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16 Sep 2013 07:00
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European Islamic Investment Bank plc
("EIIB" or the "Company")
Interim Financial Statements - 30 June 2013
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Highlights
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Β· Satisfactory financial performance for the six months to 30 June 2013.
Β· A loss for the period of Β£0.75m (same period 2012: loss of Β£0.03m and six month to 31 December 2012 loss of Β£11.0m)
Β· Assets Under Management (AUM) including capital seeded by the Group increased from US$922m (31 December 2012) to US$1.004bn (30 June 2013)
Β· Strong capital adequacy, regulatory and liquidity ratios
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For further information please contact:
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EIIB plc Tel: +44 (0)20 7847 9900
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Zulfi Caar Hydari, Chief Executive
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Westhouse Securities Tel: +44 (0)20 7601 6100
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Antonio Bossi
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Chief Executive Statement
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Financial results
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EIIB Group delivered stable financial performance for the six months to 30 June 2013.
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Total operating income was Β£3.6m for the period to 30 June 2013 (period to 30 June 2012: Β£4.6m). Total expenses for the period were Β£4.3m (2012: Β£5.4m). The loss for the period was Β£0.75m.
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The bank maintained its strong capital adequacy, regulatory and liquidity ratios. The Regulatory Capital of the Group at 30 June 2013 stood at Β£97.0m (Β£99.5m at 31 December 2012).
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Commentary
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In the first half of the year we continued to implement our strategy of developing our core asset management capabilities whilst also enhancing our specialist banking business. We also continued to implement our restructuring plan and to maintain tight cost control.
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Earlier this year the US Federal Reserve indicated a possible tapering in quantitative easing which resulted in a sell-off in bond markets worldwide. The impact on our performance was mitigated by our position at the shorter end of the rate curve and relatively good securities selection, enabling us to outperform the relevant indices. Although we outperformed during a period of heightened volatility, overall, our first half result was adversely affected by these events.
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The performance of our asset management business was encouraging, with AUM increasing from US$922m to US$1.004bn during the period. The underlying business was strong with gross inflows of US$441m, but instability in the region and unexpected regulatory changes in Egypt led to higher redemptions resulting in net positive inflows of US$82m. Investment performance during the period was positive, withΒ all of our flagship funds having outperformed relevant benchmarks and/or peer group averages over one year.
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The investment banking team completed a Β£5.4m financing of a property portfolio in central London on a fully Sharia'a compliant basis. We expect to originate more opportunities in the second half of the year.
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We maintained strong focus on our legacy private equity investments. In the first half we completed the sale of an office building in Cairo for US$6.2m and settled the related financing. We also sold an Islamic debt obligation to Barclays Bank for US$8.1m. We will continue our efforts to extract value from our legacy private equity portfolio going forward.
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Given the challenging operating environment, the Group delivered a satisfactory performance for the six months to 30 June 2013.
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Outlook
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In June the global index compiler MSCI upgraded the United Arab Emirates ("UAE") and Qatar to Emerging Market status from Frontier Market. Effective May 2014, the UAE and Qatar will be given a weighting of 0.4 percent and 0.45 percent respectively in the MSCI Emerging Markets Index.
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This upgrade marks a new era for capital flows into the Gulf and is important for developing the region as a destination for equity investment in the long term. EIIB is positioned as a specialist bank with asset management at its core, offering investors outstanding performance based on deep GCC and MENA expertise and contacts. We have a track record of investing in these markets and we will leverage this unique capability to meet rising investor demand for regional assets.
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Although trading conditions have been challenging in the first half, the Group remains confident of its prospects for the current year.
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We look forward to reporting further progress at the year end.
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Zulfi Caar Hydari
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Chief Executive
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Condensed consolidated statement of income for the six months ended 30 June 2013 (unaudited)
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6 months to | 6 months to | Year to | ||||
30 Jun 2013 | 30 Jun 2012 | 31 Dec 2012 | ||||
Β£ | Β£ | Β£ | ||||
Income | ||||||
Income from financing and investing activities | 1,295,100 | 1,570,121 | 2,519,480 | |||
Returns to financial institutions and customers | (137,183) | (393,724) | (340,632) | |||
Net margin | 1,157,917 | 1,176,397 | 2,178,848 | |||
Net fees and commission income | 1,423,547 | 1,666,962 | 2,683,401 | |||
Net gain on funds, sukuk and quoted equity designated at fair value | 139,008 | 591,743 | 1,762,577 | |||
Gain/(loss) on private equity investments designated at fair value | 244,614 | 189,677 | (2,867,165) | |||
Gain/(loss) on investment properties | 241,335 | - | (227,589) | |||
Other operating income | 353,269 | 957,485 | 369,629 | |||
Total income | 3,559,690 | 4,582,264 | 3,899,701 | |||
Expenses | ||||||
Net (provision) / reversal for impairment of financing arrangements | 202,830 | - | (4,270,712) | |||
Staff costs | (2,939,962) | (3,415,366) | (5,718,129) | |||
Depreciation and amortization | (113,911) | (214,748) | (266,742) | |||
Other operating expenses | (1,559,208) | (1,756,642) | (3,707,462) | |||
Third party interest in consolidated funds | 99,178 | - | (14,170) | |||
Total expenses | (4,311,073) | (5,386,756) | (13,977,215) | |||
Operating loss before tax | (751,383) | (804,492) | (10,077,514) | |||
Tax charge credit | - | 777,447 | 200,106 | |||
Loss from continued operations | (751,383) | (27,045) | (9,877,408) | |||
Loss from discontinued operations | - | - | (1,143,511) | |||
Loss for the period | (751,383) | (27,045) | (11,020,919) | |||
Income/(loss) attributable to: | ||||||
Equity holders of the Bank | (834,670) | 391,722 | (10,086,141) | |||
Non-controlling interest | 83,287 | (418,767) | (934,778) | |||
(751,383) | (27,045) | (11,020,919) | ||||
Earnings per share | ||||||
- Basic | (0.05p) | 0.02p | (0.57p) | |||
- Diluted | (0.05p) | 0.02p | (0.54p) |
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Condensed consolidated statement of other comprehensive income for the six months ended 30 June 2013 (unaudited)
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6 months to | 6 months to | Year to | ||||
30 Jun 2013 | 30 Jun 2012 | 31 Dec 2012 | ||||
Β£ | Β£ | Β£ | ||||
Loss for the period | (751,383) | (27,045) | (11,020,919) | |||
Other comprehensive income | ||||||
Net change in fair value of available-for-sale securities | (414,074) | 648,013 | 816,761 | |||
Tax charge | - | - | (200,106) | |||
Exchange loss on net investment in foreign operations | (382,390) | - | - | |||
Total comprehensive (loss)/income for the period | (1,547,847) | 620,968 | (10,404,264) | |||
Total comprehensive (loss)/income attributable to: | ||||||
Equity holders of the Bank | (1,287,107) | 1,039,735 | (9,469,486) | |||
Non-controlling interest | (260,739) | (418,767) | (934,778) | |||
(1,547,846) | 620,968 | (10,404,264) |
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Condensed consolidated statement of financial position at 30 June 2013 (unaudited)
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30 Jun 2013 | 30 Jun 2012 | 31 Dec 2012 | ||
Assets | Β£ | Β£ | Β£ | |
Cash and balances with banks | 9,231,898 | 10,220,001 | 13,624,694 | |
Due from financial institutions | 56,424,808 | 61,474,645 | 62,547,116 | |
Quoted equity investments designated at fair value | 3,131,121 | - | - | |
Available-for-sale securities - sukuk | 26,170,467 | 43,371,079 | 33,989,114 | |
Sukuk designated at fair value | 22,670,390 | - | 17,453,008 | |
Investments in funds designated at fair value | 7,458,774 | 20,168,005 | 7,180,464 | |
Financing arrangements | 6,736,510 | - | - | |
Private equity financial assets designated at fair value | 14,577,333 | 21,587,923 | 13,315,897 | |
Available-for-sale securities - Other | - | 180,756 | - | |
Fair value of foreign exchange agreements | 156,281 | 432,799 | 797,669 | |
Assets held for sale | 3,618,838 | - | 5,821,454 | |
Investment property | 1,640,188 | 6,563,408 | 1,738,458 | |
Goodwill | 12,340,195 | 11,973,953 | 11,546,400 | |
Lease assets | 1,018,816 | - | - | |
Property, plant and equipment | 260,101 | 2,000,013 | 331,227 | |
Intangible assets | 19,569 | 39,597 | 27,471 | |
Other assets | 3,677,067 | 3,819,144 | 3,322,473 | |
Total assets | 169,132,356 | 181,831,323 | 171,695,445 | |
Liabilities | ||||
Due to financial institutions | 23,467,663 | 27,192,918 | 26,731,508 | |
Due to customers | - | 95,639 | 95,637 | |
Fair value of foreign exchange agreements | 819,766 | 518,004 | 39,309 | |
Liabilities held for sale | 931,702 | - | 3,144,191 | |
Other liabilities | 9,472,580 | 13,701,544 | 8,921,872 | |
Third party interest in consolidated funds | 7,468,665 | - | 3,831,361 | |
Total liabilities | 42,160,376 | 41,508,105 | 42,763,878 | |
Shareholders' equity | ||||
Share capital | 17,925,403 | 17,656,585 | 17,790,994 | |
Share premium account | 96,918,725 | 116,219,800 | 96,569,263 | |
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 | |
Fair value reserve on available-for-sale securities | 188,633 | 634,064 | 602,706 | |
Share based payment reserve | - | 424,138 | - | |
Foreign exchange reserve | (49,831) | - | (10,814) | |
Accumulated losses | (14,507,871) | (3,659,474) | (13,673,201) | |
Total equity attributable to the Bank's equity holders | 118,957,084 | 129,757,138 | 119,760,973 | |
Non-controlling interest | 8,014,896 | 10,566,080 | 9,170,594 | |
Total equity and liabilities | 169,132,356 | 181,831,323 | 171,695,445 | |
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Β Condensed consolidated statement of changes in equity for the six months ended 30 June 2013 (unaudited)
Share capital | Share premium account | Capital redemption reserve | Treasury shares | Special reserve | Share based payment reserve | Fair value reserve on AFS securities | Foreign exchange reserve | Retained earnings | Non controlling interest | Total equity Β -Group | |
Β£ | Β£ | Β£ | Β£ | Β£ | Β£ | Β£ | Β£ | Β£ | Β£ | Β£ | |
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 |
Cost of share based payment arrangements | 48,000 | - | - | - | - | 48,000 | |||||
Non controlling interest arising on business combinations | - | - | - | 10,366,506 | 10,366,506 | ||||||
Distributions | - | - | - | (1,061,824) | (1,061,824) | ||||||
Total | 17,656,585 | 116,219,800 | 599,040 | (2,117,015) | - | 424,138 | (13,949) | - | (4,051,196) | 10,984,847 | 139,702,250 |
Net change in fair value of available-for-sale securities | 648,013 | - | - | - | 648,013 | ||||||
Income for the period | - | - | 391,722 | (418,767) | (27,045) | ||||||
Total comprehensive income/(loss) for the period | 648,013 | - | 391,722 | (418,767) | 620,968 | ||||||
Balance at 30 June 2012 | 17,656,585 | 116,219,800 | 599,040 | (2,117,015) | - | 424,138 | 634,064 | - | (3,659,474) | 10,566,080 | 140,323,218 |
Balance at 1 July 2012 | 17,656,585 | 116,219,800 | 599,040 | (2,117,015) | - | 424,138 | 634,064 | - | (3,659,474) | 10,566,080 | 140,323,218 |
New shares issued | 134,409 | 349,463 | - | - | - | - | 483,872 | ||||
Cost of share based payment arrangements | - | 39,998 | - | - | - | - | 39,998 | ||||
Share premium transfer | (20,000,000) | 20,000,000 | - | - | - | - | - | - | |||
Transfer relating to share based payments | (464,136) | - | - | 464,136 | - | - | |||||
Non controlling interest arising on business acquisition | (10,814) | - | (420,425) | (431,239) | |||||||
Total | 17,790,994 | 96,569,263 | 599,040 | (2,117,015) | 20,000,000 | - | 634,064 | (10,814) | (3,195,338) | 10,145,655 | 140,415,849 |
Net change in fair value of available-for-sale securities | 168,748 | - | 168,748 | ||||||||
Tax | (200,106) | - | - | - | (200,106) | ||||||
Loss for the period | (10,477,863) | (516,011) | (10,993,874) | ||||||||
Distributions | (459,050) | (459,050) | |||||||||
Total comprehensive income/(loss) for the period | (31,358) | - | (10,477,863) | (975,061) | (11,484,282) | ||||||
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 |
Balance at 1 January 2013 | 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 |
New shares issued | 134,409 | 349,462 | - | - | - | - | 483,871 | ||||
Foreign exchange adjustment | - | (653) | 383,855 | 383,202 | |||||||
NCI adjustment on discontinued operations | - | - | (123,291) | (123,291) | |||||||
Distributions | - | - | - | (1,155,523) | (1,155,523) | ||||||
Total | 17,925,403 | 96,918,725 | 599,040 | (2,117,015) | 20,000,000 | - | 602,706 | (11,467) | (13,673,201) | 8,275,635 | 128,519,826 |
Net change in fair value of available-for-sale securities | (414,073) | - | - | - | (414,073) | ||||||
Exchange loss on net investment in foreign operations | (38,364) | - | (344,026) | (382,390) | |||||||
Loss for the period | (834,670) | 83,287 | (751,383) | ||||||||
Total comprehensive income/(loss) for the period | (414,073) | (38,364) | (834,670) | (260,739) | (1,547,846) | ||||||
Balance at 30 June 2013 | 17,925,403 | 96,918,725 | 599,040 | (2,117,015) | 20,000,000 | - | 188,633 | (49,831) | (14,507,871) | 8,014,896 | 126,971,980 |
Condensed consolidated cash flow statement for the six months ended 30 June 2013 (unaudited)
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6 months to | 6 months to | Year to | ||
30 Jun2013 | 30 Jun 2012 | 31 Dec 2012 | ||
Β£ | Β£ | Β£ | ||
Cash flows from operating activities | ||||
Operating loss for the period | (751,383) | (804,492) | (10,077,514) | |
Operating loss on discontinued operations | - | - | (1,143,511) | |
Adjusted for: | ||||
Net (reversal) / provision for impairment of financing arrangements | (202,830) | - | 4,270,712 | |
Gain/(loss) on private equity investments designated at fair value | (385,612) | (132,193) | 3,094,754 | |
Loss / (gain) on investment in funds and sukuk designated at fair value | 148,483 | - | (693,042) | |
Gain on quoted equity investments designated at fair value | (25,099) | - | - | |
Depreciation and amortisation | 113,911 | 214,748 | 266,742 | |
Charge for share awards | - | 48,000 | 87,998 | |
Net (increase)/decrease in operating assets: | ||||
Β Due from financial institutions | 6,122,308 | 34,662,969 | 29,319,786 | |
Β Financing arrangements | (6,533,680) | - | - | |
Quoted equity investments designated at fair value | (3,106,022) | - | - | |
Available-for-sale securities - sukuk | 7,404,574 | (13,279,039) | (21,181,336) | |
Sukuk designated at fair value | (5,999,263) | - | - | |
Investments in funds designated at fair value | 355,088 | (16,011,903) | (6,487,420) | |
Private equity financial assets designated at fair value | (875,824) | 676,877 | (207,851) | |
Investment properties | 98,270 | - | (1,738,458) | |
Lease assets | (1,018,816) | - | - | |
Other assets | (639,351) | 3,852,568 | (12,615,263) | |
Net increase/(decrease) in operating liabilities: | ||||
Β Due to financial institutions | (3,263,845) | (1,719,107) | 11,508,366 | |
Β Due to customers | (95,637) | (4,361) | (4,364) | |
Β Other liabilities | 1,815,035 | (3,175,991) | 5,185,607 | |
Taxation: | ||||
Β Corporation tax settled | - | (7,934,954) | (9,011,800) | |
Net cash inflow from operating activities | (6,839,693) | (3,606,878) | (9,426,594) | |
Cash flows from investing activities | ||||
Acquisition of a subsidiary - net positive cash from acquisition | - | 3,624,693 | - | |
Purchase of plant and equipment | (34,882) | - | (469,291) | |
Net cash outflow from investing activities | (34,882) | 3,624,693 | (469,291) | |
Cash flows from financing activities | ||||
Capital from minority shareholders on acquisition | - | - | 9,946,081 | |
Payments to minority shareholders | (1,155,523) | (1,061,824) | (1,520,874) | |
Subscriptions to consolidated funds | 3,637,302 | - | 3,831,362 | |
Net cash outflow from financing activities | 2,481,779 | (1,061,824) | 12,256,569 | |
Net increase in cash and cash equivalents | (4,392,796) | (1,044,009) | 2,360,684 | |
Cash and cash equivalents at the beginning of the period | 13,624,694 | 11,264,010 | 11,264,010 | |
Cash and cash equivalents at the end of the period | 9,231,898 | 10,220,001 | 13,624,694 | |
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Notes to the condensed consolidated interim financial statements (unaudited)
At 30 June 2013
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1. Principal activities and authorisation of the financial statements
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European Islamic Investment Bank plc ('EIIB' or 'Bank' or 'Company') is a London based specialist banking and asset management group incorporated in the United Kingdom on January 11, 2005. The activities of the Bank are focused on servicing clients in London and the Gulf Cooperation Council countries 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.
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The interim condensed consolidated financial statements of the Bank and its subsidiaries (the 'Group') for the six months ended 30 June 2013 were authorised by the Board of Directors for issue on 16 September 2013.
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The condensed consolidated financial statements of the Group as at and for the period ended 30 June 2013 are available at www.eiib.co.uk
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2. Accounting policies
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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 2012.
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3. Share capital and share premium
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EIIB issued 13,440,860 ordinary shares of 1 pence each at a premium price of 3.6p as per its agreement with an investor 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 on 1 May 2013.
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4. Subsequent events
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The following significant event occurred subsequent to the interim reporting period;
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EIIB issued 27,240,143 ordinary shares of 1 pence each at a premium price of 3.6p and made a cash settlement of Β£1.6m as final settlement of the consideration due to an investor in connection with the strategic investment by the Company in Rasmala. The shares were admitted to trading on AIM on 25 July 2013.Β Following the issuance, the total number of shares in the capital of EIIB has increased to 1,819,780,416 ordinary shares.
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