPOs, raising some $2.26 billion during the period.
The upgrading of the UAE and Qatar to emerging markets status was a significant development. Saudi Arabia also announced plans to open its market to international investors. Increased ability to invest in the region will boost long-term prospects for regional markets.
Regional investors were also encouraged by signs of increasing stability in Egypt where our business continues to make steady progress.
Overall, the outlook remains positive with greater investment and IPO opportunities on the horizon.
Asset Management
Our investment performance remained strong across all of our Funds and client portfolios. Our flagship equity funds, the Arabian Markets Growth Equity Fund and the Rasmala GCC Islamic Equity Income Fund, produced returns of 13.63% and 10.45%, respectively. Our flagship fixed income funds, the Rasmala GCC Fixed Income Fund and the Rasmala Global Sukuk Fund, produced returns of 5.53% and 3.81%, respectively.
We continued to execute our product innovation plan with the launch of the Rasmala Trade Finance Fund.
Our Assets under management (AUM) including capital seeded by the Group remained steady at US$1,123m (period to 31 December 2013: US$1,176m). An increase in AUMs in our equity funds and investment strategies of around $57m, and in our alternative investment strategies of around $31m, was offset by a decline in AUMs in our fixed income funds and money market investment strategies. The decline in AUMs in our fixed income and money markets funds and strategies was principally due to the maturity of a fixed income portfolio mandate of US$99m.
Our expanded range of products are now being supported by an enhanced sales team and we will continue to invest in our sales, distribution and marketing capabilities.
Capital Markets and Structured Finance
We are lead arranger and book runner for Europe-based insurance group FWU's US$100m sukuk al-wakala programme. The first tranche of US$20m was closed last year. We completed the second tranche of $40m during the reporting period. The FWU transaction showcases the bank's skill set in debt capital markets and structured debt finance.
EIIB also participated as a cornerstone investor in the Emirates REIT IPO on Nasdaq Dubai.
Legacy Investments
We continue to seek an orderly exit from our remaining legacy investments and remain focused on winding down non-core operations.
Tender Offer
EIIB received authority from shareholders to undertake a tender offer and commenced the process. The Tender Offer remains open until 1.00pm on 10 October 2014 and will be implemented subject to consultation with EIIB's regulator.
Proposed Share Buy Back
EIIB did not receive a general authority from shareholders to buy back shares. The Board remains committed to a Share Buy Back and believes that the effect of such purchases would be in the best interests of shareholders.
UK Regulatory Permissions
The Board undertook a review of the scope of EIIB's UK regulatory permissions and concluded that the current scope is in excess of requirements. We have therefore initiated discussions with our regulators to vary our regulatory permissions in order to allow the Company to focus on its core strategy. We anticipate this will involve relinquishing EIIB's deposit-taking licence.
Outlook
Progress in the first half of the year has been satisfactory. We continue to focus on our core asset management strategy and see growing opportunities in our markets. We look forward to reporting further progress at year end.
Zulfi Caar Hydari
Chief Executive
Condensed consolidated statement of income for the six months ended 30 June 2014 (unaudited)
6 months to 30-Jun-14 | 6 months to 30-Jun-13 | Year to 31-Dec-13 | ||||
£ | £ | £ | ||||
Income | ||||||
Income from financing and investing activities | 1,037,007 | 1,295,100 | 2,491,520 | |||
Returns to financial institutions and customers | (102,145) | (137,183) | (206,830) | |||
Net margin | 934,862 | 1,157,917 | 2,284,690 | |||
Net fees and commission income | 2,390,055 | 1,423,547 | 3,154,350 | |||
Net gain on funds, sukuk and quoted equity | 1,676,106 | 139,008 | 1,190,493 | |||
Gain/(loss) on private equity investments designated at fair value | 805,388 | 244,614 | 2,480,687 | |||
Gain/(loss) on investment property designated at fair value | 138,406 | 241,335 | 324,953 | |||
Other operating income | 99,892 | 353,269 | 746,079 | |||
Total operating income | 6,044,709 | 3,559,690 | 10,181,252 | |||
Expenses | ||||||
Net provision for impairment of financing arrangements | 0 | 202,830 | 202,831 | |||
Staff costs | (2,680,882) | (2,939,962) | (5,780,633) | |||
Depreciation and amortization | (58,999) | (113,911) | (187,100) | |||
Other operating expenses | (2,173,314) | (1,559,208) | (2,921,197) | |||
Third party interest in consolidated funds | (218,018) | 99,178 | (10,379) | |||
Total expenses | (5,131,213) | (4,311,073) | (8,696,478) | |||
Operating profit/loss before tax | 913,496 | (751,383) | 1,484,774 | |||
Tax charge/credit | (249,817) | 0 | (262,624) | |||
Profit/loss from continued operations | 663,679 | (751,383) | 1,222,150 | |||
Loss from discontinued operations | (218,736) | 0 | (1,249,584) | |||
Profit/(loss) for the period | 444,943 | (751,383) | (27,434) | |||
Income/(loss) attributable to: | ||||||
Equity holders of the Bank | 216,081 | (834,670) | 137,575 | |||
Non-controlling interest | 228,862 | 83,287 | (165,009) | |||
444,943 | (751,383) | (27,434) | ||||
Earnings per share | ||||||
- Basic | 1.02p | (0.05p) | 0.01p | |||
- Diluted | 1.02p | (0.05p) | 0.01p | |||
Condensed consolidated statement of other comprehensive income for the six months ended 30 June 2014 (unaudited)
6 months to 30-Jun-14 | 6 months to 30-Jun-13 | Year to 31-Dec-13 | |||||
£ | £ | £ | |||||
Profit/(loss) for the period | 444,943 | (751,383) | (27,434) | ||||
Other comprehensive income | |||||||
Net change in fair value of available-for-sale securities | 47,944 | (414,074) | (383,595) | ||||
Foreign exchange gain/(loss) on net investment in foreign operations | 39,202 | (382,390) | (413,904) | ||||
Total comprehensive (loss)/income for the period | 532,089 | (1,547,847) | (824,933) | ||||
Total comprehensive income/(loss) attributable to: | |||||||
Equity holders of the Bank | 224,507 | (1,287,107) | (561,830) | ||||
Non-controlling interest | 307,582 | (260,740) | (263,103) | ||||
532,089 | (1,547,847) | (824,933) | |||||
Condensed consolidated statement of financial position at 30 June 2014 (unaudited)
30 Jun 2014 | 30 Jun 2013 | 31 Dec 2013 | ||
£ | £ | £ | ||
Assets | ||||
Cash and balances with banks | 7,293,822 | 9,231,898 | 9,488,406 | |
Due from financial institutions | 41,532,663 | 56,424,808 | 40,244,300 | |
Financial assets designated at fair value | 28,737,942 | 33,260,285 | 27,266,475 | |
Available for sale investments | 31,988,516 | 26,170,467 | 26,457,774 | |
Financing arrangements | 7,965,605 | 6,736,510 | 11,450,067 | |
Private equity assets designated at fair value | 16,026,636 | 14,577,333 | 15,864,665 | |
Fair value of foreign exchange agreements | 1,036,946 | 156,281 | 1,377,797 | |
Assets held for sale | 537,751 | 3,618,838 | 910,109 | |
Investment property | 1,610,614 | 1,640,188 | 1,742,156 | |
Goodwill | 10,021,251 | 12,340,195 | 10,165,750 | |
Operating Lease assets | - | 1,018,816 | 4,368,976 | |
Property, plant and equipment | 153,892 | 260,101 | 193,589 | |
Intangible assets | 7,767 | 19,569 | 13,409 | |
Other assets | 3,900,887 | 3,677,067 | 406,019 | |
Total assets | 150,814,292 | 169,132,356 | 149,949,492 | |
Liabilities | ||||
Due to financial institutions | 10,584,567 | 23,467,663 | 13,000,806 | |
Fair value of foreign exchange agreements | 1 | 819,766 | 2,819 | |
Liabilities held for sale | 564,140 | 931,702 | 848,866 | |
Other liabilities | 10,771,845 | 9,472,580 | 6,274,656 | |
Third party interest in consolidated funds | 1,385,031 | 7,468,665 | 6,499,725 | |
Total liabilities | 23,305,584 | 42,160,376 | 26,626,872 | |
Shareholders' equity | ||||
Share capital | 19,720,892 | 17,925,403 | 19,720,892 | |
Share premium account | 101,815,459 | 96,918,725 | 101,815,459 | |
Capital redemption reserve | 599,040 | 599,040 | 599,040 | |
Treasury shares | (2,117,015) | (2,117,015) | (2,117,015) | |
Special reserve | 20,000,000 | 20,000,000 | 20,000,000 | |
Fair value reserve on available-for-sale securities | 267,055 | 188,633 | 219,111 | |
Foreign exchange reserve | (355,328) | (49,831) | (315,810) | |
Accumulated losses | (16,771,268) | (14,507,871) | (16,987,349) | |
Total equity attributable to the Bank's equity holders | 123,158,835 | 118,957,084 | 122,934,328 | |
Non-controlling interest | 4,349,874 | 8,014,896 | 4,042,292 | |
Total equity and liabilities | 150,814,292 | 169,132,356 | 153,603,492 |
Condensed consolidated cash flow statement for the six months ended 30 June 2014 (unaudited)
6 months to 30 Jun 2014 | 6 months to 30 Jun 2013 | Year to 31 Dec 2013 |
| |
£ | £ | £ |
| |
Cash flows from operating activities |
| |||
Operating profit/(loss) for the period | 913,496 | (751,383) | 1,484,774 |
|
Operating profit/(loss) on discontinued operations | (218,736) | 0 | (1,249,584) |
|
Adjusted for: |
| |||
Net provision for impairment of financing arrangements | 0 | (202,830) | (202,830) |
|
Loss / (gain) on investment in funds and sukuk designated at fair value (989,573) | 123,384 | (840,956) | ||
Loss / (gain) on private equity investments designated at fair value | (805,388) | (385,612) | (2,480,687) | |
Depreciation and amortisation | 58,999 | 113,911 | 187,100 | |
Loss on disposal of plant & equipment | 0 | 0 | 28,212 | |
Fair value gain on Investment property | (138,406) | 0 | (177,000) | |
Net (increase)/decrease in operating assets: | ||||
Due from financial institutions | (1,288,364) | 6,122,308 | 22,505,646 | |
Quoted Equity investments designated at fair value | (4,019,751) | (3,106,022) | (6,466,921) | |
Financing arrangements | 3,484,462 | (6,533,680) | (11,450,067) | |
Sukuk | 9,683,606 | 1,405,310 | 9,434,349 | |
Available for sale securities - Equity | ||||
Private Equity financial assets designated at fair value | 599,373 | (875,824) | (68,081) | |
Investments in funds designated at fair value | (11,628,548) | 355,088 | 2,388,270 | |
Investment property | 313,992 | 98,270 | 173,302 | |
Other assets | 538,161 | (1,658,167) | (6,216,839) | |
Net increase/(decrease) in operating liabilities: | ||||
Due to financial institutions | (2,455,756) | (3,263,845) | (13,730,702) | |
Due to customers | 0 | (95,637) | (95,637) | |
Other liabilities | 4,517,226 | 1,815,035 | 6,005,586 | |
Taxation: | ||||
Corporation tax (paid)/received | 0 | 0 | 0 | |
Net cash inflow/(outflow) from operating activities | (1,435,207) | (6,839,692) | (772,065) | |
Cash flow from investing activities | ||||
(Purchase)/disposal of Operating lease assets | 4,368,976 | 0 | (4,368,976) | |
Payment on acquisition of a subsidiary (cash consideration) | 0 | 0 | (1,600,000) | |
Purchase of plant and equipment | (13,660) | (34,882) | (63,612) | |
Net cash inflow/(outflow) from investing activities | 4,355,316 | (34,882) | (6,032,588) | |
Cash flows from financing activities | ||||
Net Subscriptions to consolidated funds | (5,114,693) | 3,637,303 | 2,668,365 | |
Payment to minority shareholders | 0 | (1,155,523) | 0 | |
Net cash inflow/(outflow) from financing activities | (5,114,693) | 2,481,779 | 2,668,365 | |
Cash and cash equivalents at the beginning of period | 9,488,406 | 13,624,694 | 13,624,694 | |
Cash and cash equivalents at the end of the period | 7,293,822 | 9,231,898 | 9,488,406 | |
Notes to the condensed consolidated interim financial statements (unaudited)
At 30 June 2014
1. Principal activities and authorisation of the financial statements
European Islamic Investment Bank plc ('EIIB' or 'Company') is a London headquartered specialist asset management and financing group incorporated in the United Kingdom on January 11, 2005. The Company is focused on the Gulf Cooperation Council countries and offers investment management and structured finance solutions.
The interim condensed consolidated financial statements of the Company and its subsidiaries (the 'Group') for the six months ended 30 June 2014 were authorised by the Board of Directors for issue on 24 September 2014.
The Interim Financial Statements of the Group for the period ended 30 June 2014 are available from the Company's website 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 2013.
3. Share capital and share premium
EIIB consolidated its ordinary shares as approved at its Annual General Meeting on 25 June 2014 and as a result of consolidation, the number of ordinary shares with voting rights in issue in the Company has changed to 39,441,784 from 1,972,089,200.
4. Subsequent events
The following significant events occurred subsequent to the interim reporting period;
EIIB reduced its share premium account by an amount of £40,000,000 with the approval of the Chancery Division of the High Court in order to create additional distributable reserves.
EIIB commenced its tender offer for up to 8,000,000 shares which is due to close on 10 October 2014 and will be implemented subject to consultation with the regulator.
Related Shares:
Rasmala