European Islamic Investment Bank plc 
 
 
 
Annual Report 
 
For the year ended 31 December 2014 
 
 
 
 
 
A London listed asset management group specialized in the growth 
markets of the GCC 
 
 
 
 
 
 
  European Islamic Investment Bank plc 
 
1 
 
 
 
 
Introduction 2 
Highlights 3 
Chairman’s Statement   4 
Strategic report 6 
      Business model and strategy 6 
      Chief Executive Officer’s review 7 
      Operating and financial review 12 
Directors 18 
Corporate Governance 19 
Report of the Directors  22 
Statement of Directors’ Responsibilities 24 
Report of the Sharia’a Supervisory Board 25 
Independent Auditor’s Report 26 
The Financial Statements 
       Consolidated Statement of Income 27 
Consolidated Statement of Other Comprehensive Income  28 
Consolidated Statement of Financial Position 29 
Consolidated Statement of Changes in Equity 30 
Consolidated Statement of Cash Flows 31 
Company Statement of Financial Position 32 
Company Statement of Changes in Equity 33 
Company Statement of Cash Flows 34 
Notes to the Financial Statements 35 
  
 
   European Islamic Investment Bank plc  
 
2 
 
  
 
 
A London listed asset management group specialized in the growth markets of the GCC 
 
 
European Islamic Investment Bank plc (EIIB or the Group) is a London listed asset management group focused on 
the growth markets of the Gulf Cooperation Council (GCC) countries. 
 
EIIB has an extensive network of business relationships throughout the GCC and wider Middle East and North 
Africa (MENA) region. Our skilled and experienced teams provide investment management and financing solutions 
to pension funds, family groups, corporations and financial and government institutions. 
 
 
 
   European Islamic Investment Bank plc  
 
3 
 
 
2014 HIGHLIGHTS 
 
Our year at a glance 
 
 Assets under management including capital seeded by the Group £715m (US$ 1,113m) (2013: £712m 
(US$ 1,176m)) 
 Gross subscriptions in excess of $300m during 2014 
 Completed successful re-domiciliation of core funds to Luxembourg 
 Continued to execute product diversification plan with emphasis on alternative investment strategies 
 Increased shareholding in Rasmala Egypt Asset Management (REAM) to 100% 
 Flagship Funds continued long-standing track record of investment success 
 Best Islamic Institution (Europe) 2014 and Sharia Fund Manager of the Year 2014 awards 
 Started review of Group branding  
 
 
How we performed 
 
 Total operating income £10.8m (2013: £10.2m) 
 
 Profit before tax from continuing operations £1.50m (2013: £1.48m) 
 
 Profit to equity holders £0.60m, after tax expense of £0.79m and loss on discontinued operations of 
£0.12m 
 
 Staff costs of £5.40m (2013: £5.78m) and other operating expenses of £3.8m (2013: £2.9m)  
 
 Regulatory Capital of the Group at 31 December 2014 stood at £102m (£101m at 31 December 2013) 
 
 Net Asset Value, after share consolidation, of 317.2 pence per share (2013: 6.4 pence per share (post 
consolidation 320 pence)) 
 
 
 
   European Islamic Investment Bank plc  
 
4 
 
 
Chairman’s Statement 
 
I am pleased to report a second year of profit that is attributable to equity holders, despite the challenging 
economic climate in the latter part of the year. In 2014 we consolidated our position as a leading asset 
management and financing group in the MENA region. 
 
Further progress 
 
In 2014, we made steady progress, building on the groundwork of the previous year. We expanded further our 
product offering to include alternative strategies and achieved this whilst maintaining control over our cost base.  
 
This disciplined and focused approach has enabled the Group to report a second successive profit in 2014, while 
continuing to invest in the growth initiatives necessary to achieve our five year plan.  
 
Performance 
 
The Group’s operating income increased to £10.8m (2013 £10.2m) with a particularly strong performance from our 
asset management business. The second half of the year saw significant volatility in GCC markets, which we have 
been able to navigate.  Our cost base increased slightly, but remained effectively controlled. 
 
A second year of stable profit is a clear demonstration that we continue to move in the right direction and we will 
continue to invest in our platform and people to ensure continued progress. 
 
Market developments 
 
In the second half of 2014 the GCC countries experienced strong headwinds as a result of falling oil prices and 
rising political uncertainty. Stock markets in the region fell in line with these concerns. Despite these challenges, we 
believe stable governments, as evidenced by the smooth transition of power in Saudi Arabia, high growth rates and 
a combination of sovereign wealth and demographics will continue to translate into long-term growth for the region.  
 
Meanwhile, the benefits of an Islamic approach to finance are increasingly being appreciated across developed 
and growth markets.  
 
Our Chief Executive Officer expands on our market views on page 10, but I believe that the Group is well 
positioned to benefit from the opportunities in our core markets. 
 
Regulation 
 
The Board undertook a review of the scope of EIIB’s UK regulatory permissions and concluded that they exceeded 
our requirements. Following detailed discussions with the Prudential Regulation Authority (PRA) and the Financial 
Conduct Authority (FCA), the PRA authorised the amending of our permissions and we were able to relinquish the 
Group’s deposit-taking license. We are now solely regulated by the FCA in the United Kingdom and by local 
regulators in Egypt, Oman and the United Arab Emirates. The Group’s regulation is now more efficiently aligned to 
its strategy and business model.  
 
 
Corporate Governance 
 
The Group continually assesses corporate governance and its effectiveness, independence and efficiency. Board 
performance is also evaluated annually. 
 
The Board contains a suitable majority of non-executive and independent directors with a wide range of skills and 
experience relevant to EIIB’s business. Biographies of the Directors and details of the Board and its committees 
can be found on pages 18 to 21. There were no Board changes made during the year.  
 
We will continue to review the Board’s membership, its performance, its committees’ performance and that of 
individual board members to ensure the Board and its committees have the appropriate balance of skills, 
experience and independence.  
 
 
  European Islamic Investment Bank plc  
 
5 
 
Tender offer 
 
A tender offer was launched on 1 August 2014, and withdrawn on 28 November 2014 as the Company remained in 
discussions with its regulators regarding the implementation of that offer. Those discussions have now been 
concluded satisfactorily. 
 
A circular explaining the terms of a new tender offer for up to £20 million was posted to shareholders on 17 April 
2015 and is expected to close on 6 May 2015. 
 
Outlook 
 
The Board has worked diligently in following our defined strategy of creating a market leading asset management 
and financing business focused on the GCC region.  
 
The GCC has shown remarkable resilience despite significant headwinds in 2014. We are confident that our 
business is well positioned to benefit from opportunities in our markets. I look forward to working with our expert 
staff, management team and board in achieving further positive results. 
 
 
 
 
 
 __________________________ 
Abdallah Y. Al-Mouallimi  
 
Chairman  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   European Islamic Investment Bank plc  
 
6 
 
 
STRATEGIC REPORT 
 
Our Business Model and Strategy 
 
Business Model 
 
EIIB is a London listed asset management and financing group focused on the growth markets of the GCC 
countries. We deliver investment banking and asset management products and services across asset classes to 
wholesale and institutional clients. 
 
We derive management fees from our asset management services and transactional fees from financing activities. 
We also generate returns from principal investments. 
 
Our Clients 
 
We are an institutional asset manager working closely with pension funds, family groups, corporations, financial 
and government institutions including sovereign wealth funds. 
 
Our Services 
 
Asset Management 
Investment Banking 
Principal Investments 
 
Our Strategy 
 
Our strategy is to promote the GCC and other regional growth markets as a preferred investment destination. We 
offer our international and regional clients bespoke asset management and financing solutions primarily focused on 
our core markets. We aim to be a catalyst for consolidation in the GCC asset management industry and to achieve 
a market leading position. 
 
As a leading player in the GCC we are also experts in Islamic Finance (“IF”). IF is an investment discipline that 
considers environmental, social and other criteria to generate long-term financial returns and a positive impact on 
society.  The principles of IF include the avoidance of: 
 
- Interest or the trading of intangible assets and cash flows relating to such activities 
- Uncertainty 
- Speculation 
- Unjust enrichment or unfair exploitation  
 
Our competition 
 
Our principal competition comes from independent regional asset management firms and from regional banks. 
 
   European Islamic Investment Bank plc  
 
7 
 
CHIEF EXECUTIVE OFFICER’S REVIEW 
 
On behalf of the Directors I am pleased to present my review of the year, as part of our Strategic Report.  
 
 
Our Strategy 
 
EIIB is a London listed asset management and financing group focused on the growth markets of the GCC 
countries. EIIB is authorised by the Financial Conduct Authority in the United Kingdom and also regulated in Egypt, 
Oman and the United Arab Emirates. EIIB’s primary focus is to provide investment management and financing 
solutions to pension funds, family groups, corporations and financial and government institutions. 
 
The activities of the Group include investment management solutions encompassing equities, fixed income and 
alternatives; investment banking services encompassing provision of financing, debt capital markets and structured 
finance; and business advisory services. 
 
EIIB's business strategy is to develop as a specialist asset management and financing business, offering clients 
bespoke solutions focused on the growth markets of the GCC. The Group’s aim is to be a catalyst for consolidation 
in the GCC asset management industry and to achieve a market leading position. 
 
Given our market positon in the GCC we have also developed world class expertise in Islamic Finance. The key 
principles of Islamic finance are based on ethical real economy transactions, thus Islamic finance transactions 
avoid the following: 
 
 Interest or the trading of intangible assets and cash flows relating to such activities 
 Uncertainty 
 Speculation 
 Unjust enrichment or unfair exploitation  
 
As we look forward, we will continue to invest in innovative product development, distribution capabilities, further 
strengthening of the team and strategic or bolt-on acquisitions as appropriate.  
 
Results 
 
The financial statements for the reporting year ended 31 December 2014 are shown on pages 27 to 87.  
 
I am pleased to report that the results for 2014 reflect continued strengthening of our business, despite challenging 
market conditions in the second half of the year. Total operating income increased to £10.8m (2013 £10.2m), 
which, combined with continued tight cost control, delivered an underlying operating profit before tax from 
continued operations of £1.50m (2013: £1.48m). 
 
The net profit including non-controlling interest in 2014 amounted to £0.60m (2013 loss of £0.03m) after tax 
expense of £0.79m (2013: £0.26m) and loss on discontinued operations of £0.12m (2013 £1.25m). 
 
Our Asset Management business performed strongly this year, with higher levels of performance fees than last 
year. Our assets under management have remained broadly flat despite challenging market conditions in the GCC, 
particularly in the second half of the year. Considering market conditions, this is a highly creditable performance. 
 
Whilst we maintained good performance in our flagship funds, new alternative strategies have positioned us well 
for the years ahead as we diversify our product offering.   
 
We continued to build our Investment Banking business and further awards are testament to the level of in-house 
expertise we have developed.  
 
The Group maintained its strong capital adequacy, regulatory and liquidity ratios. The Regulatory Capital of the 
Group at 31 December 2014 stood at £102m (£101m at 31 December 2013). 
 
Our change in regulatory permissions, covered in more detail below, has not diminished the importance of 
maintaining tight controls and transparency around capital and liquidity. 
 
  European Islamic Investment Bank plc  
 
8 
 
Regulation 
 
During 2014 we gained authorisation from the Prudential Regulation Authority (PRA) to amend our regulatory 
permissions and relinquished our UK deposit-taking licence at the end of 2014. We are now solo regulated in the 
UK by the Financial Conduct Authority (FCA) and by local regulators in the UAE, Oman and Egypt.  
 
Changing our regulatory permissions was a complex project and a significant step in aligning our permissions with 
our operating model. 
 
Brand franchise 
 
We started a review of the Group’s branding and plan to complete this work during 2015. We aim to achieve a 
clear, recognisable and valued brand name for the Group and its operating companies. A re-launch will help bring 
market clarity and definition around who we are and what we do. 
 
Asset Management 
 
While Assets Under Management (AUM) remained broadly constant during the year, this masks a good 
performance in the face of challenging markets. The business attracted approximately $300m in new subscriptions 
during the year which were offset by redemptions and market and foreign exchange movements. We saw a 
significant correction in the equity markets, across the GCC and wider MENA region, in the latter part of the year, 
with concurrent interest rate uncertainties. Many of our investors sought to exit traditional strategies and rotate into 
alternative investment strategies. The diversification of our product offering has helped us to retain AUM and 
consolidate our market share in the UAE.  
 
During 2014, we completed the successful re-domiciliation of a selection of our funds to Luxembourg. A broad, 
Luxembourg-domiciled fund offering is important for our global distribution strategy, boosting the funds' appeal to 
both international and regional third-party distributors and investors. Investors increasingly recognize Luxembourg 
as one of the most attractive and cost effective jurisdictions for the domicile of funds.   
 
Product Development 
 
We continued to build and enhance our product offering. We added the Rasmala GCC Islamic Equity Income Fund 
and the Rasmala Global Sukuk Fund to complement our flagship products, Rasmala Arabian Markets Growth 
Equity Fund and the Rasmala GCC Fixed Income Fund. We have also responded to client demand for alternative 
investment strategies by launching the Rasmala Trade Finance Fund (“RTFF”) and the Rasmala Leasing Fund 
(“RLF”). RTFF is a Sharia’a compliant open-ended fund providing investors with a low volatility money market 
alterative that is linked to emerging market trade transactions and aims to benefit from the rapid growth of global 
trade. RLF is a Sharia’a compliant fund established to capture investment performance in the US leasing market.  
 
Strategically, these investment products allow us to retain any outbound investment flows from clients seeking 
alternative investment ideas. We believe there is a market opportunity for us to offer our GCC client base unique, 
Sharia’a compliant, investment products investing in international markets in addition to catering to investor 
requirements in MENA investment markets. 
 
Strong Performance and Industry Recognition  
 
Overall investment performance remained strong compared to both our competitors and industry-recognised 
benchmarks. The Rasmala Arabian Markets Growth Equity Fund returned 10.1% (net of all fees and expenses) 
compared to the S&P Pan Arab Composite Large Mid Cap Index return of -0.9%.  This builds upon the fund's long-
term track record, which stands at an annualized outperformance of 8.75% since inception in 2006.  
 
The Rasmala GCC Fixed Income Fund returned 6.7% (net of all fees and expenses) despite the global fixed 
income headwinds and compared to the Citigroup MENA Broad Bond Index GCC return of 6.9%, also extending 
that fund’s long-term track record of annualized outperformance of 2.67% since inception in 2009. 
 
In addition all of our mutual funds and discretionary portfolio mandates outperformed their respective benchmarks 
in 2014.  
 
The response from our existing client base has been encouragingly positive as many of them increased assets 
under management with us during the year.  
  European Islamic Investment Bank plc  
 
9 
 
We have also attracted new client mandates, including our second discretionary managed portfolio from a 
government institution in Oman. In 2015 our objective is to win similar mandates from government institutions in 
other GCC countries. 
 
There is growing demand for our products and we will continue to drive growth by recruiting proven talent and 
increasing our product range. 
 
In 2014, Morningstar awarded the Rasmala Arabian Markets Growth Equity Fund with the coveted five star rating 
based upon its investment performance over the past 3 years. Also, in 2014, Global ISF awarded Rasmala the 
Sharia Fund Manager of the Year. 
 
Such industry recognition is evidence of Rasmala’s continued success in investment performance, product 
innovation, and serving the needs of our local client base. 
 
Rasmala was recently ranked as the 15th largest asset management firm in the Middle East by New York based 
Institutional Investor, and ranked within the top independent asset management firms if commercial banks were 
excluded from the list. 
 
 
Investment Banking 
 
Traditionally, domestic and regional institutions have acted as distributors of financial products to their customers, 
relying upon partnerships with bulge bracket firms for product structuring expertise. In contrast, EIIB has continued 
building on its proven ability to manufacture products in its own right. The investment banking (IB) team structured 
and placed products during the year that showcased the Group’s skill set in debt capital markets. 
 
In March 2014, we successfully acted as lead arranger and book runner for European-based multinational 
insurance group FWU Group on the second tranche of their sukuk al-wakala programme. This second tranche of 
US$40m was part of a US$100m programme and was rated BBB by Fitch. This was a unique asset backed 
transaction involving a European corporate issuing rated paper via the sukuk markets.  
 
The transaction helped the Group to win the award for ‘Best Islamic Institution in Europe’ for the second year in a 
row.      
 
In parallel with developing cutting-edge solutions for our clients in sukuk, the IB team has been instrumental in 
generating value for the Group through evaluating other investment opportunities, both for the Group’s proprietary 
book and for asset management clients.   
 
For example, during 2014, IB arranged the placement of securities in Emirates REIT and worked closely with asset 
management to evaluate opportunities for the Rasmala Trade Finance Fund.  The IB team also established a 
strategy for real estate and leasing and began evaluating opportunities towards the end of 2014. 
 
The IB team looks beyond mere replication of conventional financing structures through the application of Sharia’a 
‘wrappers’ and other synthetic structures, and instead focuses on first principles of Islamic finance.  
 
We see these products and services as being a growth area as capital from the GCC region flows into the 
international markets.  
 
Principal Investments 
 
Principal Investments (PI) main focus is to invest in opportunities that align with our strategy and business model. 
 
The PI business unit provides seed funding for new Asset Management products and for Investment Banking 
transactions. 
 
PI also manages our private equity investments.  Whilst there has been no change in these investments during 
2014, we continue to proactively manage our exposures.  
 
Our book exposure is now £16.7m (2013: £15.9m), which includes our private equity assets across the group.  
 
We continue to seek exits from our private equity investments and are determined to optimise the returns from our 
exits.  European Islamic Investment Bank plc  
 
10 
 
 
Market Review 
 
We believe the markets of the GCC region offer favourable prospects despite headwinds from lower oil prices and 
regional geo-political uncertainties. GCC countries have high growth rates with significant sovereign wealth, high 
levels of infrastructure spending, rising income and positive demographics which will continue to drive long-term 
growth in the region.  
 
In the short term the price of oil, having declined by about 55% since September 2014, has weakened the external 
and fiscal balances of oil exporters, including members of the GCC. Stock markets of various countries, including 
Kuwait, Saudi Arabia and UAE, declined sharply in late 2014 because of concern over how these economies will 
be affected by lower oil prices. However, large capital buffers, low non-performing loans and generally high liquidity 
should allow most GCC countries to avoid sharp cuts in government spending, limiting the impact on near-term 
growth and financial stability.   
 
The IMF predicts GDP growth of 3.4% in 2015 for the GCC overall, slightly lower as compared to 3.7% in 2014.   
 
There is continued regional demand for sukuk and credit-based products, and ample liquidity within the regional 
banking sector.  We expect reasonable performance from regional credit markets assuming that external shocks 
are manageable and global rates curves rise within current consensus expectations.  Islamic Finance markets are 
becoming increasingly accepted and attractive among mainstream capital markets for corporates, financial 
institutions and sovereigns around the globe.  Over the past few years, Islamic Finance assets grew at an annual 
rate of 15% to 20% which is expected to continue over the medium to long term.  This growth will be further fuelled 
by greater liquidity and better price formation. 
 
We believe a rebound in confidence in the GCC stock markets will occur in 2015 should regional tensions between 
Saudi Arabia and Yemen subside. However, we do not anticipate the same degree of abnormal returns from 
regional equity markets as in 2013 or through most of 2014.   
 
Last year, the global index compiler MSCI upgraded UAE and Qatar to Emerging Market status from Frontier 
Market and there were indications that foreign investors could gain access to Saudi Arabia’s Tadawul in 2015. The 
liberalisation of a US$500-600bn equity market is an important development in building momentum for the Gulf 
region as a destination for equity investment in the longer term.  
 
Tender offer 
A tender offer was launched in 2014 and later withdrawn as the Company remained in discussions with its 
regulators regarding the implementation of that offer. Those discussions have now been concluded satisfactorily 
and a circular explaining the terms of a new tender offer was posted to shareholders on 17 April 2015 and is 
expected to close on 6 May 2015.  
 
Future Developments 
 
Our fundamental belief in the GCC region and our ability to play a key role in its economic development and growth 
allows us to look forward with optimism. 
 
Our clearly defined business model, exceptional local reputation through Rasmala, coupled with committed and 
hardworking staff reaffirms our belief that EIIB is well placed for growth. 
 
Whilst we continue to focus on organic growth we will also continue to monitor acquisition opportunities that align 
and will add value to our franchise and business model. 
 
   European Islamic Investment Bank plc  
 
11 
 
 
Acknowledgements 
 
2014 is the second year of profit for the Group and underlines the rapid success we have had in turning around the 
Group and implementing a revised strategy. We look forward to 2015 with confidence as we further diversify our 
product offering and leverage from the foundations put in place to drive growth and profit. 
 
We have a stable and high-performing team across the Group – I would like to thank all of our staff for their 
continuing contribution to our success. I would also like to thank the Chairman and the Board for their counsel and 
support during the year. 
 
 
 
____________________ 
Zulfi Caar Hydari  
Chief Executive Officer 
 
 
   European Islamic Investment Bank plc  
 
12 
 
Operating and Financial Review 
 
EIIB is a London listed asset management and financing group focused on the growth markets of the GCC 
countries. It delivers asset management and investment banking products and services across asset classes to 
wholesale and institutional markets. 
 
EIIB is authorised by the Financial Conduct Authority (FCA) and is listed on the AIM Market of the London Stock 
Exchange. The Group's activities are also regulated by local regulators in MENA jurisdictions. The Group's 
competitive position is significantly enhanced by its geographic footprint and network in MENA region. 
 
The Directors present the Operating and Financial Review for 2014. Having followed the framework set out in the 
Accounting Standards Board Reporting Statement: Operating and Financial Review as a guide to best practice, the 
Directors believe they have discharged their responsibilities under Section 417 of the Companies Act 2006 to 
provide a balanced and comprehensive review of the development and performance of the business. 
 
Results 
 
Total operating income in 2014 was £10.8m (2013: £10.2m). Profit before tax from continuing operations amounted 
to £1.50m (2013: £1.48m).  
Capital Adequacy 
EIIB had total assets of £138m at 31 December 2014 (£154m at 31 December 2013). Regulatory capital resources 
of the Group as at 31 December 2014 was £102m (£101m at 31 December 2013) and the total risk weighted 
assets was £124m (£117m at 31 December 2013). The capital adequacy ratio as at 31 December 2014 stood at 
83% (2013: 86%). 
Liquidity 
As at 31 December 2014, the net cash excess (calculated as a percentage of deposits) was +40% (31 December 
2013: +40%) in the 8 days and under category, and +60% (31 December 2013: +60%) in the 1 month and under 
category, against minimum requirements during the year of 0% and -5% respectively. 
 
Liquidity is managed on a day to day basis by the Head of Treasury.  
 
People 
 
A significant differentiating factor for our business is our ability to attract talent. During the period the Directors 
believe that EIIB has been able to provide a stimulating environment and competitive remuneration structures 
which has enabled the Group to attract and retain staff of the highest calibre.   
 
Operational 
 
We have successfully agreed with our regulators a change in permissions, in order to align them with our business 
model. We are now solo regulated in the United Kingdom by the FCA and by local regulators in the MENA 
jurisdictions.   
 
All relevant consents have been received for our proposed tender offer which will be completed shortly. 
 
Key Performance Indicators 
 
The Group considers the financial and Assets Under Management figures published in this report as being the 
most appropriate key performance indicators in judging the success of the business and its strategy.  
 
 
 
 
 
 
  European Islamic Investment Bank plc  
 
13 
 
2014 Review 
 
2014 was a strong year for Rasmala’s asset management business. Discretionary managed assets including 
capital seeded by EIIB group stood at £715m (US$ 1,113m) (2013: £712m (US$ 1,176m)). Strong investment 
performance across our flagship funds and investment strategies showed the benefits of our regional expertise and 
detailed local insights.   
 
 
Rasmala Assets Under Management 
 
 
 
 
 
 
 
Gross inflows during the year exceeded $300m but offset by redemptions and market and foreign exchange 
movements. We were pleased to see many of our investors rotate from traditional strategies into our new 
alternative investment products. 
 
During 2014, we completed the successful re-domiciliation of a selection of our funds to Luxembourg. A broad, 
Luxembourg-domiciled fund offering is important for the expansion of our global distribution strategy, boosting the 
funds' appeal to both international and regional third-party distributors and investors. Investors increasingly 
recognize Luxembourg as one of the most attractive and cost effective jurisdictions for the domicile of funds.  We 
focused our efforts on innovating, expanding and upgrading our product offering; and deepening and expanding 
our market penetration within existing and new distribution channels and clients. 
 
The development of our asset management business since 2012 has been marked. Our business is now of scale, 
appropriately domiciled and effectively distributed. 
 
Investment Performance 
 
Our investment performance was strong across all investment strategies, Funds and client portfolios.  Our two 
flagship Funds, the Arabian Markets Growth Equity Fund and the Rasmala GCC Fixed Income Fund, continued 
their long standing track record of investment success, outperforming industry recognized benchmarks and peer 
group averages. 
   European Islamic Investment Bank plc  
 
14 
 
 
 Arabian Markets Growth Equity Fund **** Performance Tables 
 
Fund Performance 2014 2013 2012 2011 
Arabian Markets Growth Equity 
Fund* 
10.10 37.95 11.91 -2.16 
S&P Pan Arab composite Large 
Mid cap Index*** 
-0.90 21.62 3.10 -13.62 
Relative Return 11.00 16.33 8.81 11.46 
 
 
Cumulative Returns (%) 1Y 2Y 3Y 5Y SI*** 
Arabian Markets Growth Equity 
Fund* 
10.10 51.88 69.97 87.88 76.41 
S&P Pan Arab composite Large 
Mid cap Index*** 
-0.90 20.52 24.26 21.42   -13.95 
Relative Return 11.00 31.36 45.71 66.46 90.37 
 
Source: Rasmala’s internal performance measurement 
*Performance is based on A-Share Class in USD and as of 31
st 
December 2014. 
** Inception date was 30
th
 July 2006. 
***Index was MSCI Arabian Markets Index since inception until August 2010. After which, it was changed to S&P Pan Arab Composite Index. 
****Performance from September 2014 onwards is for Rasmala Arabian Markets Growth Equity Fund UCITS IV SICAV domiciled in Luxemburg. 
Prior to September 2014, the Fund was domiciled in Cayman Islands. 
                                           
                                                 
 
 Rasmala GCC Fixed Income Fund **** Performance Table 
 
 
Fund Performance 2014 2013 2012 2011 
 
 
Rasmala GCC Fixed Income Fund* 6.71 1.14 14.56 6.47 
 
Citigroup MENA Broad Bond Index 
GCC** 
6.89 0.03 12.63 7.49 
 
Relative Return -0.18 1.11 1.93 -1.02 
 
 
 
Cumulative Returns (%) 1Y 2Y 3Y 5Y SI 
Rasmala GCC Fixed Income Fund* 6.71 7.92 23.63 44.98 69.46 
Citigroup MENA Broad Bond Index 
GCC** 
  6.89 6.92 20.42 35.18  47.06 
Relative Return  -0.18 1.00 3.21 9.80 22.40 
 
Source: Rasmala’s internal performance measurement. 
*Performance is net of fees based on Distribution Share Class in USD and as of 31
st 
December 2014. 
**Index was Citigroup Corporate AAA/AA Bond since inception until March 2011. After which, it was changed to Citigroup MENA Broad Index 
GCC.                                                                                                                   
***Inception date is 31
st
 March 2009.  
****Performance from February 2014 onwards is for the Rasmala Global Sukuk Fund UCITS IV SICAV domiciled in Luxemburg. Prior to 
February 2014, the Fund was domiciled in the Cayman Islands. 
 
Wholesale Distribution Channels 
 
We continue to increase our market visibility by opening new distribution channels. In 2014, the core focus of our 
wholesale distribution efforts was the continued development of strategic partnerships with regional financial 
services providers. In particular, we have been building relationships with entities that offer Islamic insurance and  European Islamic Investment Bank plc  
 
15 
 
savings products (Sharia’a Compliant Takaful and Re-Takaful) for promotion by Emirati based banks and IFAs to 
their core banking and wealth management customers respectively. The market for packaged insurance and 
savings products is growing rapidly in the Gulf, and these entities are well positioned to cooperate with Rasmala.  
 
We also work closely with existing distributors to identify new opportunities and add additional products to their 
platforms. 
 
Discretionary Portfolio Mandates 
 
Discretionary Portfolio Mandates (DPM) provide the investment manager with the discretion to execute transactions 
within set parameters without referring to the account owner. 
 
We increased both the number and size of our DPMs during 2014. Notably we won a new mandate from a 
government institution in Oman that we consider to be of strategic significance.  
 
In a clear continuing vote of confidence in our investment performance and high levels of client servicing, existing 
DPM clients increased the size of their portfolios with us during the year.  
 
Product Development 
 
In 2014, we continued to execute the product expansion plan we developed and set in motion two years ago. The 
Rasmala Trade Finance Fund saw significant interest from our distributors and is positioned for rapid AUM growth 
in 2015. 
 
We also continued to strengthen our leasing platform.  The Rasmala Leasing Fund (RLF) was established to 
capture investment performance in the US leasing market. RLF pays regular annual distributions of 12%, and 
targets an IRR of 7% over the full life of the Fund. We plan to launch a second leasing fund in 2015.  
 
The leasing and trade finance funds provide an alternative investment strategy to clients who want to reduce 
exposure to traditional strategies. 
 
Strategically, these investment products allow us to retain any outbound investment flows from clients seeking 
alternative investment ideas. We believe there is a market opportunity for us to offer our GCC client base unique, 
Sharia’a compliant, investment products investing in international markets in addition to catering to investor 
requirements in MENA investment markets. 
 
The variety in our product offering ensured we were able to retain assets under management in a challenging 
environment. 
 
 
Rasmala Key Funds 
 
These are summarised as follows: 
 
Equity 
         Rasmala Arabian Markets Growth Equity Fund 
         Rasmala GCC Islamic Equity Income Fund 
         Rasmala Palestine Equity Fund 
 
Fixed Income 
         Rasmala GCC Fixed Income Fund 
         Rasmala Global Sukuk Fund 
 
Alternative 
         Rasmala Leasing Fund 
         Rasmala Trade Finance Fund 
 
Investment Banking 
 
The investment banking team is specialized in Islamic banking products and services.  
  European Islamic Investment Bank plc  
 
16 
 
 
Principal Investments 
 
Principal Investments consisted of a number of private equity investments and a financing arrangement. 
 
 
Principal Risks and Uncertainties 
 
EIIB's business model involves the taking of risk in return for reward. Our MENA regional focus offers opportunities 
for financial returns but exposes us to a number of emerging market social, political and economic risks.  
 
The Group is exposed to market risk in relation to its assets and liabilities, credit risk from transactions with third 
parties, particularly money market transactions, liquidity risk from liquidity mismatches and operational risk. 
 
The effective management of risk is an essential part of our business and a key element in good corporate 
governance. Strong risk management is fundamental to EIIB's culture. The Group's approach to risk is documented 
in various risk policies. Under these policies risk is monitored on a daily basis.  
 
Further details are reported in detail in Note 41 to the Financial Statements on pages 73 to 87. 
 
Risk Management including Financial Risk 
 
In terms of the Corporate Governance Code, the Board is responsible for risk. A Risk Appetite and Tolerance 
Policy sets the parameters for risk taking, and systems and controls are in place to identify, measure, monitor and 
manage risk. 
 
The responsibility for managing risks lies with senior management. The Risk Department facilitates this process 
and monitors the effectiveness of the Group's risk management processes. 
 
The Board Risk Committee has overall responsibility for ensuring the Group's Risk Policies are implemented. 
 
The key elements of our risk management framework are: 
 
 setting the Risk Management strategy and philosophy; 
 defining the business risk appetite and tolerances; 
 identification and quantification of risks; 
 evaluation of identified risks; 
 managing identified risks; 
 risk reporting to support the on-going management of risks and the effectiveness of the risk solutions; and 
 business continuity planning. 
 
Further details on the Board and Group's approach to risk management are included in the Corporate Governance 
section, on page 19 and in Note 41 to the Financial Statements on pages 73 to 87. 
 
 
Summary 
 
Our asset management business remains on a growth path aided by additional products in the platform and 
additional focus on sales. Our investment performance and personalised client service continues to attract AUMs 
from new and established direct clients and via a broadening range of distribution channels.  
 
With the launch of new funds and further expansion of Rasmala’s product range planned in 2015, we are confident 
that our asset management business will continue to flourish.  
 
Our investment banking operation is well positioned to grow its debt capital markets and structured debt finance 
business. 
 
 
 
 
  European Islamic Investment Bank plc  
 
17 
 
 
____________________                                 
Zulfi Caar Hydari 
Chief Executive Officer, 
 
27
 
April 2015 
 
Registered Office: 
Milton Gate 
60 Chiswell Street 
London EC1Y 4SA 
 
 
   European Islamic Investment Bank plc  
 
18 
 
DIRECTORS 
 
NON-EXECUTIVE DIRECTORS 
 
H.E. Abdallah Yahya Al-Mouallimi 
(2), (3). Chairman of the Board and Chairman of the Board Risk Committee of EIIB, H.E. Abdallah Yahya Al-
Mouallimi is currently the Permanent Representative of Saudi Arabia to the United Nations. He has held various 
senior government and private sector positions including Ambassador to Belgium, Luxembourg and the European 
Union, Mayor of Jeddah, member of the Saudi Consultative Council and Director of Saudi General Organisation for 
Military Industries. His private-sector service includes chairing the Jeddah Chamber of Commerce, Vice-Chairman 
of Olayan Financing Company, Board Member of Saudi Telecom Company, Managing Director of Coca-Cola 
Bottling Company Saudi Arabia, Board Member of Saudi National Commercial Bank and Egypt Finance Company 
amongst others. He is also Co-Founder and Chairman of HBG Holdings. He has a Masters in Management from 
Stanford University and a Bachelor of Science in Chemical Engineering from Oregon State University. 
 
Mohammed Al Sarhan* 
(1), (2). Senior Independent Director and Chairman of the Nomination and Remuneration Committee of EIIB. Until 
recently Mohammed Al Sarhan was Vice President and Chief Operating Officer of Al Faisaliah Group, Kingdom of 
Saudi Arabia.  Previously he was the Vice President of the Saudi Arabian Refining and Marketing Company 
(SAMAREC). Currently he is the Chairman of Al Safi Danone Company, and a board member of Alfaisaliah group 
Holding company. He is Vice Chairman of the National Shipping Company of Saudi Arabia; Board Member of 
Saudi Arabian Public Transport Company; Board Member of the Saudi civil Aviation holding company. He is also a 
board member of Venture Capital Bank in Bahrain, and a board member of Goknur Juice company in Turkey.  He 
holds a BSc (Mathematics) from Oregon State University, USA.” 
John Robertson Wright* 
(1). Chairman of the Audit Committee and Non-Executive Director of EIIB. A career Banker with strong experience 
in UK and international markets including assignments in India, Sri Lanka, West Africa, Canada, Hong Kong and 
the United States, John Wright was recently appointed Chairman of Butterfields Bank UK.  He was formerly Chief 
Executive of Oman International Bank for seven years, Chief Executive of the Northern and National Irish Banks in 
Ireland for five years, Chief Executive of the Gulf Bank in Kuwait and finally Chief Executive of Clydesdale & 
Yorkshire Banks prior to retirement. He has also served as Non Executive Director of banks in Oman, London and 
Bermuda and as Chairman of companies in Northern Ireland and in Scotland. He is a Fellow of the Chartered 
Institute of Bankers in Scotland and the Chartered Institute of Bankers in Ireland. 
Michael Willingham-Toxvaerd 
Non-Executive Director of EIIB. Michael Willingham-Toxvaerd is Managing Partner of HBG Holdings UK LLP. He 
also holds a number of other directorships. He has significant experience in capital markets, mergers and 
acquisitions, founding, financing and listing companies on the London Stock Exchange. He is also experienced in 
private equity and holds an MBA from Cranfield University. 
Martin Gilbert Barrow*, CBE 
(3). Non-Executive Director of EIIB. Martin Barrow has extensive knowledge of Asia, having worked in the region 
for 35 years with Jardine Matheson. After joining the Hong Kong operations in 1965, he served as President of the 
group’s affiliate in Saudi Arabia, Managing Director of the operations in Japan and Regional Managing Director of 
Hong Kong and China, before being appointed to the board of Jardine Matheson Ltd in 1989. Mr. Barrow is a 
director of Matheson & Co Limited, Ballie Gifford Japan Trust PLC, China Britain Business Council and the Hong 
Kong Association. 
 
EXECUTIVE DIRECTORS 
 
Zulfi Caar Hydari 
(3). Chief Executive Officer of EIIB. Mr. Hydari is an activist investor experienced in special situations, Private 
Investment in Public Equities and private equity transactions. He is specialised in structuring investment capital 
from the GCC and implementing post acquisition value enhancement strategies in portfolio companies. Mr. Hydari 
is Group Chief Executive of Rasmala Holdings Limited. He is also Co-Founder of HBG Holdings, a leading special 
situations private equity firm. Mr. Hydari holds an MBA from Cranfield University. 
 
(1) Member of the Audit Committee 
(2) Member of the Nomination and Remuneration Committee 
(3) Member of the Board Risk Committee 
* Independent Director   European Islamic Investment Bank plc  
 
19 
 
CORPORATE GOVERNANCE 
 
COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE  
 
The Board considers that good corporate governance is central to achieving the Group’s objectives and has 
applied these principles in drawing up the Group’s risk management framework taking into consideration The UK 
Corporate Governance Code 2012 published by the Financial Reporting Council (The Code). 
 
THE BOARD AND ITS COMMITTEES 
 
The Group is led by a Board comprising Non-Executive and Executive Directors with significant experience in 
financial services and deep relationships in the MENA region. The appointment of Directors is considered by the 
Nomination and Remuneration Committee and then the Board. Following the provisions in the Articles of 
Association, all Non-Executive Directors must stand for re-election by the shareholders at the first Annual General 
Meeting following their appointment and must also stand for re-election by the shareholders, at least every three 
years. Executive Directors normally retire at age 65, as required by their service agreements. Non-Executive 
Directors are appointed for three-year renewable terms, which may be terminated by giving three months’ notice. 
 
The Board is required to meet at least three times a year; in 2014 there were six Board meetings. The Board has a 
programme designed to enable the Directors to review corporate strategy and the operations and results of the 
business and to discharge their duties within a framework of prudent and effective controls relating to the 
assessment and management of risk. 
 
The matters specifically referred to the Board for decision include the approval of the annual report and financial 
statements; the payment of dividends; the long-term objectives of the Group; the strategies necessary to achieve 
these objectives; the Group’s budgets and plans; significant credit exposures; significant capital expenditure items; 
significant investments and disposals; the organisational structure of the Group; the arrangements for ensuring that 
the Group manages risk effectively; any significant change in accounting policies or practices; the appointment of 
the Group’s main professional advisers; and the appointment of senior executives within the organisation. 
 
The Board has delegated to the Committees of EIIB the power to make decisions on operational matters, including 
those relating to credit, liquidity, operational and market risk, within an agreed framework. 
 
All Directors have access to the services of the Company Secretary, and independent professional advice is 
available to the Directors at the Group’s expense, where they judge it necessary to discharge their duties as 
Directors. 
 
The Board reviews and approves its composition and charter in order to set the risk management framework of the 
Group at least annually. To assist the Board in executing its functions, it reviews and approves the composition and 
charters of the following Board sub-committees: 
 
AUDIT COMMITTEE 
 
John Wright assumed the chairmanship of the Audit Committee on 7 September 2012. The Audit Committee 
comprises John Wright (Chairman) and Mohammed Al Sarhan. In discharging its duties, the committee is required 
to review the external auditors’ remuneration and, in discussion with them, to assess their independence and 
recommend their re-appointment at the Annual General Meeting. The committee also reviews the financial 
statements published in the name of the Board and the quality and acceptability of the related accounting policies, 
practices and financial reporting disclosures; the scope of work of the internal auditor, reports from the internal 
auditor and the adequacy of their resources; the effectiveness of the systems for internal control, risk management 
and compliance with financial services legislation and regulations; procedures by which staff may raise concerns in 
confidence; and the results of the external audit and reports from the external auditor and their findings on 
accounting and internal control systems. Based on the work as outlined above, the audit committee is satisfied that 
the external auditor is independent and will ensure that their findings will be considered. 
 
 
   European Islamic Investment Bank plc  
 
20 
 
NOMINATION AND RENUMERATION COMMITTEE 
 
The Nomination and Remuneration Committee, which comprises Mohammed Al Sarhan (Chairman) and Abdallah 
Al-Mouallimi, reviews the composition of the Board, taking into account the skills, knowledge and experience of 
Directors and considers and makes recommendations to the Board on potential candidates for appointment as 
Directors. The committee also makes recommendations to the Board concerning the re-appointment of any Non-
Executive Director by the Board at the conclusion of his or her specified term; the re-election of any Director by the 
shareholders under the retirement provisions of the Articles of Association; any matters relating to the continuation 
in office of a Director; and the appointment of any Director to executive or other office.  
 
The Nomination and Remuneration Committee evaluates the performance of the Board and its committees and 
makes appropriate recommendations to the Board. This is conducted through a self-assessment process that 
requires each Director to assess and rate the performance of the Board and its committees. The results of the 
exercise are considered by the Board and appropriate steps agreed and implemented to remedy any areas of 
deficiency or concern.  
 
The Nomination and Remuneration Committee reviews the remuneration policy for senior management, to ensure 
that members of the executive are provided with appropriate incentives to encourage them to enhance the 
performance of the Group and that they are rewarded for their individual contribution to the success of the 
organisation. It is also made aware of, and advises on, major changes to employee benefits schemes.  
 
BOARD RISK COMMITTEE 
 
The Board Risk Committee comprises Abdallah Al-Mouallimi (Chairman), Martin Barrow and Zulfi Caar Hydari. The 
Board Risk Committee assists the Board in fulfilling its investment risk management responsibilities. These 
responsibilities include determining the Group’s risk profile and ensuring that management remains within the 
Board’s predetermined risk appetite. Meetings are held at least three times per annum and include the Chief 
Executive Officer and Finance Director and Head of Risk Management by standing invitation. The terms of 
reference include reviewing capital adequacy, liquidity, credit risk, market risk, operational risk and approvals under 
the Board’s delegated authority. 
 
EXECUTIVE MANAGEMENT COMMITTEE 
 
The Group has an Executive Management Committee to assist the Chief Executive Officer in performing his duties. 
The Executive Management Committee meetings are held at least once a month and membership comprises the 
Chief Executive Officer and senior management from finance, risk, treasury, principal investments, investment 
banking, asset management, legal, compliance and HR. Specifically, the committee considers the development 
and implementation of strategy, operational plans, policies and budgets; the monitoring of operating and financial 
performance; the assessment and control of risk; the prioritisation and allocation of resources; human resources; 
and the monitoring of competitive forces in each area of operation. The committee, assisted by its sub-committees, 
also supports the Chief Executive Officer in ensuring the development, implementation and effectiveness of the 
Group’s risk management framework and the clear articulation of the Group’s risk policies, and in reviewing the 
Group’s aggregate risk exposures and concentrations of risk. The committee may have specific powers delegated 
to it by the Board from time to time and, following the exercise of these powers, it reports to the Board. 
 
   European Islamic Investment Bank plc  
 
21 
 
 
MEETINGS AND ATTENDANCE 
 
 
*attended as a non-member 
 
 
 
 
SHAREHOLDERS 
 
The Board has appointed Mohammed Al Sarhan as the Senior Independent Director. He is available to 
shareholders if they have concerns which contact through the normal channels of Chairman or Chief Executive 
Officer has failed to resolve or for which such contact is inappropriate. The Board ensures the Directors develop an 
understanding of the views of major shareholders by attending shareholder meetings; making them aware of views 
and feedback received from shareholders; and providing them with analysts’ and brokers’ briefings on the Group. 
 
 
 
 
  
 
Main 
Board 
Audit 
Committee  
Nomination and 
Remuneration 
Committee 
Board Risk 
Committee 
No. of meetings in year    
 
    
 
Abdallah Yahya Al-Mouallimi 6 - 4 4 
Mohammed Al Sarhan 5 5 4 - 
Michael Willingham-Toxvaerd 6 - - - 
John Robertson Wright 5 6 - - 
Zulfi Caar Hydari 6 6* 4* 4 
Martin Gilbert Barrow  4 - - 4 
Total number of meetings held 6 6 4 4  European Islamic Investment Bank plc  
 
22 
 
 
REPORT OF THE DIRECTORS OF THE GROUP  
 
The Directors of European Islamic Investment Bank plc (registration number 5328847) have pleasure in presenting 
their annual report, together with the audited financial statements, for the year ended 31 December 2014.  
 
Dividend  
 
The company will not be paying a dividend for the year ended 2014 however, it was announced that it would 
reduce its capital by way of a tender offer in 2014. The tender offer was cancelled as a result of the firm not 
receiving all necessary consents to reduce its capital. The firm will proceed to finalise the tender offer in 2015.   
 
Directors  
 
The Directors serving at the date of this report and during the year are shown on page 18. There were no changes 
to the Board of Directors in 2014.  
 
Directors’ interests  
 
The Directors who held office at the end of the financial year had the following beneficial interests in the ordinary 
shares of the Group according to the register of Directors’ interests. The table shows the number of shares held as 
a percentage of total shares in issue at that time: 
 
Name Class of share Interest at end of year Interest at start of year 
Mohammed Al Sarhan 
Ordinary 1p - 5,549,567 (0.29%) 
Ordinary 50p 110,911 (0.29%) - 
 
Abdallah Al-Mouallimi, the Chairman and Michael Willingham-Toxvaerd hold indirect beneficial interests in EIIB by 
virtue of their participations in HBG Group fund structures, which in turn hold 16.11% of EIIB’s shares.  
 
None of the other Directors who held office at the end of the financial year had any other disclosable interest in the 
shares of the Group. 
 
According to the register of Directors’ interests, no rights to subscribe for shares in the Group were granted to any 
of the Directors or their immediate families, or exercised by them, during the financial year. 
 
Qualifying third party indemnity provisions 
The company has arranged qualifying third party indemnity for all of its directors. 
 
Sharia’a supervisory board members 
 
The Sharia’a Supervisory Board (SSB) members are as follows: 
 
• Dr. Abdul Sattar Abu Ghuddah – Chairman (resigned 30 June 2014) 
• Shaykh Nizam Yacouby –Chairman 
• Dr. Aznan bin Hasan 
• Dr Talha Azami – (appointed 17 September 2014) 
 
Political contributions and charitable donations 
 
The Group made no political contributions or charitable donations during the year. 
 
PRINCIPAL RISKS AND UNCERTAINTIES  
 
Refer to the Strategic Report and to Note 41 on pages 73 to 87 of the financial statements. 
 
FINANCIAL INSTRUMENTS 
 
Refer to the Strategic Report, which includes the Group’s financial risk management and information on its 
exposure to market, credit and liquidity risk.  European Islamic Investment Bank plc  
 
23 
 
 
FUTURE DEVELOPMENTS 
 
Refer to the Strategic Report 
 
EVENTS SINCE THE REPORTING DATE 
 
The Directors confirm there are no significant events arising since the reporting date that should be reported to 
shareholders other than those disclosed on page 87. 
 
GOING CONCERN 
 
In approving the financial statements the Directors have reviewed the current and potential future business 
activities and financial position of the Group, including an assessment of the capital adequacy and liquidity 
forecasts. Based upon this they are satisfied that the Group has adequate resources to continue in business for the 
foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the 
financial statements. 
 
AUDITORS 
 
The Directors who held office at the date of approval of this Directors’ report confirm that so far as they are each 
aware there is no relevant audit information of which the Group’s auditors are unaware, and each Director has 
taken all steps that he ought to have taken as a Director to make himself aware of any relevant audit information 
and to establish that the Group’s auditors are aware of that information. 
 
   European Islamic Investment Bank plc  
 
24 
 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE 
FINANCIAL STATEMENTS  
 
The directors are responsible for preparing the Annual Report and the Group and Parent company financial 
statements in accordance with applicable laws and regulations.  
 
Company law requires the directors to prepare group and parent company financial statements for each financial 
year. As required by the AIM Rules of the London Stock Exchange they are required to prepare the Group financial 
statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the 
Parent company financial statements on the same basis.  
 
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the UK   
the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 
 
Under company law the directors must not approve the financial statements unless they are satisfied that they give 
a true and fair view of the state of affairs of the Group and Parent company and of their profit or loss for that period. 
In preparing each of the Group and Parent company financial statements, the directors are required to: 
 
 select suitable accounting policies and then apply them consistently; 
 make judgments and estimates that are reasonable and prudent; 
 state whether they have been prepared in accordance with IFRSs as adopted by the EU; and 
 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 
group and the parent company will continue in business.  
 
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the 
Parent company's transactions and disclose with reasonable accuracy at any time the financial position of the 
Parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. 
They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of 
the Group and to prevent and detect fraud and other irregularities. 
 
 
 
 
By order of the Board, 
 
 
 
____________________ 
Zulfi Caar Hydari 
Chief Executive Officer 
 
27
 
April 2015 
 
Registered Office: 
Milton Gate 
60 Chiswell Street 
London EC1Y 4SA 
   European Islamic Investment Bank plc  
 
25 
 
REPORT OF THE SHARIA’A SUPERVISORY BOARD 
 
 
In the name of Allah, The Beneficent, The Merciful 
 
 
To the Shareholders of European Islamic Investment Bank plc (“EIIB”) 
 
For the period 1 January 2014 to 31 December 2014 (the “Period”) 
 
Assalamu Alaikum Wa Rahmat Allah Wa Barakatuh 
 
In compliance with our letters of appointment with EIIB, we are required to submit this report. 
 
We have reviewed the principles and the contracts relating to a sample of transactions conducted by EIIB during 
the Period. We have conducted our review to form an opinion as to whether EIIB has complied, during the Period, 
with Sharia’a rules and principles and also with the specific fatwas, rulings and guidelines issued by us. 
 
EIIB’s management is responsible for ensuring that EIIB conducts its business in accordance with Sharia’a rules 
and principles. It is our responsibility to form an independent opinion, based on our review of the operations of EIIB 
in the Period, and to report to you. 
 
We conducted our review which included examining, on a test basis, each type of transaction, the relevant 
documentation and procedures adopted by EIIB for the transaction during the Period. Based on this we are of the 
opinion that the contracts, transactions and dealings entered into by EIIB during the Period that were reviewed are 
in compliance with Sharia’a rules and principles. 
 
We beg Allah the Almighty to grant us all success and straight-forwardness. 
 
Wassalam Alaikum Wa Rahmat Allah Wa Barakatuh   
 
27 April 2015 
 
Signed on behalf of the Sharia’a Supervisory Board of European Islamic Investment Bank plc. 
 
 
 
         
                      
_______________________     _______________________ 
Sh. Nizam Yacouby      Talha Azami 
(Chairman)       (Member)     
    
 
 
 
______________________                                                                    
Dr. Aznan Hasan           
(Member)          
 
 
   European Islamic Investment Bank plc  
 
26 
 
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF EUROPEAN ISLAMIC 
INVESTMENT BANK PLC   
We have audited the financial statements of European Islamic Investment Bank plc for the year ended 31 December 2014 
which comprise the consolidated and company statement of financial position, the consolidated statement of income, the 
consolidated and company statement of cash flows, the consolidated and company statement of changes in equity and the 
related notes.  The financial reporting framework that has been applied in their preparation is applicable law and International 
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial 
statements, as applied in accordance with the provisions of the Companies Act 2006.  
 
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 
2006.  Our audit work has been undertaken so that we might state to the company’s members those matters we are required to 
state to them in an auditor’s report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume 
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for 
the opinions we have formed. 
 
Respective responsibilities of directors and auditors 
 
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the 
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an 
opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  
Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors.  
 
Scope of the audit of the financial statements 
 
A description of the scope of an audit of financial statements is provided on the FRC’s website at 
www.frc.org.uk/auditscopeukprivate. 
 
Opinion on financial statements 
 
In our opinion:  
 
 the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 31 
December 2014 and of the group’s profit for the year then ended; 
 the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; 
 the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the 
European Union and as applied in accordance with the provisions of the Companies Act 2006; and 
 the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 
 
Opinion on other matters prescribed by the Companies Act 2006 
 
In our opinion the information given in the strategic report and directors’ report for the financial year for which the financial 
statements are prepared is consistent with the financial statements. 
Matters on which we are required to report by exception 
 
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in 
our opinion: 
 adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been 
received from branches not visited by us; or 
 the parent company financial statements are not in agreement with the accounting records and returns; or 
 certain disclosures of directors’ remuneration specified by law are not made; or 
 we have not received all the information and explanations we require for our audit. 
 
______________________________ 
Neil Griggs (Senior Statutory Auditor) 
For and on behalf of BDO LLP, Statutory Auditor 
United Kingdom 
 
27 April 2015 
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127) 
  European Islamic Investment Bank plc 
 
27 
 
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2014 
 
 
  
2014 
 
2013 
 
Notes £ 
 
£ 
Income 
    
Income from financing and investing activities 4 1,820,063 
 
2,491,520 
Returns to financial institutions and customers 5 (180,966) 
 
(206,830) 
Net margin 
 
1,639,097 
 
2,284,690 
  
0 
 
(1) 
Net fees and commission income 6 5,921,086 
 
3,154,350 
Net gain on funds, Sukuk and quoted equity 7 1,266,191 
 
1,190,493 
Gain on private equity investments designated at fair value   
 
159,241 
 
2,480,687 
Gain on investment property designated at fair value 
 
357,656 
 
324,953 
Other operating income 8 1,423,207 
 
746,079 
Total operating income 
 
10,766,478 
 
10,181,252 
  
0 
 
1 
Expenses 
 
  
 
  
Provision for impairment of financing arrangements   - 
 
202,831 
Staff costs 9 (5,378,045) 
 
(5,780,633) 
Depreciation and amortization 23, 24 (94,244) 
 
(187,100) 
Other operating expenses 10 (3,790,206) 
 
(2,921,197) 
Third party interest in consolidated funds   - 
 
(10,379) 
Total expenses 
 
(9,262,495) 
 
(8,696,478) 
  
0 
 
(1) 
Operating profit before tax 11 1,503,983 
 
1,484,774 
Tax charge 12 (786,881) 
 
(262,624) 
Profit from continued operations 
 
717,102 
 
1,222,150 
     
Loss after tax from discontinued operations 20 (116,976) 
 
(1,249,584) 
  
  
 
  
Profit/(loss) for the year 
 
600,126 
 
(27,434) 
  
0 
 
0 
Profit/(loss) attributable to: 
    
   Equity holders of the Company 
 
592,037 
 
137,575 
   Non-controlling interest 38 8,089 
 
(165,009) 
  
600,126 
 
(27,434) 
     
Earnings per share 
    
-   Basic 13 3.16p 
 
0.01p 
-   Diluted 13 3.16p 0.01p  European Islamic Investment Bank plc 
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 
2014 
28 
 
 
 
  
 
  
  
2014 
 
2013 
 
Notes £ 
 
£ 
Profit/(loss) for the year 
 
600,126 
 
(27,434) 
Items that may be reclassified subsequently to profit or 
loss:  
 
 
 
Net change in fair value of available-for-sale securities 
 
179,031 
 
(383,595) 
     
Exchange loss on net investment in foreign operations 
 
(526,012) 
 
(413,904) 
 
 
  
 
  
Total comprehensive income/(loss) for the period 
 
253,145 
 
(824,933) 
 
 
 
 
 
Total comprehensive income/(loss) attributable to: 
 
 
 
 
    Equity holders of the Company 
 
245,056 
 
(561,830) 
    Non-controlling interest  
 
8,089 
 
(263,103) 
 
 
253,145 
 
(824,933)  European Islamic Investment Bank plc 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2014 
29 
 
  
 
 
 
 
 
 
 
 
 
 
2014 
 
2013 
 
Notes £ 
 
£ 
Assets 
    
Cash and balances with banks 
 
6,561,726 
 
9,488,406 
Other assets 25 12,216,422 
 
4,060,019 
Available-for-sale securities - sukuk 16 22,471,325 
 
26,457,774 
Assets held for sale 20 91,491 
 
910,109 
Leasing fund held for sale 21 - 
 
4,368,976 
Financing arrangements 17 7,807,396 
 
11,450,067 
Financial assets designated at fair value 15 25,847,173 
 
27,266,475 
Fair value of foreign exchange agreements 19 24,394 
 
1,377,797 
Due from financial institutions 14 34,056,436 
 
40,244,300 
Private equity assets designated at fair value 18 16,693,699 
 
15,864,665 
Property, plant and equipment 23 174,243 
 
193,589 
Investment properties 22 1,673,630 
 
1,742,156 
Intangible assets 24 2,528 
 
13,409 
Goodwill 37.3 10,784,754 
 
10,165,750 
Total assets 
 
138,405,217 
 
153,603,492 
Liabilities 
    
Due to financial institutions 26 6,630,419 
 
13,000,806 
Fair value of foreign exchange agreements 19 954,329 
 
2,819 
Liabilities held for sale 20 123,545 
 
848,866 
Other liabilities 27 5,601,917 
 
6,274,656 
Third party interest in consolidated funds 
 
- 
 
6,499,725 
Total liabilities 
 
13,310,210 
 
26,626,872 
Shareholders' equity 
    
Share capital 28 19,720,892 
 
19,720,892 
Share premium account 28 61,815,459 
 
101,815,459 
Capital redemption reserve 28 599,040 
 
599,040 
Treasury shares 29 (2,117,015) 
 
(2,117,015) 
Special reserve 30 60,000,000 
 
20,000,000 
Equity reserve  (911,624)  - 
Fair value reserve on available-for-sale securities 
 
398,142 
 
219,111 
Foreign exchange reserve 
 
(841,822) 
 
(315,810) 
Accumulated losses 
 
(16,395,312) 
 
(16,987,349) 
Total equity attributable to the Company's equity holders 122,267,760 
 
122,934,328 
Non-controlling interest   38 2,827,247 
 
4,042,292 
Total equity 
 
125,095,007 
 
126,976,620 
Total equity and liabilities 
 
138,405,217 
 
153,603,492 
 
 
                                            
 
______________________________                            _________________________________ 
Abdallah Y. Al-Mouallimi, Chairman Zulfi Caar Hydari, Chief Executive Officer
  
27
 
April 2015 
  European Islamic Investment Bank plc 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014 
30 
 
 
 
 
 
 
Share 
capital  
 
 
Share 
premium 
account  
Capital 
redemption 
reserve  
Treasury 
shares  
Special 
reserve 
 
Equity 
reserve  
Fair value 
reserve 
on AFS 
securities  
Foreign 
exchang
e  
reserve  
Accumulate
d losses  
Non-
controlling 
interest   
Total equity 
– Group  
 £  £  £  £  £  £  £  £  £  £  £ 
                      
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 
Contributions by and distributions to owners                      
New shares issued 1,929,898  5,246,196  -  -  -  -  -  -  -  -  7,176,094 
Acquisition of NCI -  -  -  -  -  -  -  -  -  (2,561,405)  (2,561,405) 
Adjustment on premium paid over acquisition of 
non-controlling interest  -  -  -  -  - 
 
-  -  -  (3,451,723)  -  (3,451,723) 
Capital distribution by Rasmala subsidiaries -  -  -  -  -  -  -  -  -  (1,086,807)  (1,086,807) 
Reallocation of NCI (note 38) -  -  -  -  -  -  -  -  -  (1,216,987)  (1,216,987) 
Other  -  -  -  -  -  -  -  10,814  -  -  10,814 
 19,720,892  101,815,459   599,040  (2,117,015)  20,000,000  -  602,706  -  (17,124,924)  4,305,395  127,801,553 
                      
Comprehensive income for the year                      
Net change in fair value of available-for-sale 
securities          
 
  (383,595)  -  -  -  (383,595) 
Foreign exchange loss on conversion of foreign 
operations          
 
  -  (315,810)  -  (98,094)  (413,904) 
Profit/(loss) for the year             -  -  137,575  (165,009)  (27,434) 
Total comprehensive income             (383,595)  (315,810)  137,575  (263,103)  (824,933) 
                      
Balance at 31 December 2013 19,720,892  101,815,459  599,040  (2,117,015)  20,000,000   -  219,111  (315,810)  (16,987,349)  4,042,292  126,976,620 
                      
Balance at 1 January 2014 19,720,892  101,815,459   599,040   (2,117,015)  20,000,000   -   219,111   (315,810)  (16,987,349)  4,042,292   126,976,620  
Contributions by and distributions to owners                      
Transfer (note 30) -  (40,000,000)  -  -   40,000,000   -   -   -   -  -   -  
Disposal of subsidiary -  -   -  -   -   -   -   -   -  (314,345)  (314,345) 
Acquisition of NCI -  -  -  -  -  (911,624)  -  -  -  (696,109)  (1,607,733) 
Forex reserves (note 39.4) -  -   -  -   -   -   -   -   -  (212,680)  (212,680)  
 19,720,892  61,815,459   599,040   (2,117,015)  60,000,000   (911,624)   219,111   (315,810)  (16,987,349)  2,819,158  124,841,861 
Comprehensive income for the year                      
Net change in fair value of available-for-sale 
securities          
 
  179,031  -  -  -  179,031 
Foreign exchange loss on conversion of foreign 
operations          
 
  -  (526,012)  -  -  (526,012) 
Profit for the year             -  -  592,037  8,089  600,126 
Total comprehensive income             179,031  (526,012)  592,037  8,089  253,145 
                       
Balance at 31 December 2014 19,720,892   61,815,459  599,040  (2,117,015)  60,000,000  (911,624)  398,142  (841,822)  (16,395,312)  2,827,247  125,095,007  European Islamic Investment Bank plc 
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2014 
31 
 
 
 2014  2013 
 £  £ 
Cash flows from operating activities    
Operating profit for the period 1,503,983   1,484,774  
Operating loss on discontinued operations (116,976)  (1,249,584) 
Adjusted for:    
Net provision for impairment of financing arrangements -   (202,830) 
Gain on investment in funds and sukuk designated at fair value 184,920  (840,956) 
Gain on private equity investments designated at fair value (159,241)  (2,480,687) 
Reversal of provision on related party  (962,958)  - 
Gain on sale of investments (253,774)  - 
Depreciation and amortization 94,244   187,100  
Loss on disposal of plant & equipment -   28,212  
Fair value gain on Investment property (357,656)  (177,000) 
Net /decrease/(increase) in operating assets:    
Due from financial institutions 6,187,864   22,505,646  
Financial assets designated at fair value (4,088,576)   (1,792,047) 
Financing arrangements 3,642,672   (11,450,067) 
Available-for-sale securities-sukuk 3,986,449   7,531,340  
Private Equity financial assets designated at fair value  (669,793)  (68,081) 
Investment property 426,182   173,302  
     Fair value of foreign exchange agreements 1,353,403  (580,128) 
Assets held for sale 818,617  4,911,345 
Lease assets held for sale 4,368,976  - 
Other assets (9,161,369)  (737,546) 
Net (decrease)/increase in operating liabilities:     
Due to financial institutions (6,370,387)  (13,730,702) 
Due to customers -   (95,637) 
Fair value of foreign exchange agreements 951,510  (36,490) 
Liabilities held for sale (725,321)  (2,295,325) 
Other liabilities  (1,459,620)  (1,856,704) 
Third party interest in consolidated funds (6,499,725)  -  
Taxation:    
Corporation tax paid -   -  
Net cash outflow from operating activities (7,306,576)   (772,065) 
Cash flow from investing activities    
Sale/(purchase) of investment in funds 5,576,730   (4,368,976) 
Payment on acquisition of a subsidiary net of cash acquired (1,773,769)   (1,600,000) 
Disposal of a subsidiary net of cash disposed of 630,303   - 
Purchase of plant and equipment  (53,368)  (63,612) 
Net cash inflow/(outflow) from investing activities 4,379,896  (6,032,588) 
Cash flows from financing activities    
Net Subscriptions to consolidated funds -  2,668,365  
Net cash inflow/ from financing activities -  2,668,365  
    
Cash and cash equivalents at the beginning of period 9,488,406   13,624,694  
Cash and cash equivalents at the end of the period 6,561,726   9,488,406  
 
Profit receipt on investments during 2014 included above £1,740k (2013: £2,358k) and profit paid on borrowings 
£24k (2013: £47k)   
 
The notes on pages 35 to 87 forms an integral part of the financial statements.  European Islamic Investment Bank plc  
 
32 
 
 
 
 
COMPANY STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2014 
  2014  2013 
 Notes £  £ 
Assets     
Cash and balances with banks  5,053,233   3,330,188  
Other assets 25 7,772,182   567,167  
Available-for-sale securities - sukuk  16 22,471,325   26,457,774  
Leasing fund held for sale 21 -   4,543,467  
Financing arrangements 17 7,807,396   11,450,067  
Financial assets designated at fair value 15 21,720,625   18,776,878  
Fair value of foreign exchange agreements 19 24,394   1,377,797  
Due from financial institutions 14 34,225,916   38,001,173  
Property, plant and equipment 23 15,297   28,390  
Investments in subsidiaries 37 30,626,590  66,378,641  
Intangible assets 24 2,528   13,409  
Total assets   129,719,486  170,924,952 
     
Liabilities     
Due to financial institutions 26 -   4,279,725 
Due to group entities 39.3 -   38,231,018 
Fair value of foreign exchange agreements 19 954,329   2,819  
Other liabilities 27 1,913,931   2,025,339  
Total liabilities  2,868,260  44,538,901 
     
Shareholders' equity     
Share capital 28 19,720,892   19,720,892 
Share premium account 28 61,815,459   101,815,459  
Capital redemption reserve 28 599,040   599,040  
Treasury shares 29 (2,117,015)  (2,117,015) 
Special reserve 30 60,000,000   20,000,000 
Fair value reserve on available-for-sale securities  398,142   219,111 
Accumulated losses  (13,565,292)  (13,851,436) 
Total equity attributable to the Company's equity holders  126,851,226  126,386,051 
     
Total equity and liabilities  129,719,486  170,924,952 
 
 
      
_____________________________                                                        _____________________________ 
Abdallah Y. Al-Mouallimi, Chairman      Zulfi Caar Hydari, Chief Executive Officer  
27
 
April 2015 
 
The notes on pages 35 to 87 form an integral part of the financial statements. European Islamic Investment Bank plc 
33 
 
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014 
 
 
 
 
Share 
capital  
Share 
premium 
account  
Capital 
redemption 
reserve  
Treasury 
shares  
Special 
Reserve 
 Fair value 
reserve 
on AFS 
securities  
Accumulated 
losses  
Total 
Equity – 
Company 
 
£  £  £  £  £ 
 
£  £  £ 
                
Balance at 1 January 2013 17,790,994  96,569,263  599,040 
 
(2,117,015)  20,000,000 
 
602,706  (13,673,201)  119,771,787 
Contributions by and distributions to owners      
 
   
 
     
New shares issued 1,929,898  5,246,196  - 
 
-  - 
 
-  -  7,176,094 
 19,720,892  101,815,459  599,040 
 
(2,117,015)  20,000,000 
 
602,706  (13,673,201)  126,947,881 
      
 
   
 
     
Comprehensive income for the year      
 
   
 
     
Net change in fair value of available-for-sale securities      
 
   
 
(383,595)  -  (383,595) 
Loss for the year      
 
   
 
-  (178,235)  (178,235) 
Total comprehensive income      
 
   
 
(383,595)  (178,235)  (561,830) 
      
 
   
 
     
Balance at 31 December 2013 19,720,892  101,815,459  599,040 
 
(2,117,015)  20,000,000 
 
219,111  (13,851,436)  126,386,051 
      
 
   
 
     
Balance at 1 January 2014 19,720,892  101,815,459  599,040 
 
(2,117,015)  20,000,000 
 
219,111  (13,851,436)  126,386,051 
Contributions by and distributions to owners      
 
   
 
     
Share premium transfer -  (40,000,000)  - 
 
-  40,000,000 
 
-  -  - 
 19,720,892  61,815,459  599,040 
 
(2,117,015)  60,000,000 
 
219,111  (13,851,436)  126,386,051 
      
 
   
 
     
Comprehensive income for the year      
 
   
 
     
Net change in fair value of available-for-sale securities      
 
   
 
179,031  -  179,031 
Profit for the year      
 
   
 
-  286,144  286,144 
Total comprehensive income      
 
   
 
179,031  286,144  
465,177 
 
      
 
   
 
     
Balance at 31 December 2014 19,720,892  61,815,459  599,040 
 
(2,117,015)  60,000,000 
 
398,142  (13,565,292)  126,851,226  European Islamic Investment Bank plc 
34 
 
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2014 
 
 
 
 
2014  2013 
 
 
£  £ 
 
 
   
Cash flows from operating activities 
 
   
Operating profit/(loss) for the period 
 
286,144 
 
(178,235) 
Adjusted for: 
 
  
 
  
    Fair value gain on subsidiary investments 
 
(872,567) 
 
(875,875) 
    Net provision for impairment of financing arrangements  -  (202,830) 
    Gain on investment in funds and sukuk designated at fair value  (1,027,990)  (661,846) 
    Gain on sale of investments  
 
(253,774)  - 
    Depreciation and amortisation 
 
25,376  48,526 
Net (increase)/decrease in operating assets: 
 
   
Due from financial institutions 
 
3,775,257  24,748,772 
Financing arrangements 
 
3,642,672  (11,450,067) 
Available-for-sale securities - sukuk 
 
3,986,449  7,147,746 
Financial assets designated at fair value 
 
(2,695,246)  (5,257,795) 
Fair value of foreign exchange agreements  
 
1,353,402  (580,128) 
Investment in subsidiaries  
 
(4,244,396)  (3,875,014) 
Other assets 
 
(7,205,016)  4,836,229 
Net increase/(decrease) in operating liabilities: 
 
   
Due to financial institutions 
 
(4,279,725)  (13,219,434) 
Due to group entities 
 
(38,231,018)  (39,726) 
Due to customers 
 
-  (95,637) 
Fair value of foreign exchange agreements 
 
951,510  (36,490) 
Other liabilities 
 
67,625  589,753 
Net cash (outflow)/inflow from operating activities  
 
(44,721,297)  894,439  
 
 
   
Cash flows from investing activities 
 
   
Payment on acquisition of a subsidiary  
 
-  (1,600,000) 
Sale of investment in funds 
 
5,576,730  - 
Disposal/redemption in subsidiary 
 
40,869,014  - 
Purchase of property, plant and equipment  
 
(1,402)  (1,889) 
Net cash inflow/(outflow) from investing activities  
 
46,444,342  (1,601,889)  
 
 
   
Net (decrease)/increase in cash and cash equivalents 
 
1,723,045  (707,450) 
 
 
   
 
 
   
Cash and cash equivalents at the beginning of the year 
 
3,330,188  4,037,638 
Cash and cash equivalents at the end of the year 
 
5,053,233  3,330,188 
 
 
Profit receipt on investments during 2014 included above £1,721k (2013: £2,358k) 
The notes on pages 35 to 87 forms an integral part of the financial statements. 
   European Islamic Investment Bank plc 
 
35 
 
1 Principal activities, definitions and authorisation of the financial statements 
 
European Islamic Investment Bank plc (‘EIIB’ or ‘Company’) is a London listed asset management and financing 
group focused on the growth markets of the Gulf Cooperation Council (GCC) countries. The Company’s primary 
focus is to provide investment management and financing solutions to pension funds, family groups, corporations 
and financial and government institutions. 
 
The Company is incorporated in the United Kingdom 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. Following agreement with 
the PRA our permissions were amended on 19 December 2014 and the Company is now solely regulated by the 
Financial Conduct Authority in the United Kingdom.  
 
The consolidated financial statements of the Company as at and for the year ended 31 December 2014 comprise 
the Company and its subsidiaries (together referred to as the ‘Group’ and individually as ’Group entities’). 
 
The following terms are used in the financial statements: 
 
Murabaha (notes 14 and 26) is a sale of goods at a cost plus an agreed profit mark up under which a party (the 
seller) purchases goods at cost price from a supplier and sells the goods to another (the buyer) at a cost plus an 
agreed mark up. Commodity murabaha, whereby commodities are bought and sold are a common form of Islamic 
financing transaction.  
 
Sukuk (note 16) are certificates of equal value representing undivided shares in ownership of tangible assets, 
usufruct and services or (in the ownership of) the assets of particular projects or special investment activities. 
Sukuk are usually tradable and yield periodic profit distributions. 
 
Wakala (notes 14 and 26) means agency and can be used in an arrangement whereby one party (the principal) 
places funds with another (the agent) for investment by the agent on the principal’s behalf in return for an agreed 
fee or commission. 
 
The financial statements of European Islamic Investment Bank plc for the year ended 31 December 2014 were 
authorised for issue by the Board of Directors on 27 April 2015. 
 
2 Accounting policies 
 
2.1 Basis of preparation  
 
The financial statements have been prepared under the historical cost accounting convention except for financial 
assets stated at their fair value comprising available-for-sale securities, financial assets designated at fair value 
and fair value of foreign exchange agreements and investment properties. 
 
As permitted by section s.408 of the Companies Act 2006 the income statement of the Company is not presented 
as part of the financial statements. The parent entity’s profit after tax for the year ended 31 December 2014 was 
£286,144 (2013: loss £178,235). 
 
 
2.2 Compliance with International Financial Reporting Standards 
 
The consolidated financial statements and the financial statements of the Company have been prepared in 
accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. 
 
2.3  New accounting policy, disclosures and changes to the accounting policies 
 
The accounting policies applied by the Group in these consolidated financial statements are the same as those 
applied by the Group in its financial statements as at and for the year ended 31 December 2013. 
 
 
 
 
  European Islamic Investment Bank plc 
 
36 
 
2.4 Significant accounting judgements and estimates 
 
2.4.1 Impairment of Goodwill 
 
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the 
smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash 
inflows of other assets or groups of assets (the "cash-generating unit" or "CGU"). Subject to an operating segment 
ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are 
aggregated so the level at which impairment is tested reflects the lowest level at which goodwill is monitored for 
internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are 
expected to benefit from the synergies of the combination. 
 
The Group's corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset 
may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. 
 
The carrying value of goodwill is determined in accordance with IFRS 3 Business Combinations and tested for 
impairment in accordance with IAS 36 Impairment of Assets. Goodwill arises on the acquisition of subsidiaries and 
represents the excess of the fair value of the purchase consideration over the fair value of the Group’s share of the 
fair value of the assets acquired and the liabilities assumed including contingent liabilities as at the date of the 
acquisition. 
 
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less 
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using 
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to 
the asset. 
 
Goodwill is reviewed annually for impairment, or more frequently when there are indications that impairment may 
have occurred. The test involves comparing the carrying value of goodwill with the present value of the pre-tax 
cash flows, discounted at a rate of interest that reflects the inherent risks, of the cash generating unit to which the 
goodwill relates, or the cash generating unit’s (investment in subsidiary) fair value if this is higher. The fair value of 
the investment in subsidiary is determined using the net asset value (NAV) of the subsidiary as at the year end.  
 
An impairment loss is recognised if the carrying amount of an asset or a CGU exceeds its recoverable amount. 
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated 
first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amount of 
the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not 
reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting 
date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has 
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to 
the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, 
net of depreciation or amortisation, if no impairment loss had been recognised. 
 
The Group has used the following main assumptions to determine the discount rate used to perform impairment 
testing of the Goodwill: 
 
          2014   2013 
Risk free rate of interest       1.62%  2.05%   
Equity risk premium       7.43%  8.60% 
Projected growth rate       2.50%  2.50% 
Term used to forecast cash flows (in years)    5 yrs  5 yrs 
Discount rate calculated using capital asset pricing model (CAPM) 11.10%  10.90% 
 
Credit and liquidity discount factors applied                                          
Private investment funds 10 – 50%          10 – 50% 
Minority interests 20 - 46%           20 - 34%                            
  
 
 
 
 
  European Islamic Investment Bank plc 
 
37 
 
2.4.2   Fair value measurement  
 
It is EIIB’s policy to revalue its investments and foreign exchange contracts on a periodic basis using independent 
and market observable pricing sources where possible.  Equities are valued at market quotations from exchanges 
where listed; Funds are valued at market NAV provided and published by the Fund Administrators; Sukuk 
valuations are based on closing mid-prices from market observable pricing sources or from recent trade information 
if available;  FX spot and Forward contracts are valued using spot and forward mid curve prices obtained from 
Bloomberg.  Real estate investments are measured using latest independent valuation provided by a real estate 
expert. The valuation takes into account geo-political factors, condition of the land, expected income from the use 
of the property and is determined on a forced-sale-value (FSV) basis. 
 
Closing spot rate used        2014    2013 
GBP/USD        1.5577  1.6526 
GBP/EUR       1.2878  1.2003 
GBP/AED       5.7219  6.0693 
GBP/BHD       0.5872  0.6230 
GBP/QAR       5.6737  6.0166 
 
Forward mid-rate used      1.5567  1.6489 
GBP/USD 
 
 
If a market for a financial instrument is not active (private equities and certain sukuks), the Group establishes fair 
value using a valuation technique. Valuation techniques include using recent arm's length transactions between 
knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are 
substantially the same, discounted cash flow analysis and obtain quotes from market makers. The chosen 
valuation technique makes maximum use of market inputs, relies as little as possible on estimates specific to the 
Group, incorporates all factors that market participants would consider in setting a price, and is consistent with 
accepted economic methodologies for pricing financial instruments. Inputs to valuation techniques reasonably 
represent market expectations and measures of the risk-return factors inherent in the financial instrument. The 
Group calibrates valuation techniques and tests them for validity using prices from observable current market 
transactions in the same instrument or based on other available observable market data. Judgements are made to 
select discount factors to calculate the effect of counterparty credit risk (credit value adjustment) and liquidity 
discount to be applied to private equity investments. Liquidity discounts are determined using a range of 
comparable information for companies from market observable sources to adjust the fair values for the impact of 
minority interest investments of the Group 
 
As at 31 December 2014 and 2013 the carrying amounts of the Group’s and Company’s financial instruments that 
are measured at amortised cost and mature within 12 months from the reporting date (as set out in Note 32) are 
reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time 
between the origination of the instruments and their expected realisation.  
 
The fair value of non-current financial instruments for disclosure purposes is estimated by discounting the future 
contractual cash flows at the current market profit rate that is available to the Group and Company for similar 
financial instruments.  These comprise financing arrangements, amounts due to financial institutions, other assets 
and other liabilities.  The fair value of these non-current floating, fixed and non-rate sensitive financial instruments 
at the end of the Group's and Company’s reporting periods are not significantly different from the carrying 
amounts.  The current market profit rates utilised for discounting purposes, which were materially equivalent to the 
respective instruments' contractual profit rates, are deemed observable and accordingly these fair value estimates 
have been categorised as Level 2 within the fair value measurement hierarchy required by IFRS 7.  
2.4.3 Provisions for impairment of financial assets 
At each reporting date the Group assesses whether there is objective evidence that financial assets are impaired. 
A financial asset or a group of financial assets is/are impaired when objective evidence demonstrates that a loss 
event has occurred after the initial recognition of the asset/s, and that the loss event has an impact on the future 
cash flows of the asset/s that can be estimated reliably.  
 
Objective evidence that financial assets are impaired can include significant financial difficulty of the borrower or 
issuer, default or delinquency by a borrower, restructuring of a loan or advance by the Group on terms that the 
Group would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance 
of an active market for a security, or other observable data relating to a group of assets such as adverse changes  European Islamic Investment Bank plc 
 
38 
 
in the payment status of borrowers or issuers in the group, or economic conditions that correlate with defaults in 
the group. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value 
below its cost is objective evidence of impairment.  
 
The Group considers evidence of impairment for assets carried at amortised cost at specific asset level. All 
individually significant assets carried at amortised cost are assessed for specific impairment. 
 
Impairment losses on assets carried at amortised cost are measured as the difference between the carrying 
amount of the financial asset and the present value of estimated future cash flows discounted at the asset's 
original effective profit rate. Impairment losses are recognised in profit or loss and reflected in an allowance 
account. Profit on impaired assets continues to be recognised through the unwinding of the discount. When a 
subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed 
through profit or loss. 
 
Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss 
that has been recognised in other comprehensive income to profit or loss as a reclassification adjustment. The 
cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference between the 
acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment 
loss previously recognised in profit or loss. Changes in impairment provisions attributable to time value are 
reflected as a component of profit income.  
 
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase 
can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the 
impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent 
recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive 
income. The Group writes off certain investment securities when they are determined to be uncollectible. 
2.4.4 Income tax 
The Group is subject to direct and indirect taxation in a number of jurisdictions in which it operates. Some 
transactions and calculations for which a tax charge or credit is computed have an inherent uncertainty given the 
judgements involved. The Group objectively estimates these amounts and any difference in the final determination 
will impact the period in which such determination is made.   
 
 
2.5 Other significant accounting policies 
2.5.1 Foreign currency 
 
The financial statements are presented in Sterling, which is the Company’s functional and presentation currency. 
Transactions in foreign currencies are initially recorded at the rate of exchange ruling at the date of the transaction. 
Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the 
rate of exchange ruling at the reporting date. Non-monetary assets and liabilities are translated into Sterling at the 
effective historical rate used on the date of initial recognition. All such differences are taken to the income 
statement. Foreign exchange translation differences relating to the opening non-controlling interest and movements 
thereon are taken to the Consolidated Statement of Changes in Equity.  Translation gains or losses arising from net 
investments in foreign subsidiaries are taken to Other Comprehensive Income. 
2.5.2 Revenue recognition 
 
(a) Net Margin  
 Sukuk, murabaha and wakala income and expense 
Sukuk, murabaha and wakala are Islamic financing transactions. Sukuk are certificates of equal value 
representing undivided shares in ownership of tangible assets, usufruct and services or (in the ownership of) 
the assets of particular projects or special investment activities. Murabaha is a contract for sale or purchase 
of goods where there is an agreed mark-up and deferred settlement. Wakala derives income and expense in 
the form of agency fee or commission. Income and expense for these arrangements are recognised on an 
effective yield basis over the periods of the contracts.  
  European Islamic Investment Bank plc 
 
39 
 
(b) Net fees and commission income 
(i) Investment management fees, performance fees, brokerage fees, placement fees and other advisory fees 
are recognised on accrual basis, when the related services are performed and when it is probable that the 
economic benefit will flow to the Company. 
(ii) Fees and commissions which are not recognised on an effective yield basis over the life of the financial 
instrument to which they relate, such as fees for negotiating transactions for third parties and underwriting 
fees and commission, are recognised in revenue when it is probable that the economic benefit will flow to the 
Company. This will normally be from the point at which the significant act to which the fees and commissions 
relate has been completed. 
 
(c) Net gain on funds, Sukuk and quoted equity 
 
Net gain on funds, Sukuk and quoted equity comprises realised profits and losses upon sale thereof and dividend 
income.  The latter is recognised when the right to receive income is established. 
2.5.3 Cash and cash equivalents 
 
The captions Cash and cash equivalents and Cash and balances with banks represent cash and current account 
balances with banks and clearing exchanges. 
 
This is per the Company Statement of Cashflows. 
 
2.5.4 Financial instruments  
 
(a) Recognition of financial instruments 
Financial instruments are recognised in the statement of financial position on the trade date, that is, the date on 
which the Company commits to buy or sell the financial instrument. All financial instruments are recognised initially 
at fair value. In the case of financial instruments not recognised at fair value through the income statement, that 
value will include direct costs of acquisition or issue. For financial instruments carried at fair value through the 
income statement, transaction costs are expensed immediately. 
 
(b) Due from financial institutions, Financing arrangements, Due to financial institutions, Due to group 
entities and Due to customers 
Financial assets included within Due from financial institutions and Financing arrangements, as well as financial 
liabilities included within Due to financial institutions, Due to group entities and Due to customers comprise non-
derivative financial assets with fixed or determinable repayments that are not quoted in an active market. They are 
not entered into with the intention of immediate or short-term resale and are not designed as ‘available-for-sale 
securities’ or ‘financial assets designated at fair value’. Financial assets included under these captions are initially 
recognised at fair value plus any directly related transaction costs. They are subsequently measured at amortised 
cost less any impairment losses. Amortised cost is calculated by taking into account any discount or premium on 
acquisition and fees and costs that are an integral part of the effective rate of return. The amortisation is included in 
Income from financing and investing activities and Returns to financial institutions and customers in the income 
statement. 
 
At each reporting date the Company reviews the carrying values of its financial assets; a financial asset is 
considered to be impaired if there is objective evidence of events since initial recognition of the asset that will 
adversely affect the amount or timing of future cash flows from the asset. The amount of the impairment loss will be 
the difference between the carrying value of the financial asset and the present value of the estimated future cash 
flows. The amount of the impairment loss will be recognised in the income statement, and the carrying value of the 
financial asset will be written down and the impairment loss allowance will be recognised in an allowance account 
for that purpose. Where subsequent events indicate that the impairment loss allowance is not required, or not 
required in full, the loss allowance made will be reversed. 
(c)  
Available-for-sale securities 
Available-for-sale (‘AFS’) securities are investments that are designated as available-for-sale or are not classified 
as another category of financial assets. These include sukuk and quoted equity.  
 
AFS securities are recognised at cost at the point of acquisition or at fair value which is considered cost for assets 
transferred from other IAS 39 classifications. Cost on acquisition is considered as the fair value of the investment 
including any acquisition charges. AFS securities are then carried in the statement of financial position at fair value.  European Islamic Investment Bank plc 
 
40 
 
profit accruals on AFS securities are recognised in the income statement. Changes in the fair value are recognised 
directly in the OCI in the Fair value reserve in the accounting period in which they arise. Where the value of a 
security is considered to be impaired, the losses are recognised in the income statement; otherwise, the gains and 
losses previously recognised in equity are recognised through the income statement when the investment matures 
or is sold; these are included under Trading income. Fair value gains and losses are recognised in equity net of any 
tax effect. 
 
(d) Financial assets designated at fair value 
Quoted equity investments, investment in funds and private equity investments that are managed and evaluated on 
a fair value basis in accordance with an agreed investment strategy and reported to key personnel on that basis 
are classified under this category. These assets are recognised initially at fair value and subsequent gains and 
losses arising from changes in the fair value are recognised directly in the income statement.  
 
(e) Foreign exchange commitments 
The valuation of forward foreign exchange commitments held at fair value through the income statement is 
recognised in the statement of financial position under Fair value of foreign exchange agreements on either the 
asset or liability side of the statement of financial position dependent on whether the valuation is positive or 
negative respectively. Revaluation gains and losses are included in the income statement under other operating 
income. 
2.5.5 Investments in subsidiaries in Parent’s books 
 
The Company’s investments in subsidiaries are designated for recognition and measurement in the financial 
statements as ‘fair value through profit or loss’. Accordingly these assets are fair valued using suitable valuation 
techniques and the gain or loss is included in the income statement of Company. 
 
2.5.6 Investment property  
 
Investment properties are held either to earn rental income, for capital appreciation or for both. Investment 
properties are measured at fair value with any change therein recognised in the consolidated statement of income. 
 
Fair value measurement 
Investment property is measured initially at its historical cost, including related transaction costs.  After initial 
recognition, investment property is subsequently measured at fair value, representing open market value that is 
determined annually. The determination of fair values of investment properties are based on valuation by an 
independent professional valuer. The fair value of investment reflects the current prices for similar property in the 
same location and condition. When the use of a property changes such that it is reclassified as property and 
equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting. 
2.5.7 Property, plant and equipment 
 
Plant and equipment is stated at cost less accumulated depreciation and impairment losses if any. Depreciation is 
provided on a straight line basis over estimated useful lives as follows: 
 
  Leasehold improvements 5 years 
  Motor vehicles 4 years 
  Fixtures, fittings and office equipment 3 - 5 years 
  Computer hardware 3 years 
  Buildings  40 years 
The asset’s useful lives are reviewed, and adjusted if appropriate, at the reporting date. 
2.5.8 Intangible assets 
 
Intangible assets consist of computer licences and software development costs including capitalised staff costs. 
Intangible assets are stated at cost less accumulated amortisation and impairment losses if any. Amortisation is 
provided on a straight line basis over a current estimated useful life of five years.  European Islamic Investment Bank plc 
 
41 
 
 
2.5.9 Operating leases 
 
Operating lease rentals are charged to the income statement on a straight line basis over the period of the lease.  
2.5.10 Pension cost 
 
The Company operates a defined contribution pension scheme for all staff. The cost of the scheme is equal to the 
contributions payable to the scheme for the accounting period and is recognised within Staff costs in the income 
statement. The Company has no further obligation once the contributions have been paid. 
2.5.11 Taxation  
 
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement 
except to the extent that it relates to items recognised directly in OCI, in which case it is recognised in OCI. 
 
(a) Current tax 
 Current tax is provided on taxable profits at the current rate. 
 
(b) Deferred tax 
 Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in 
the statement of financial position and the amount attributed to such assets and liabilities for tax purposes. 
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are 
recognised to the extent it is probable that future taxable profits will be available against which deductible 
temporary differences can be utilised. The effect of a change in tax rates on deferred tax assets and 
liabilities is recognised in income in the period that includes the enactment date. 
 
 
2.6 Accounting for business combinations 
 
European Islamic Investment Bank applies IFRS 10 Consolidated Financial Statements.    
  
The consolidated financial statements combine the financial statements of European Islamic Investment Bank PLC 
and all its subsidiaries. Subsidiaries are entities over which European Islamic Investment Bank PLC has control. 
The Group has control over another entity when The Group has all of the following:  
  
1) power over the relevant activities of the investee, for example through voting or other rights;   
2) exposure to, or rights to, variable returns from its involvement with the investee; and   
3) the ability to affect those returns through its power over the investee.   
  
The assessment of control is based on the consideration of all facts and circumstances. The Group reassesses 
whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the 
three elements of control.  
  
Intra-group transactions and balances are eliminated on consolidation and consistent accounting policies are used 
throughout The Group for the purposes of the consolidation.   
  
Changes in ownership interests in subsidiaries are accounted for as equity transactions if they occur after control 
has already been obtained and they do not result in loss of control.  
  
Details of the principal subsidiaries are given in Note 37. 
 
 
2.7 Basis of consolidation 
 
Subsidiaries  
 
The consolidated financial statements of the Company comprise the financial statements of the European Islamic 
Investment Bank plc and the entities the Company controls. Control exists where the Company has the power to 
significantly affect the investee’s returns, have exposure or rights over those variable returns, and the ability to  European Islamic Investment Bank plc 
 
42 
 
affect the amounts of those returns.  Controlled entities are consolidated from the date on which control is 
transferred to the Company and they are deconsolidated from the date the control ceases. All intra-group balances, 
transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in 
full upon consolidation.   
 
Assets under management 
 
The Group manages assets held in Funds and other investment vehicles on behalf of investors. The financial 
statements of these entities are not included in these consolidated financial statements unless these qualify as 
subsidiaries. Information about the Group’s assets under management is set out in note 31. 
 
 
Transactions eliminated on consolidation  
Intra-group balances and transactions, and any unrealised gains arising from inter-company transactions, are 
eliminated in preparing these consolidated financial statements. Unrealised losses are eliminated in the same way 
as unrealised gains, but only to the extent that there is no evidence of impairment. 
 
2.8 Determination and presentation of operating segments 
 
The Group has adopted IFRS 8 Operating Segments. This Standard requires the presentation of financial 
information for segments based on information that is internally presented to the decision making function for the 
purposes of resource allocation and performance assessment. An operating segment is a component of the Group 
that engages in business activities from which it may earn revenues and incur expenses.  
 
IFRS 8 Operating segments requires the Group to report its revenues from its external customers for each group of 
similar products and services that it offers  and also report revenues from its external customers in relation to the 
Group’s country of domicile and attributed in total to all foreign countries from which the Group derives revenue.  
The Group is also required by this standard to report on certain non-current non-financial assets that are located in 
the Group’s country of domicile and attributed in total in all foreign countries in which the Group holds such assets.  
The Group is not reporting these disclosures as, in each instance, the necessary information is currently not 
available to it in order for it to do so, and the Board of Directors have assessed that the cost to develop such 
information for the purpose of 2014 financial statements would be excessive as they outweigh its benefits.  This is 
a direct result of the Group finalising an exercise towards the end of the current year to realign its strategy and 
business model.  The Board foresees that it will be possible to report these disclosures in the subsequent year  
given that the realignment has been completed by the start of 2015. 
 
Given that the Group is a multi-national asset manager and investment bank with a diverse customer base, it is not 
reliant on one or a few of these, as it does not derive 10% or more of its revenues from any single external 
customer. 
 
  
2.9 Disclosure pertaining to fair values for financial instruments 
 
The Group has applied Improving Disclosures about Financial Instruments issued in March 2009, that require 
enhanced disclosures about fair value measurements and liquidity risk in respect of financial instruments. 
 
The amendments require that fair value measurement disclosures use a three-level fair value hierarchy that reflects 
the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are 
required when fair value measurements are categorised as Level 3 (significant unobservable inputs) in the fair 
value hierarchy. The amendments require that any significant transfers between Level 1 and Level 2 of the fair 
value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, 
changes in valuation techniques from one period to another, including the reasons therefore, are required to be 
disclosed for each class of financial instruments.  
 
Disclosures in respect of fair values of assets are included in note 40. 
  
2.10 New standards and interpretations effective for the year 
 
New standards and interpretations to existing standards which have been published by IASB and IFRIC which the 
Company has adopted this year are:  
  European Islamic Investment Bank plc 
 
43 
 
IFRIC 21              Levies 
IFRIC 2010-12 Cycle              IFRS2,3,8,13 IAS 16,24,38 
IFRIC 2011-13 Cycle  IFRS 1,3,13 IAS40 
 
These have not had any material impact on the business during the year.            
 
2.11 Standards and interpretations issued but not yet effective 
 
New standards, amendments and interpretations to existing standards which have been published by IASB and 
IFRIC with an effective date after the date of these financial statements and, which the Company has not early 
adopted, are as follows:  
 
Standards Description Effective * 
  
 
IFRS11 Interest in Joint Operations        1 January 2016 
IAS16 & 38 Methods of Depreciation                            1 January 2016 
IAS27 Equity Method in Separate Statements 1 January 2016 
IFRS28 / IAS28 Sale or Contribution of Assets  1 January 2016 
IFRSs 2012-14 Annual Improvements         1 January 2016 
IAS1 Disclosure Initiative                            1 January 2016 
IFRS10,12 IAS28 Investment Entities 1 January 2016 
IFRS15 Revenue from Contracts  1 January 2017 
IFRS9 Financial Instruments  1 January 2018 
          
 
The Group anticipates that the accounting pronouncements (not yet adopted by the EU), which have not been early 
adopted will have no material effect on the financial statements. The Group is currently in the process of evaluating 
the potential effect of these standards.  
 
 *for financial periods starting on or after this date 
 
2.12 Assets and liabilities held for sale  
 
Assets and liabilities held for sale comprises assets and liabilities that are classified as held-for-sale such that they 
will be recovered primarily through sale rather than through continuing use.  
 
Immediately before classification as held-for-sale, the assets, or components of a disposal group, are re-measured 
in accordance with the Group’s other accounting policies. Thereafter, generally the assets are measured at the 
lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated 
first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated 
to financial assets, employee benefits assets or investment property, which continue to be measured in accordance 
with the Group’s other accounting policies. Impairment losses on re-measurement are recognised in profit or loss. 
Gains are not recognised in excess of any cumulative impairment loss.   
 
Once classified as held-for-sale, intangible assets, and property and equipment are no longer amortised or 
depreciated, and any equity-accounted investee is no longer equity accounted.  
 
2.13 Going concern 
 
In approving the financial statements the Directors have reviewed the current and potential future business 
activities and financial position of the Group, including an assessment of the capital adequacy and liquidity 
forecasts.  
 
EIIB had total assets of £138m at 31 December 2014 (£154m at 31 December 2013).  Capital resources of the 
Group as at 31 December 2014 was £102m (£101m at 31 December 2013) and the total risk weighted assets was 
£124m (£117m at 31 December 2013). The capital adequacy ratio as at 31 December 2014 stood at 83% (2013: 
86%).  European Islamic Investment Bank plc 
 
44 
 
 
The statement of financial position of the Company remains highly liquid. As at 31 December 2014 the Company 
had no deposits. As at 31 December 2013, the net cash excess (calculated as a percentage of deposits) is +40% in 
the 8 days and under category, and +60% in the 1 month and under category. 
 
Based upon the above, the Directors are satisfied that the Group has adequate resources to continue in business 
for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the 
financial statements.  
 
3. Segmental Information 
 
The Company focuses on MENA markets and for 2014 centred on the following three core businesses:  
 
(a) Investment Banking – encompassing provision of financing, debt capital markets, structured debt finance, 
and advisory services. 
(b) Asset Management – investment management solutions encompassing equities, fixed income and 
alternatives. 
(c) Principal Investments  – investing in funds and Islamic products, includes a diversified portfolio of private 
equity 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 Company’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.    European Islamic Investment Bank plc 
 
45 
 
2014  Banking 
Asset 
Management 
 Principal 
Investments  
 
Discontinued 
Operations  Total 
 
£ £ £ £ £ 
      
Revenue from external customers    3,095,416  5,680,705 2,178,521 - 10,954,642 
Returns to external customers (52,319) (148,303) (21,901) - (222,523) 
Fair value gain on investments 
- - 34,359 - 34,359 
Total operating income 
3,043,097  5,532,402   2,190,979   -     10,766,478  
 
     
(Loss)/profit after tax from 
continuing activities 
 
(196,229) 
 
(479,188) 
  
1,392,519 
 
 -    
  
   717,102  
Loss from discontinued 
operations 
 -     -     -         (116,976)      (116,976) 
Other comprehensive income 
after tax 
(284,068) (62,913) - - (346,981) 
Total comprehensive income 
(480,297) (542,101)  1,392,519 (116,976) 253,145 
 
     
 
     
Depreciation and amortisation 
(25,376) (65,968) (2,900) - (94,244) 
 
     
 
     
Segment assets 
62,520,532 59,099,494 16,693,699 91,492 138,405,217 
 
     
Segment liabilities 
3,107,784 6,448,913 3,629,968 123,545 13,310,210 
 
     
Capital expenditure 
     
Leasehold improvements - 20,247 - - 20,247 
Plant and equipment 1,402 33,983 - - 35,385  
Intangible assets - - - - - 
 
   European Islamic Investment Bank plc 
 
46 
 
2013 Banking 
Asset 
Management 
 Principal 
Investments 
 
Discontinued 
Operations  Total 
 
£ £ £ £ £ 
      
Revenue from external customers 4,339,650 3,377,531 147,651 - 7,864,832 
Returns to external customers (206,829) - - - (206,829) 
Fair value (loss)/gain on investments (134,740) - 2,657,989 - 2,523,249 
Total operating income 3,998,081 3,377,531 2,805,640 - 10,181,252 
      Profit/(loss) after tax from continuing 
activities 70,605 (774,356) 1,925,901 - 1,222,150 
Loss from discontinued operations       - - - (1,249,584) (1,249,584) 
Other comprehensive income after 
tax (383,594) (413,905) - - (797,499) 
  
        
Total comprehensive income (312,989) (1,188,261) 1,925,901 (1,249,584) (824,933) 
      
      
Depreciation and amortisation (38,820) (110,859) (37,421) - (187,100) 
      
      
Segment assets 124,824,018 10,262,544 17,606,821 910,109 153,603,492 
      
Segment liabilities 14,902,087 4,032,556 6,843,363 848,866 26,626,872 
      
Capital expenditure 
     
Plant and equipment 38,167 25,445 - - 63,612  
Intangible assets - - - - - 
 
 
   European Islamic Investment Bank plc 
 
47 
 
4. Income from financing and investing activities     
  2014  2013 
Group   £  £ 
     
Due from financial institutions - murabaha and wakala  221,620  251,385 
Financing arrangements - murabaha  306,022  258,261 
Available-for-sale investments – sukuk  1,272,851  1,137,504 
Sukuk designated at fair value   -  844,370 
Fixed deposit interest  19,570  - 
  1,820,063  2,491,520 
5. Returns to financial institutions and customers     
  2014  2013 
Group  £  £ 
     
Due to financial institutions – murabaha, wakala and facilities  (180,966)  (206,830) 
  (180,966)  (206,830) 
     
6. Net fees and commission income     
  2014  2013 
Group   £  £ 
     
Investment banking fees   273,352  263,704 
Asset management fees (net)   5,114,324  2,603,211 
- Management fees   3,420,359   3,038,296 
- Performance fees   2,523,151   714,048 
- Placement fees   490,160   - 
- Introducers fees   (1,319,346)   (1,149,133) 
Brokerage fees  78,882  287,435 
Other fee income  454,528  - 
  5,921,086  3,154,350 
     
7. Net gain on funds, Sukuk and quoted equity      
  2014  2013 
Group   £  £ 
     
Realised income on investment in equity, sukuk and funds 1,225,154  225,949 
Unrealised (losses)/income on investment in equity, sukuk and funds (184,920)  840,955 
Dividends  225,957  123,589 
  1,266,191  1,190,493 
     
 
 
 
 
 
 
 
 
 
 
     European Islamic Investment Bank plc 
 
48 
 
8.     Other operating income  
  2014  2013 
Group   £  £ 
     
Gain on foreign currency differences  218,198  274,444 
- Net gains/(losses) on translation of balances denominated in foreign 
currency 
  2,521,077   (342,174) 
- Net (losses)/gains on translation of forward foreign exchange agreements   (2,302,879)   616,618 
      
Reversal or provision  962,958  - 
Rental income  181,036  83,456 
Other   61,015  388,179 
  1,423,207  746,079 
     
9.    Staff costs     
Group   2014  2013 
  £  £ 
Staff costs     
Directors’ salaries, fees and other  883,215  933,565 
Directors’ pension contributions   -  10,500 
Staff salaries   3,231,796  3,999,405 
Bonus  215,061  406,644 
Staff pension contributions   169,051  57,153 
Social security costs  171,068  194,959 
Sharia ’a Supervisory Board (SSB) fees  41,250  47,400 
Recruitment costs  96,350  67,251 
Staff redundancy cost  45,000  - 
Other staff costs   525,254  63,756 
  5,378,045  5,780,633 
       
Total of Directors' emoluments  883,215   944,065 
     
Amounts in respect of highest paid Director     
Emoluments   424,702  409,544 
Benefits-in-kind  25,035  14,323 
  449,737  423,867 
     
Number of employees at year end excluding staff on notice 73  71 
Average number of employees  77  72 
 
 
 
 
 
 
 
 
 
 
 
     European Islamic Investment Bank plc 
 
49 
 
10. Other operating expenses 
  2014  2013 
Group  £  £ 
     
Legal and professional fees  981,618  826,419 
Rent and other occupancy costs  775,354  934,282 
Communications and IT costs  408,931  269,024 
Advertising and market development  67,955  35,150 
Travel   307,516  79,002 
Consultancy  134,968  149,223 
Board and SSB related expenses  50,530  84,449 
Bank charges  810  - 
Other operating charges  1,062,524  543,648 
  3,790,206  2,921,197 
 
Other operating charges are incurred in the ordinary course of the business and do not include any non-recurring items. 
 
 
11. Operating profit before tax      
 
This is stated after charging: 
    
  2014  2013 
  £  £ 
Audit of group financial statements pursuant to legislation    
- Fees payable to the Group’s auditor for the audit of the Group’s annual accounts  100,000  90,000 
- Audit fees related to the prior period  750  - 
     
Other fees payable to Group auditor:     
- Other services pursuant to legislation (FCA CASS audit and PRA Return) 7,688  2,500 
     
Fees payable to auditors of the subsidiary entities that are not associates     
- Group auditor for the audits of the subsidiaries  25,133  79,061 
- Non Group auditor for the audits of the subsidiaries 6,967  - 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     European Islamic Investment Bank plc 
 
50 
 
 
 
 
12. Tax charge 
  2014  2013 
  £  £ 
Tax on operating profit     
     
Foreign tax charge for the period   786,881  262,624 
UK tax charge for the period  -  - 
Tax charge in the income statement  786,881  262,624 
     
Reconciliation of the total tax charge     
Operating income/(loss) before tax  1,503,983  1,484,775 
     
UK corporation tax at standard rate (21.5%)  323,356  345,210 
Expenses not deductible for tax purposes  91,995  85,863 
Fair value movements on non-UK investments and other non-taxable amounts 337,444  (443,917) 
Taxable other income  38,492  (89,186) 
UK deferred assets not recognised  (4,406)  364,654 
Tax charge  786,881  262,624 
     
Current tax liability     
Opening balance  262,624  - 
Current tax charge on ordinary activities   786,881  262,624 
Current tax payable   1,049,505  262,624 
 
 
    
Deferred tax assets of £8.1m (2013: £8.1m) on tax losses carried forward of £40.5m (2013: £40.6m) are not recognised in these 
financial statements given the current level of uncertainty surrounding the Company’s future taxable profits. Deferred tax assets 
on the UK tax losses are computed at 20%. 
 
Factors that may affect future current and total tax charge  
   
     
The main rate of UK corporation tax fell from 23% to 21% with effect from 1 April 2014. Further reductions in the rate from 21% 
to 20%, to take effect from 1 April 2015, was substantively enacted on 2 July 2013 and it is this rate (20%) that has been applied 
in calculating the Group’s unrecognised deferred tax assets as at 31 December 2013. 
     
It has not been possible to fully quantify the effect of these further rate reductions because of the uncertainty over the timing of 
suitable future profits against which the company’s losses may be offset.  It is expected, however, that these changes will 
reduce both any future current tax charge and the Group's unrecognised deferred tax assets. 
     
13. Earnings per share (“EPS”)     
     
Income or loss from continuing operations before tax and discontinued operations attributed to the equity holders of the 
Company is used as the numerator for computing the EPS. The denominator is the issued shares less the treasury shares 
 
EPS from continuing operations is 3.16 pence in 2014 (2013: 0.01 pence). EPS from discontinued operations is a loss of 0.15 
pence in 2014 (2013: loss of 0.03 pence). 
 
 
 
 
 
      European Islamic Investment Bank plc 
 
51 
 
  2014  2013 
  ‘000 
 
 ‘000 
Weighted average number of shares for Basic EPS  39,121  1,750,648 
Weighted average number of shares for Diluted EPS  39,121  1,750,648 
     
 
 
14. Due from financial institutions 
    
  2014  2013 
Group  £  £ 
     
Murabaha placements  20,800,000  32,101,034 
Wakala placements  11,500,000  5,900,139 
Treasury bills  1,756,436  2,243,127 
  34,056,436  40,244,300 
     
  2014  2013 
Company  £  £ 
     
Murabaha placements  20,800,000  32,101,034 
Wakala placements  13,425,916  5,900,139 
  34,225,916  38,001,173 
     
15. Financial assets designated at fair value     
          
Group   2014  2013 
  £  £ 
Navis Islamic Investment Fund  2,563,120  2,425,984 
Fixed Income Funds  9,806,395  16,506,958 
Equity and other funds  13,477,658  8,333,533 
  25,847,173  27,266,475 
     
Company  2014  2013 
  £  £ 
Equity and other funds 
 
11,914,230 
 
6,543,117 
Fixed Income Funds 
 
9,806,395 
 
12,233,761 
     
  21,720,625  18,776,878 
     
The Group’s fund portfolio represents its investment in various open-ended and closed-ended schemes specialising in Asian, 
MENA and USA based public and private equities and fixed income products. The main objectives of all these funds are 
medium to long-term capital appreciation and periodic income generation.  
 
These include high quality stocks, Sukuk and other fixed income products. All investments are prudently diversified by issuer, 
sector, geography and duration. 
 
The Company disposed its interest in Rasmala Leasing Fund (“RLF”) on 31 March 2014. RLF is classified as an entity held for 
sale in 2013 (note 21).  
 
 
    
      European Islamic Investment Bank plc 
 
52 
 
 
16. Available-for-sale securities - Sukuk 
          
Group & Company   2014  2013 
  £  £ 
Sovereign and central bank exposures  5,515,602  7,368,997 
Financial institutions  8,386,573  16,128,642 
Corporate and other counterparties  8,569,150  2,960,135 
  22,471,325  26,457,774 
     
17. Financing arrangements      
          
Group & Company   2014  2013 
  £  £ 
Sovereign and central bank exposures  2,407,396     3,025,627  
Corporate and other counterparties  5,400,000     8,424,440  
  7,807,396    11,450,067  
     
The above financing arrangements are designed based on Murabaha and Wakala structures. An exposure of £5.4m (2013 
£5.4m) of the above is collateralized with a first charge on a property portfolio valued at £12.74m (2013 £10.9m) 
     
18. Private equity financial assets designated at fair value      
  2014  2013 
Group  £  £ 
     
Opening fair value   15,864,665  13,315,897 
Exchange gain  2,489  68,081 
Fair value gain during the year  826,545  2,480,687 
Closing fair value  16,693,699  15,864,665 
     
     
These investments are measured at fair value having been designated at ‘fair value through profit and loss’ at inception. 
     
19. Fair value of foreign exchange agreements     
     
Group & Company      
Foreign exchange commitments used for matching currency exposures    Notional 
 Assets Liabilities  amount 
 £ £  £ 
2014     
Maturing in 0-3 months 24,394 954,329  80,254,454 
     
2013     
Maturing in 0-3 months 1,377,797 2,819  80,046,579 
 
 
 
    
 
 
     European Islamic Investment Bank plc 
 
53 
 
20. Discontinued operation and assets and liabilities held for sale 
     
On 1 December 2012, the Board of Directors of Rasmala Investment Saudi (“RIS”) resolved to dispose of it interest in RIS and 
intended to recover carrying amount of assets and liabilities in RIS principally through a sale transaction rather than through 
continuing use; therefore, all the asset and liabilities of RIS have been classified by Group management as held for sale and 
have been valued at lower of carrying value and fair value less cost to sell. Rasmala Group owns 80.41% shares in RIS and it 
was established on 7 April 2007 and commenced its operations on 17 September 2008. 
 
At 31 December 2014, net assets of RIS amounts to £0.3m (2013: £0.5m). Profit from RIS for the year ended 31 December 
2014 amounts to £ 0.2m (2013: losses of £0.3m). 
 
In 2011, Rasmala Group management decided to dispose of its interest in Delta Rasmala Investment (“DRI”) and intended to 
recover carrying amount of assets and liabilities in RIS principally through a sale transaction rather than through continuing use; 
therefore, all the assets and liabilities of DRI have been classed as held for sale and valued at lower of carrying value or fair 
value less cost to sell. The net liability of DRI at 31 December 2014 amounted to £0.02m (2013: £0.3m). Profit from DRI for the 
year ended 31 December 2014 amounts to £0.3m (2013 losses: £0.03m). 
 
All gains or losses arising from the above entities from the day their operations were discontinued have been classified as 
discontinued operations. 
 
The net assets above reflect the standalone amounts of the company before the exclusion of cash and balances with banks and 
intercompany balances. 
     
20.1 Loss after tax from discontinued operations    
  2014  2013 
Group  £  £ 
     
Revenue  319,060  95,414 
Expenses  (436,036)  (1,344,998) 
Net loss   (116,976)  (1,249,584) 
Tax  -  - 
Total  (116,976)  (1,249,584) 
     
A net loss is generated by discontinued activities in the year as a result of ongoing costs associated with the liquidation and 
closure of these entities. 
 
 
 
 
    
20.2 Assets held for sale      
  2014  2013 
Group  £  £ 
Property, plant and equipment   2,354  438,716 
Financial assets available for sale   56,277  124,051 
Other assets  32,860  347,342 
Total  91,491  910,109 
     
20.3 Liabilities held for sale      
  2014  2013 
Group  £  £ 
Payables   3,087  6,051 
Accruals and other liabilities  120,458  842,815 
Total  123,545  848,866  European Islamic Investment Bank plc 
 
54 
 
     
21. Lease fund held for sale     
     
Lease assets represents the operating lease asset portfolio held at the Company’s subsidiary, Rasmala Leasing Fund, a US 
based leasing vehicle. The Company disposed of its interest in Rasmala Leasing Fund on 31 March 2014 for £ 5.5m. The 
carrying value of Company’s holding on the date of disposal was £5.3m (including additional investment of £0.7m made in 
March 2014).  
     
Group  2014  2013 
  £  £ 
Rasmala Leasing Fund  -  4,368,976 
     
Company  2014  2013 
  £  £ 
Rasmala Leasing Fund  -  4,543,467 
     
The lease assets of the fund at 31 December 2013 consisted a diversified portfolio of agricultural, material handling, 
transportation, food processing, rail and construction equipment. 
 
 
    
22. Investment properties     
  2014  2013 
Group  £  £ 
     
Opening fair value  1,742,156  1,738,458 
Additions during the year  -  494,387 
Disposals during the year  (380,689)  (778,191) 
Change in fair value  206,082  324,952 
Exchange gain/(loss)  106,081  (37,450) 
Closing fair value  1,673,630  1,742,156 
     
The investment properties include 4 units (2013: 7) of one floor in I-rise Tower (Dubai, UAE) covering the total area of 7,080 
square feet (2013: 9,935 square feet). These units are stated at fair value, which has been determined based on a valuation 
performed by an independent firm of professional valuers. 
 
The Group is required to analyse non-financial assets carried at fair value by level of the fair value hierarchy within which the 
recurring fair value measurements are categorised in their entirety (Level 1, 2 or 3). The investment property is carried at 
valuation derived from techniques that use unobservable inputs and therefore falls in Level 3 under the fair value hierarchy. 
The valuation of the property has been performed on the basis of rental returns. This valuation technique has not changed from 
the prior year. The Board of Directors have reviewed any assumptions made by the valuer for reasonableness and concluded 
that there are no material sensitivities affecting the fair value that warrant disclosure. 
 
 
 
 
 
 
 
 
 
 
 
 
  European Islamic Investment Bank plc 
 
55 
 
 
23. Property, plant and equipment 
 
 
Group  
Land and 
Buildings 
 Motor 
Vehicles 
 Leasehold 
Improvements 
 Fixtures, 
Fittings 
and office 
equipment 
 Computer 
Hardware 
 Total 
 
£  £ 
 
£  £ 
 
£ 
 
£ 
Cost 
           At 1 January 2014 55,660 
 
76,735 
 
1,175,589 
 
591,350 
 
1,067,785 
 
2,967,119 
Additions  - 
 
- 
 
20,247 
 
- 
 
35,385 
 
55,632 
Disposals - 
 
(840) 
 
- 
 
(421) 
 
(1,004) 
 
(2,265) 
FX impact  2,334  2,454  39,364  14,096  32,199  90,447 
At 31 December 
2014 57,994 
 
78,349 
 
1,235,200 
 
605,025 
 
1,134,365 
 
3,110,933 
            Depreciation  
           At 1 January 2014 2,421 
 
33,986 
 
1,142,633 
 
556,935 
 
1,037,555 
 
2,773,530 
Charge for the year 2,900 
 
12,342 
 
23,505 
 
18,309 
 
25,925 
 
82,981 
Disposals - 
 
- 
 
(363) 
 
(1,389) 
 
- 
 
(1,752) 
FX impact 478  61  39,730  9,489  32,173  81,931 
At 31 December 
2014 5,799 
 
46,389 
 
1,205,505 
 
583,344 
 
1,095,653 
 
2,936,690 
            Net Book Value 
           At 31 December 
2014 52,195 
 
31,960 
 
29,695 
 
21,681 
 
38,712 
 
174,243 
  
 
 
Group  
Land and 
Buildings 
 Motor 
Vehicles 
 Leasehold 
Improvements 
 Fixtures, 
Fittings 
and office 
equipment 
 Computer 
Hardware 
 Total 
 
£  £ 
 
£  £ 
 
£ 
 
£ 
Cost 
           At 1 January 2013 55,660 
 
107,596 
 
1,403,721 
 
908,196 
 
1,065,302 
 
3,540,475 
Additions/Transfers  - 
 
42,964 
 
13,313 
 
616 
 
6,719 
 
63,612 
Disposals 
  
(73,825) 
 
(241,445) 
 
(317,462) 
 
(4,236) 
 
(636,968) 
At 31 December 
2013 55,660 
 
76,735 
 
1,175,589 
 
591,350 
 
1,067,785 
 
2,967,119 
            Depreciation  
           At 1 January 2013 - 
 
94,499 
 
1,307,832 
 
816,971 
 
989,946 
 
3,209,248 
Charge for the year 2,421 
 
12,708 
 
67,169 
 
40,711 
 
50,029 
 
173,038 
Disposals - 
 
(73,221) 
 
(232,368) 
 
(300,747) 
 
(2,420) 
 
(608,756) 
At 31 December 
2013 2,421 
 
33,986 
 
1,142,633 
 
556,935 
 
1,037,555 
 
2,773,530 
            Net Book Value 
           At 31 December 
2013 53,239 
 
42,749 
 
32,956 
 
34,415 
 
30,230 
 
193,589 
 
 
 
 
 
 
 
  European Islamic Investment Bank plc 
 
56 
 
 
Company  
 Fixtures, 
Fittings and 
office 
equipment 
 Computer 
Hardware 
 Total 
 
 £ 
 
£ 
 
£ 
Cost 
      At 1 January 2014 
 
169,825 
 
218,087 
 
387,912 
Additions 
 
- 
 
1,020 
 
1,020 
Disposals 
 
- 
 
- 
 
- 
At 31 December 2014 
 
169,825 
 
219,107 
 
388,932 
       Depreciation  
      At 1 January 2014 
 
146,458 
 
213,064 
 
359,522 
Charge for the year 
 
10,285 
 
3,828 
 
14,113 
Disposals 
 
- 
 
- 
 
- 
At 31 December 2014 
 
156,743 
 
216,892 
 
373,635 
       Net Book Value 
      At 31 December 2014 
 
13,082 
 
2,215 
 
15,297 
 
 
Company  
 Fixtures, 
Fittings and 
office 
equipment 
 Computer 
Hardware 
 Total 
 
 £ 
 
£ 
 
£ 
Cost 
      At 1 January 2013 
 
169,209 
 
216,814 
 
386,023 
Additions  
 
616 
 
1,273 
 
1,889 
Disposals 
 
- 
 
- 
 
- 
At 31 December 2013 
 
169,825 
 
218,087 
 
387,912 
       Depreciation  
      At 1 January 2013 
 
136,003 
 
189,055 
 
325,058 
Charge for the year 
 
10,455 
 
24,009 
 
34,464 
Disposals 
 
- 
 
- 
 
- 
At 31 December 2013 
 
146,458 
 
213,064 
 
359,522 
       Net Book Value 
      
At 31 December 2013 
 
23,367 
 
5,023 
 
28,390 
 
 
24. Intangible assets      
Group & Company    2014  2013 
   £  £ 
At 1 January    1,492,765  1,492,765 
Additions   382  - 
At 31 December    1,493,147  1,492,765 
 
     
Amortisation      
At 1 January    1,479,356  1,465,294 
Charge for the year   11,263  14,062 
At 31 December   1,490,619  1,479,356 
 
     
Net Book Value at 31 December    2,528  13,409  European Islamic Investment Bank plc 
 
57 
 
      
Intangible assets consist of the costs of computer licences and software development including 
capitalised staff costs. 
 
25. Other assets     
  2014  2013 
  £  £ 
Group     
Accrued income receivable  2,466,188  2,296,665 
Other receivables  1,830,299  1,479,657 
Escrow deposit*      7,383,038       -  
Prepayments  536,897  283,697 
  12,216,422  4,060,019 
     
  2014  2014 
  £  £ 
Company     
Accrued income receivable  378,573  359,207 
Other receivables  108,356  156,025 
Escrow deposit*   7,235,000  - 
Prepayments  50,253  51,936 
  7,772,182  567,168 
 
*In connection with the reduction of the share premium account, EIIB entered into a blocked trust account agreement 
with Berwin Leighton Paisner LLP on 25 June 2014 creating a blocked trust account (“BTA”). EIIB undertook to the 
court to establish this BTA for the benefit of non-consenting creditors and to hold a retention of £7.2m (such sum 
representing the amount due to non-consenting shareholders). Under the terms of the BTA the retention will remain 
held on trust in the BTA until such time as the liability to the non-consenting creditors is extinguished.  
 
 
26. Due to financial institutions 
    
     
  2014  2013 
  £  £ 
Group      
Commodity murabahas  -  1,000,000 
Wakala acceptances  -  3,279,725 
Term facility of subsidiary   3,629,968  6,843,363 
Facilities payable on demand of subsidiary  3,000,451  1,877,718 
  6,630,419  13,000,806 
     
  2014  2013 
  £  £ 
Company     
Commodity murabahas  -  1,000,000 
Wakala acceptances  -  3,279,725 
  -  4,279,725 
     
 
 
     European Islamic Investment Bank plc 
 
58 
 
 
Term facilities of subsidiary 
     
(a)    Commercial Bank of Dubai -£24.7m facility    
     
The following are the principal terms of the 
facility: 
    
 a variable interest rate cost based on 6 month LIBOR; 
 the debt to equity ratio for acquisition of companies or projects to be 75:25; 
 the balance as of 31 December 2014, £3.63m has to be repaid in two semi-annual instalments during 2015 
     
 
27. Other liabilities 
    
  2014  2013 
Group  £  £ 
Accrued expenses  4,502,149  4,745,675 
Accrued returns payable  -  50,977 
Social security and PAYE payable  8,231  62,341 
Tax payable by a subsidiary  786,881  262,624 
Other payables  304,656  1,153,039 
  5,601,917  6,274,656 
Company     
Accrued expenses  1,771,440  1,558,959 
Accrued returns payable  -  50,977 
Social security and PAYE payable  8,231  62,341 
Other payables  134,260  353,062 
 
 
 
 1,913,931  2,025,339 
  
28. Share capital, share premium and capital redemption reserve 
Authorised       
 
£ 
       
2014: 100,000,000 
ordinary shares of £0.50 
each 
 
 
      50,000,000 
2013: 5,000,000,000 
ordinary shares of £0.01 
each 
 
      50,000,000 
         
 Number of 
shares 
 £   £   £  
        
At 31 December 2014 39,441,784  19,720,892  599,040  61,815,459 
        
At 31 December 2013 1,972,089,151  19,720,892  599,040  101,815,459 
        
 
 
        European Islamic Investment Bank plc 
 
59 
 
Events of 2014  
        
During 2014 each ordinary share of 1p each was consolidated into each ordinary share of 50p each. As a result of the 
share consolidation the number of shares allotted, called up and fully paid are 39,441,784 ordinary shares of 50p 
each. The number of shares with voting rights is correspondingly amended from 1,922,332,657 to 38,446,653 and the 
balance represents Treasury shares. 
 
Events of 2013  
 
      
During 2013, EIIB issued 40,681,003 (represents 2.12% of the current total shares) ordinary shares of 1 pence each 
at a premium price of 3.6p as per its agreement (note 37.1) as part and final settlement of the consideration due in 
connection with the strategic investment by the Company in Rasmala. These shares were issued in two intervals, 
13,440,860 and 27,240,143 and were admitted to AIM on 1 May 2013 and 25 July 2013 respectively.  
        
A further share issue of 152,308,735 (represents 7.92% of the current total shares) ordinary shares was made in 
December 2013 (note 37.2) in exchange of Rasmala shares of 42,307,982. These were admitted to trading on AIM on 
30 December 2013. 
 
29. Treasury shares 
  
        
The EIIB General Employee Benefit Trust (the ‘GEBT’) purchased £2.1m worth of shares (50m shares) during 2010 
at an average price of 4.25p in order to facilitate the establishment of the 2010 employee share incentive plan (the 
‘2010 ESIP’). The total value of these shares is presented, at cost, in equity within a treasury shares reserve in 
accordance with IAS32. 
        
Part of the above shares (34m shares) was allocated to the 2010 ESIP Trust to facilitate the scheme. The 2010 ESIP 
expired in November 2012 without vesting and the shares remain in the Trust as at the year end. 
        
30. Special reserve     
        
Following an application by EIIB, the Court of the Chancery Division approved a £40m transfer from share premium to 
a non-capital reserve during July 2014. The capital reduction and tender offer were approved by shareholders by 
special resolution at a General Meeting held on 25 June 2014. 
        
31. Assets under management      
        
Total AUM of external clients as at 31 December 2014 is £693m (2013: £686m). These funds are invested without 
recourse to the Group.  
         
Total assets under management include fund management contracts novated to Rasmala by EIIB amounting to 
£715m (2013: £712m) as at 31 December 2014. On the date of acquisition of Rasmala by EIIB the AUM totalled 
£391m. 
        
The funds invested by the Group as at 31 December 2014 stood at Nil (2013: £27m) of which funds with a net asset 
value of Nil (2013: £39m) are consolidated in these Group financial statements. 
        
   European Islamic Investment Bank plc 
 
60 
 
32. Maturity Analysis of assets and liabilities 
        
The tables below show an analysis of assets and liabilities analysed between those expected to be 
recovered or settled within or more than twelve months of the reporting date. 
 
 
2014  Less than 
12  
  More than 
12  
    
Group  months    months    Total    
Assets  £    £    £    
Cash and balances with banks 6,561,726     6,561,726    
Other assets 10,460,166   1,756,256   12,216,422    
Available for sale securities - Sukuk 1,938,049   20,533,276   22,471,325    
Assets held for sale 91,491   -  91,491    
Financing arrangements 7,807,396   -  7,807,396    
Financial assets designated at fair value  4,126,547   21,720,626   25,847,173   
Fair value of foreign exchange agreements 24,394   -  24,394    
Due from financial institutions 34,056,436   -  34,056,436    
Private equity assets designated at fair value  8,169,949   8,523,750   16,693,699    
Property, Plant and equipment -  174,243   174,243    
Investment Properties 1,673,630   -  1,673,630    
Goodwill -  10,784,754   10,784,754    
Intangible assets -  2,528   2,528    
Total assets 74,909,784   63,495,433   138,405,217    
 
Liabilities 
       
Due to financial institutions 6,630,419   -  6,630,419    
Fair value of foreign exchange agreements 954,329   -  954,329    
Other liabilities 4,825,229   776,688   5,601,917    
Liabilities held for sale 123,545   -  123,545    
Third party interest in consolidated funds -  -  -   
Total liabilities 12,533,522  776,688  13,310,210   
   European Islamic Investment Bank plc 
 
61 
 
        
 
2013 
Less than 
12  
 More than 12      
Group months   months    Total    
  £    £    £    
Assets        
Cash and balances with banks 9,488,406   -  9,488,406    
Other assets 3,248,015  812,004  4,060,019   
Available for sale securities - Sukuk 5,199,925   21,257,849   26,457,774    
Assets held for sale 910,109  -  910,109   
Leasing assets held for sale -  4,368,976  4,368,976   
Financing arrangements 3,024,442   8,425,625  11,450,067    
Financial assets designated at fair value 27,266,475   -  27,266,475    
Fair value of foreign exchange agreements 1,377,797  -  1,377,797   
Due from financial institutions 40,244,300   -  40,244,300    
Private equity assets designated at fair value -  15,864,665  15,864,665   
Plant and equipment -  193,589  193,589   
Investment Properties -  1,742,156  1,742,156   
Intangible assets -  13,409  13,409   
Goodwill -  10,165,750  10,165,750   
Total assets 90,759,469   62,844,023   153,603,492    
        
Liabilities        
Due to financial institutions 9,600,806  3,400,000  13,000,806   
Fair value of foreign exchange agreements 2,819   -  2,819    
Other liabilities 5,019,725   1,254,931  6,274,656    
Liabilities held for sale 848,866  -  848,866   
Third party interest in consolidated funds -  6,499,725  6,499,725   
Total liabilities 15,472,216   11,154,656  26,626,872   
   European Islamic Investment Bank plc 
 
62 
 
2014 Less than 12   More than 12    
Company months   months    Total  
 
 £    £    £  
Assets      
Cash and balances with banks 5,053,233   -  5,053,233  
Other assets 7,772,183   -  7,772,183  
Available for sale securities – Sukuk  1,938,049   20,533,276   22,471,325  
Financing arrangements 7,807,396   -  7,807,396  
Fair value of foreign exchange 
agreements 
24,394   -  24,394  
Due from financial institutions 34,225,916   -  34,225,916  
Investments in funds (FVTPL) -  21,720,625   21,720,625  
Investment in subsidiaries -  30,626,590   30,626,590  
Plant and equipment -  15,297   15,297  
Intangible assets -  2,528   2,528  
Total assets 56,821,171   72,898,316   129,719,487  
 
Liabilities 
     
Fair value of foreign exchange 
agreements 
954,329   -  954,329  
Other liabilities 1,913,931   -  1,913,931  
Total liabilities 2,868,260   -  2,868,260  
 
 
     
2013 Less than 12   More than 12    
Company months   months    Total  
  £    £    £  
Assets      
Cash and balances with banks 3,330,188   -  3,330,188  
Other assets 453,734   113,433  567,167  
Available for sale securities – Sukuk  5,199,925   21,257,849   26,457,774  
Financial assets held for sale 4,543,467   4,543,467  4,543,467 
Financing arrangements 3,024,442   8,425,625  11,450,067 
Fair value of foreign exchange 
agreements 
1,377,797   -  1,377,797  
Due from financial institutions 38,001,173   -  38,001,173  
Investments in funds (FVTPL) -  18,776,878   18,776,878  
Investment in subsidiaries 48,453,815  17,924,826   66,378,641  
Plant and equipment -  28,390   28,390  
Intangible assets -  13,409   13,409  
Total assets 104,384,541   66,540,410   170,924,951  
      
Liabilities      
Due to financial institutions 4,279,725  -  4,279,725 
Due to customers -  -  - 
Due to group entities 38,231,018  -  38,231,018 
Fair value of foreign exchange 
agreements 
2,819   -  2,819  
Other liabilities 1,620,272   405,067  2,025,339  
Total liabilities 44,133,834   405,067  44,538,901   European Islamic Investment Bank plc 
 
63 
 
33. Pension commitments 
 
The Company provides a defined contribution scheme for all staff. The assets of the scheme are held separately 
from those of the Company in independently administered funds. Total costs of 2014 and 2013 are fully settled. 
 
34. Commitments under operating leases 
 
There is a commitment at the year-end under an operating lease for the Company’s main premises at Milton Gate, 
60 Chiswell Street, London EC1Y 4SA for a seven-year period from 21 December 2010 to 20 December 2017, at 
an annual rent and service charge of £279,150 net of VAT (includes a seven-month rent free period).  
 
Rasmala has lease commitments in Dubai, Egypt and Oman expiring in March 2017, June 2015 and February 
2015 respectively. These cost the Group £585,062, £67,418 and £9,244 annually.  
 
Future rentals are as follows:   
 
  2014  2013 
  £  £ 
Group  
    
Within one year   902,833  1,293,227 
One to five years  1,284,043  3,416,729 
  2,186,876  4,709,956 
 
  2014  2013 
  £  £ 
Company 
    
Within one year  280,196  198,958 
One to five years  552,715  908,628 
  832,911  1,107,586 
35. Contingent liabilities and commitments 
 
No contingent liabilities or contractually obligatory commitments are outstanding as at the reporting date and up to 
the date that these financial statements were approved, other than the operating lease obligations disclosed in note 
34 and items listed below. 
 
a) As at 31 December 2014 the Company had undrawn funding commitments of £6.4m (2013: £1.3m) to the 
Rasmala Leasing Fund. Upon exiting of EIIB’s investment in Rasmala Leasing Fund in 2014, EIIB’s 
commitment to fund Rasmala Leasing Fund has increased to its full commitment of £6.4m as at the date of 
this report. 
 
b) Rasmala closed off its contingent liability in the form of financial guarantees which are issued to the UAE 
markets in 2014 (31 December 2013: £3.3m) against fixed deposits under lien (31 December 2013: 
£3.3m). 
 
c) Rasmala’s outstanding £3.6m loan from Commercial Bank of Dubai is agreed to be repaid in semi-annual 
instalments of £1.8m each, up to December 2015. 
 
   European Islamic Investment Bank plc 
 
64 
 
36. Assets and liabilities in foreign currency 
 
The Company manages its exposure to foreign exchange rate fluctuations by matching assets with liabilities in the 
same currency as far as possible, with similar maturities and the use of appropriate off-balance sheet instruments. 
 
Group  2014  2013 
  £  £ 
     
Denominated in sterling  54,291,476  49,558,702 
Denominated in currencies other than sterling  84,113,739  104,044,791 
Total assets  138,405,215  153,603,493 
     
Denominated in sterling  2,868,260  3,079,750 
Denominated in currencies other than sterling  10,441,949  23,547,123 
Total liabilities  13,310,209  26,626,873 
 
Company  2014  2013 
  £  £ 
     
Denominated in sterling  50,248,491  46,770,632 
Denominated in currencies other than sterling  79,470,996  124,154,320 
Total assets  129,719,487  170,924,952 
     
Denominated in sterling  2,868,260  3,079,750 
Denominated in currencies other than sterling  239,524  41,459,151 
Total liabilities  3,107,784  44,538,901 
  
The Group’s foreign exchange arrangements, while providing effective economic hedges for the purposes of Group 
risk management, do not qualify for hedge accounting under the specific requirements of IAS 39 Financial 
instruments: Recognition and measurement and are therefore treated as derivatives held for trading.  Accordingly, 
the effects of such arrangements have not been reflected against foreign currency denominated balances in the 
table above. 
 
 
37. Subsidiaries 
 
Subsidiaries  
Principal activity of registration 
% 
held 
% 
held 
Country 
    2014 2013 
 
Rasmala Holdings Limited 
Asset Management and 
Investment banking 
76.3 76.3 UAE 
Rasmala Egypt Asset 
Management  
Asset Management 100. 51.0 Egypt 
Cordoba Capital (UK) Ltd Sharia’a advisory 50 - 
Cayman 
Islands 
EIIB Investco Limited Investment Holding 100 - 
Cayman 
Islands 
 
All of the above subsidiaries and sub-subsidiaries of the Group are consolidated. 
 
   European Islamic Investment Bank plc 
 
65 
 
Investments in subsidiaries  
   
Company 2014 
 
2013 
 £ 
 
£ 
At 1 January  66,378,641  60,903,627 
Additions  -  5,711,577 
Disposal (40,869,014)  - 
Fair value gain during the year  872,567  875,875 
Exchange gain/(loss) / other movement 4,244,396   (1,112,438) 
At 31 December  30,626,590  66,378,641  
 
 
   
 
37.1 Acquisition of a controlling stake in Rasmala Holdings Limited (“Rasmala”) 
 
Rasmala is the Holding Company of a financial services group operating in the Middle East, specialising in asset 
management. Rasmala Investment Bank Limited was one of the first regional investment banks to be licensed by 
the Dubai Financial Services Authority.  EIIB owns a majority (67%) of management shares and a majority ordinary 
shares (76.3% at 31 Dec 2014) in Rasmala.  
 
The total Comprehensive income and loss for the periods in the consolidated statement of comprehensive income 
since the acquisition date contributed by Rasmala amounted to a gain of £0.3m in 2014 and a loss of £0.4m in 
2013.  
 
37.2 Additional acquisition of Rasmala Non-Controlling Interest 
 
On 23 December 2013 EIIB acquired a further 42,307,982 of Rasmala shares for a consideration of 152,308,735 
EIIB ordinary shares (note 28). The value of these shares was assessed by the management at £5,711,578 which 
represents a price of 3.75p per share. With this further acquisition EIIB currently holds 165,479,652 of Rasmala’s 
total ordinary shares that represents 76.3% of its total shares. 
 
The carrying values of the controlling and non-controlling interests are adjusted to reflect the change in interests in 
the subsidiary. The resulting £3,451,723 difference between the value of consideration paid, of £5,711,578 and the 
value of consideration received from Non-controlling Interest, of £2,259,854 is recognised directly in equity and 
attributed to the owners of the Company. No adjustment is made to the goodwill and no loss is recognised in the 
consolidated income statement. 
37.3 Goodwill 
  
 
2014 
 
2013 
 
 
Group  
 
£ 
 
£ 
 
 
  
 
 
 
 
 
 
Opening book value   
 
10,165,750 
 
11,546,400 
 
 
Goodwill created on acquisition of Rasmala Holdings Limited  
 
- 
 
- 
 
 
Reallocation of NCI (note 38)  
 
- 
 
(1,216,987) 
 
 
Foreign exchange gain/(loss)  
 
619,004 
 
(163,663) 
 
 
Closing book value  
 
10,784,754 
 
10,165,750 
 
 
  
 
 
 
 
 
 
Goodwill created on the Rasmala acquisition is principally attributable to the value expected to be derived from the 
acquired group through future growth, additional business from new clients and the operational synergies and 
savings derived therefrom.   
 
37.4 Impairment testing of goodwill  
Testing goodwill for impairment involves a significant amount of estimation. This includes the identification of 
independent cash generating units and the allocation of goodwill to these units based on which units are expected 
to benefit from the acquisition. The allocation is reviewed following business reorganisation. Cashflow projections  European Islamic Investment Bank plc 
 
66 
 
necessarily take into account changes in the market in which a business operates including the level of growth, 
competitive activity and the impacts of regulatory change. Determining both the expected pre-tax cashﬂows and the 
risk adjusted interest rate appropriate to the cash generating unit require the exercise of judgement. The estimation 
of pre-tax cashﬂows is sensitive to the periods for which detailed forecasts are available and to assumptions 
regarding the long term sustainable cashﬂows.  
 
No impairment charges were recognised during the year.   
 
Key assumptions 
 
The key assumptions used for impairment testing of goodwill created on the acquisition of Rasmala are stated 
below. 
 
 Rasmala Group was considered to be one cash generating unit (‘CGU’) 
 The recoverable amount of the CGU has been determined using cashﬂow predictions based on financial 
budgets approved by management and covering a ﬁve-year period, with a terminal growth rate of 2.5% (2013: 
2.5%) applied thereafter 
 The forecast cashﬂows have been discounted at a pre-tax rate of 11.1% (2013: 10.9%)  
 
Based on these assumptions, the recoverable amount exceeded the carrying amount. 
 
Management believes that any reasonably possible change in the key assumptions above would not cause the 
recoverable amount of the Goodwill to fall below the carrying value. 
38. Non-controlling interest  
  2014 
 
2013 
Group  £ 
 
£ 
   
 
 
Start of year   4,042,292 
 
9,170,594 
Acquisition of non-controlling interest (note 37.2)  (696,109) 
 
(2,259,854) 
Gain/(loss) for the year   8,089 
 
(165,009) 
Other comprehensive loss for the year  - 
 
(98,094) 
Distributions   - 
 
(1,086,807) 
Disposal of Subsidiary  (314,345) 
 
- 
Reallocation of NCI (note 37.3)  - 
 
(1,216,987) 
Foreign exchange loss  (212,680) 
 
(301,551) 
End of year  2,827,247 
 
4,042,292 
 
 
39. Related party disclosures 
 
Related parties include group companies including subsidiaries, directors and other key management personnel 
and close family members of directors and other key management personnel. 
 
A related party transaction is a transfer of resources, services or obligations between related parties Management 
compensation for key management personnel is also included in the related party transaction. 
39.1 Compensation of key management personnel 
  2014 
 
2013 
  £ 
 
£ 
   
 
 
Short-term employee benefits   715,836 
 
898,565 
Compensation for loss of office  - 
 
35,000 
Post-employment pension costs  - 
 
10,500 
  715,836 
 
944,065 
 
 
   European Islamic Investment Bank plc 
 
67 
 
Executive 
 
 
Salary 
Benefits 
in kind 
Pension 
contributions 
Compen-
sation for 
loss of 
office 
Total 
2014 
Total 
2013 
 
 £ £ 
£ £ £ £ 
 
   
    
Zulfi Caar Hydari 
 424,702 25,035 
- - 449,737 423,867 
Keith McLeod 
 - - 
- - - 239,436 
 
 424,702 25,035 - - 449,737 663,303 
 
Non-executive  
Fixed fees 
Attendance 
fees 
Total 
2014 
Total 
2013 
 
 
£ £ £ £ 
 
     
Abdallah Y Al-Mouallimi  32,000 8,000 40,000 44,826 
Aabed Al Zeera  - - - 31,667 
Michael Willingham-Toxvaerd  40,000 3,000 43,000 44,000 
Mohammed Al Sarhan   60,599 6,000 66,599 99,766 
John Wright  28,500 7,000 35,500 38,167 
Martin Barrow  25,000 6,000 31,000 22,336 
 
 186,099 30,000 216,099 280,762 
 
In addition to the above, Michael Willingham-Toxvaerd had Consultancy arrangement with EIIB Plc and charged 
£50,000 during 2014. 
 
39.2 Other Directors’ interests 
 
The Company enters into transactions, arrangements and agreements involving Directors and their related 
concerns in the ordinary course of business. Management believes that all such business is conducted on an arms-
length basis.  
 
(a) HBG Group owns 16.11% of EIIB ordinary shares, and a number of its partners and connected parties hold 
key managerial positions and directorships at the EIIB Group. 
 
 Abdallah Al-Mouallimi – Chairman of EIIB. 
 Zulfi Caar Hydari – CEO of EIIB and Group CEO of Rasmala group. 
 Michael Willingham-Toxvaerd – Non-Executive Director of EIIB. 
 Imtiaz Hydari – Chairman of Rasmala. 
 
There were no payments made by EIIB to HBG in 2014. EIIB settled £442,062 of HBG consultancy 
charges during 2013. This amount was accrued in the 2012 financial statements. 
 
£192,592 is accrued in 2014 financial statements for Mr. Imtiaz Hydari for the services he rendered as 
the Chairman of Rasmala. He drew £208,705 from the Group during 2013. 
 
Other payments made to HBG group by Rasmala during 2014 are £46,907 (2013:£51,523). 
 
(b) Full impairment provision was created in 2011 by Rasmala of £3.8m, relating to a receivable from iHilal 
Baghlaf Development Company, a related party, which represents accrued management fees in 
connection with a real estate project based in Dubai. An amount of £1.0m is reversed from such provision 
and reflected in 2014 financial statements. 
 
39.3 Intra Group transactions  
 
(a) The Company has accepted Wakala deposits from EIIB InvestCo, EIIB ServiceCo 3 WLL and 
Rasmala Investment Saudi during the year on an arms-length basis. Deposits outstanding as at 31 
December 2014 amount to £Nil (2013: £38.2m). As at 31 Dec 2014, the outstanding Wakala deposits 
from these entities stood at £Nil (2013: £36.9m) and £Nil (2013: £0.7m) respectively. The respective  European Islamic Investment Bank plc 
 
68 
 
profit accruals on these were £Nil (2013: £159k) and £Nil (2013: £1k). The Company has entered into 
a commodity murabaha agreement with Rasmala Holdings Limited during the year. Outstanding 
principal as at 31 December 2014 was £1.9m (2013: £Nil) and the profit accrual was £40k (2013: £Nil) 
 
(b)   The following intercompany transactions between EIIB and Rasmala took place during the year: 
 
 
  2014 
 
2013 
 
Charged by Rasmala   £ 
 
£ 
 
Fee for managing EIIB's sukuk portfolio and funds   
          96,651  
 
    168,910  
 
Advisory services  
       633,769  
 
  498,275  
 
Investment banking fee share   
     (183,911) 
 
    90,769  
 
Salary recharges  
          76,053  
 
    77,140 
 
Other recharges  
       115,875  
 
75,127 
 
Total   738,437 
 
910,221 
 
   
 
 
 
 
(a) The following intercompany charges were made by Rasmala from the three funds of EIIB (that are 
consolidated to the Group financial statements): 
 
  2014 
 
2013 
 
Charged by Rasmala   £ 
 
£ 
 
Management fees   -     
 
   181,614 
 
Total   - 
 
181,614 
 
 
 
(b) The following intercompany payments were made by the three EIIB funds (that are consolidated to the 
Group financial statements) to EIIB: 
  2014 
 
2013 
 
Paid to EIIB   £ 
 
£ 
 
Fees   -     
 
   119,498 
 
Total   - 
 
119,498 
 
 
39.4 Transaction with non-controlling interests  
 
During 2014, Rasmala acquired the 49% NCI of its subsidiary, Rasmala Egypt Asset Management, thereby 
increasing its stake to 100%. £1,773,769 was paid as purchase consideration towards this buy-out of NCI share of 
£0.8m effective 31
st
 December 2013.    
 
During 2014, Rasmala exited from its Brokerage entity along the lines of its vision, for £0.6m for its shares and 
intercompany receivables 
 
On 23 December 2013 EIIB acquired a further 42,307,982 of Rasmala shares for a consideration of 152,308,735 
EIIB ordinary shares to the other shareholders in Rasmala. The value of these shares was assessed by the 
management at £5,711,578 which represents a price of 3.75p per share (note 37.2). None of the parties listed in 
note 39.1 and 39.2 receive EIIB shares on this transaction. Rasmala shareholders agreed that the shares would be 
issued to their pooled investment vehicles, Fortek Investments Ltd and Vallford Limited. These SPVs comprised 
individuals who are employees of Rasmala.  
  
In connection with this transaction, Rasmala created an equity reserve of £1,194,790 as required by accounting 
standards in connection with a share for share exchange.  The equity reserve has been reflected in the Group 
accounts and is split across group and non-controlling interest as described in the Consolidated Statement of 
Changes in Equity.  European Islamic Investment Bank plc 
 
69 
 
 
39.5 Other related party transactions  
  
Management considers all above transactions with related parties have been conducted at an arm’s-length basis.   
 
40. Valuation of assets measured at fair value 
 
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs 
used in making the measurements: 
 
Level 1: Quoted market price (unadjusted) in an active market for an identical instrument 
 
Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. 
derived from prices) 
  
This category includes instruments valued using: quoted market prices in active markets for similar 
instruments; quoted prices for identical or similar instruments in markets that are considered less than 
active; or other valuation techniques where all significant inputs are directly or indirectly observable from 
market data.  
 
Level 3: Valuation techniques using significant unobservable inputs 
 
This category includes all instruments where the valuation technique includes inputs not based on 
observable data and the unobservable inputs have a significant effect on the instrument's valuation. This 
category includes instruments that are valued based on quoted prices for similar instruments where 
significant unobservable adjustments or assumptions are required to reflect differences between the 
instruments.  
 
Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market 
prices or dealer price quotations. For all other financial instruments the Group determines fair values using 
valuation techniques.  
 
Valuation techniques include net present value and discounted cash flow models, comparison to similar 
instruments for which market observable prices exist and other valuation models. Assumptions and inputs used in 
valuation techniques include risk-free and benchmark rate of returns, credit spreads and other premia used in 
estimating discount rates, bond and equity prices, foreign currency exchange rates and net asset valuations. The 
objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial 
instrument at the reporting date that would have been determined by market participants acting at arm's length.  
 
The Group has an established control framework with respect to the measurement of fair values. This framework 
includes independent price verification and reporting by the Group’s Risk department to the Chief Executive Officer, 
and the Group’s Risk and Audit committees. The Risk department has overall responsibility for independently 
verifying the transactions, assets and all significant fair value measurements.  
 
The table below analyses financial instruments measured at fair value at the end of the reporting period, by the 
level in the fair value hierarchy into which the fair value measurement is categorised. 
 
During 2013, certain investments in funds and private equity financial assets were transferred from Level 3 to Level 
2 principally due to improved transparency of market prices as a result of market transactions in these instruments. 
 
   European Islamic Investment Bank plc 
 
70 
 
Group 
Company 
 
The above table does not include financial instruments within the ‘Assets held for sale’ and ‘Liabilities held for sale’ 
categories. 
 
Group 
 
Company 
 
The above table does not include financial instruments within the ‘Assets held for sale’ and ‘Liabilities held for sale’ 
categories. 
At 31 December 2014 Level 1  Level 2 
 
Level 3  Total 
Assets £  £  
 
£   £  
Investments in funds designated at fair value 4,126,547  21,720,626 
 
-  25,847,173 
Available-for-sale securities – sukuk -  22,471,325 
 
-  22,471,325 
Private equity financial assets  designated at fair 
value -  4,042,702 
 
12,650,997  16,693,699 
Fair value of foreign exchange arrangements -  24,394 
 
-  24,394 
 4,126,547  48,259,047 
 
12,650,997  65,036,591 
 
Liabilities    
 
   
Fair value of foreign exchange arrangements -  954,329 
 
-  954,329 
 -  954,329 
 
-  954,329 
At 31 December 2014 Level 1  Level 2 
 
Level 3  Total 
Assets £  £  
 
£   £  
Investments in funds designated at fair value -  21,720,625 
 
-  21,720,625 
Available-for-sale securities – sukuk -  22,471,325 
 
-  22,471,325 
Investments in subsidiaries -  - 
 
30,626,590  30,626,590 
Fair value of foreign exchange arrangements -  24,394 
 
-  24,394 
 -  44,216,344 
 
30,626,590  74,842,934 
Liabilities    
 
   
Fair value of foreign exchange arrangements -  954,329 
 
-  954,329 
 -  954,329 
 
-  954,329 
At 31 December 2013 Level 1  Level 2 
 
Level 3  Total 
Assets £  £  
 
£   £  
Financial assets designated at fair value 6,466,921  20,799,553 
 
     -   27,266,475 
Available-for-sale securities – sukuk -  22,431,090 
 
4,026,684        26,457,774 
Private equity financial assets  designated at fair 
value -   2,788,071  
  
13,076,594  15,864,665 
Fair value of foreign exchange arrangements -     1,377,797 
         
-       1,377,797 
 6,466,921  47,396,511 
 
17,103,278  70,966,711 
Liabilities    
 
   
Fair value of foreign exchange arrangements -  2,819 
 
-  2,819 
 -  2,819 
 
-  2,819 
At 31 December 2013 Level 1  Level 2 
 
Level 3  Total 
Assets £  £  
 
£   £  
Available-for-sale securities – sukuk -  22,431,090 
 
4,026,684        26,457,774 
Investments in funds  designated at fair value -    18,776,878  
 
   4,543,467        23,320,345  
Investments in subsidiaries -   -  
 
 66,378,641        66,378,641 
Fair value of foreign exchange arrangements -  
     
1,377,797 
         
-       1,377,797 
 -  42,585,765 
 
74,948,792  117,534,557 
Liabilities    
 
   
Fair value of foreign exchange arrangements -  2,819 
 
-  2,819 
 -  2,819 
 
-  2,819  European Islamic Investment Bank plc 
 
71 
 
 
The following table reconciles the opening balances to the closing balances for fair value measurements in Level 3 
of the fair value hierarchy. 
Group 
2014  
Available-for-
sale securities – 
sukuk  
Investments in 
funds designated 
at fair value  
Private equity 
financial assets 
designated at fair 
value 
 Total 
      
Balance at 1 January          4,026,684          -  13,076,594       17,103,278 
Transfer   - - - 
Purchases/Additions  1,505,890 - - 1,505,890 
Disposal/Redemptions   (974,322) (253,774) - (1,228,096) 
Transfers*  (4,573,284) - - (4,573,284) 
Total gains or losses:  15,032 253,774 (878,764) (609,958) 
- in income statement  - 253,774 (878,764) (624,990) 
- in other comprehensive 
income  15,032 - - 15,032 
Settlements and other 
movements  - - 453,167 453,167 
Balance at 31 December  - - 12,650,997 12,650,997 
Company 
2014  
Available-for-
sale securities – 
sukuk  
Investments in 
funds designated 
at fair value 
 
Investments in 
Subsidiaries Total 
      
Balance at 1 January          4,026,684          4,543,467        66,378,641        74,948,792  
Purchases/Additions  1,505,890 - - 1,505,890 
Disposals/Redemptions   (974,322) (4,797,241) (40,869,013) (46,640,576) 
Transfers*  (4,573,284) - - (4,573,284) 
Total gains or losses:  15,032 253,774 872,567 1,141,373 
- in income statement  - 253,774 872,567 1,126,341 
- in other comprehensive 
income  15,032 - - 15,032 
Settlements and other 
movements  - - 4,244,395 4,244,395 
Balance at 31 December  - - 30,626,590 30,626,590 
      
*Sukuks previously treated as level 3 have been transferred to level 2 
 
Group 
2013  
Available-for-
sale securities – 
sukuk  
Investments in 
funds designated 
at fair value  
Private equity 
financial assets 
designated at fair 
value 
 Total 
      
Balance at 1 January          1,395,132          3,266,046  10,513,116       15,174,294 
Transfer   (3,266,046) 1,026,092 (2,239,954) 
Purchases/Additions  3,025,627 - - 3,025,627 
Disposals/Redemptions   (378,203) - - (378,203) 
Total gains or losses:  14,183 - 1,923,073 1,937,256 
- in income statement  - - 1,923,073 1,937,256 
- in other comprehensive 
income  14,183 - - 14,183 
Settlements and other 
movements  (30,055) - (385,687) (415,742) 
Balance at 31 December  4,026,684 - 13,076,594 17,103,278 
   European Islamic Investment Bank plc 
 
72 
 
Company 
2013  
Available-for-
sale securities – 
sukuk  
Investments in 
funds designated 
at fair value 
 
Investments in 
Subsidiaries Total 
      
Balance at 1 January          1,395,132          1,129,667        60,903,627        63,428,426  
Purchases/Additions  3,025,627 3,570,240 5,711,577 12,307,444 
Disposals/Redemptions   (378,203) - - (378,203) 
Total gains or losses:  14,183 - 875,875 890,058 
- in income statement  - - 875,875 875,875 
- in other comprehensive 
income  14,183 - - 14,183 
Settlements and other 
movements  (30,055) (156,440) (1,112,438) (1,298,933) 
Balance at 31 December  4,026,684 4,543,467 66,378,641 74,948,792 
      
 
Although the Group believes that its estimates of fair value are appropriate, the use of different methodologies or 
assumptions could lead to different measures of fair value. For fair value measurements in Level 3, changing one 
or more of the assumptions used, to reasonably possible alternative assumptions would have the following effects: 
 
  
Effect on profit or loss 
 
Effect on comprehensive 
income 
Group  Favourable (Unfavourable) Favourable (Unfavourable) 
31 December 2014  £ £ £ £ 
      
Private equity financial assets 
designated at fair value **  
   
1,265,100 
  
(1,265,100)  
-    -    
       1,265,100 (1,265,100)  - -    
 
  
Effect on profit or loss 
 
Effect on comprehensive 
income 
Company  Favourable (Unfavourable) Favourable (Unfavourable) 
31 December 2014  £ £ £ £ 
      
Investments in subsidiaries ***        612,532       (612,532)  -    -    
        612,532        (612,532)  -    - 
 
Appropriate change for each asset measurement based on  
* applicable % change to the market price (5%) 
** applicable % change to the market price (10%) 
*** 2% change in fair value 
 
 
  
Effect on profit or loss 
 
Effect on comprehensive 
income 
Group  Favourable (Unfavourable) Favourable (Unfavourable) 
31 December 2013  £ £ £ £ 
      
Available-for-sale securities – sukuk *     -    
   
-      201,334     (201,334) 
Private equity financial assets 
designated at fair value **  1,307,659 (1,307,659)      -  - 
  1,307,659 (1,307,659)      201,334  (201,334) 
 
 
 
 
 
 
  European Islamic Investment Bank plc 
 
73 
 
  
Effect on profit or loss 
 
Effect on comprehensive 
income 
Company  Favourable (Unfavourable) Favourable (Unfavourable) 
31 December 2013  £ £ £ £ 
      
Available-for-sale securities – sukuk *  
 
  -    
   
-            201,334       (201,334)  
Investments in funds designated at fair 
value *  
   
227,173 
  
(227,173)  -    -    
Investments in subsidiaries ***        1,327,573       (1,327,573)  -    -    
        1,554,746        (1,554,746)     201,334 
   
(201,334) 
 
Appropriate change for each asset measurement based on  
* applicable % change to the market price (5%) 
** applicable % change to the market price (10%) 
*** 2% change in fair value 
 
Inputs are inter-related as they are influenced by market conditions and these inter-relationships may mitigate the 
impact on value if these inputs moved in opposite directions.  The percentages used in the sensitivity analysis 
represents the Board of Director’s assessment of the reasonable possible change in them at the reporting date. 
41. Risk management  
41.1 Introduction 
 
The Board of Directors have set an overall risk framework in line with risk appetite, documented within a set of risk 
management policies which are approved by the Board or mandated risk committees. Ultimate responsibility for 
risk resides with the Board of Directors. 
 
The Company is exposed mainly to credit risk, market risk, operational risk and liquidity risk. 
 
(1) Structure 
 
The Board of Directors is ultimately accountable for risk within the Company and for ensuring a strong control 
environment. The Board has mandated a number of committees tasked with managing and monitoring risks within 
the Company. 
 
(a) Board of Directors 
The Board of Directors has overall responsibility for risk management and for approving the risk appetite, 
tolerances, strategies and principles. 
 
(b) Board Risk Committee (“BRC”) 
The BRC is a sub-committee of the Board of Directors which assists the Board in fulfilling its risk management 
responsibilities from day to day. The committee’s responsibilities include advising on risk strategy, providing 
oversight and challenge supporting a risk culture, reviewing and approving risk policies and assessing, reviewing, 
and approving all exposures that are within its delegated authority. 
 
(c) Executive Management Committee (“EMC”) 
The EMC assists the Chief Executive Officer in performing his duties.  These include consideration of the 
development and implementation of strategy, operational plans, policies and budgets as well as the assessment 
and control of risk 
 
(d) Risk Management Committee (“RMC”) 
The RMC assists the Executive Management Committee and the Board of Directors in managing and controlling 
risk in all areas of the Company, through proactive identification, measurement, evaluation, control, monitoring, and 
reporting of: 
 
 
 
  European Islamic Investment Bank plc 
 
74 
 
 Credit risk 
 Market risk 
 Operational risk including other residual risks 
 Liquidity risk 
 
 
(e) Asset and Liability Committee (“ALCO”) 
The ALCO is constituted to assist the Executive Management Committee and the Board in proactively managing 
the capital, liquidity, assets and liabilities of the Company. It is also mandated to manage the risk-reward 
relationship that exists between solvency, liquidity and profit rate risk. 
 
(f) Internal Audit  
Internal Audit’s primary role is to provide assurance to the Audit Committee and the Board that the risk 
management, internal control, corporate governance and other key business processes and controls, as 
appropriate, are operating effectively and meeting the ongoing and changing needs of the Company. This includes 
providing management with independent appraisals of systems of internal control and supporting development of a 
sound control culture throughout the Company. 
 
(2) Measurement and reporting 
 
The risks within the Company are assessed using quantitative and qualitative methodologies. Losses are 
calculated using assumptions based on consideration of the economic environment in which the Company 
operates, stress scenarios and conditions in the Islamic banking market. 
 
Risk is managed by a set of comprehensive limits, triggers and processes. These reflect the business strategy, risk 
appetite and market environment in which the Company operates and its overall risk capacity in relation to capital 
and regulatory requirements set by the UK Regulatory Authorities. 
 
Information is compiled by the Risk department from all business areas and is then presented to the Executive 
Management Committee and Board on a monthly basis. The Risk Report includes detailed reporting of credit 
exposures by internal ratings, geographical regions, industry sectors, asset maturities, liquidity, and market risk 
exposures for profit rates, foreign exchange, money and capital market instruments and the results of the stress 
tests. 
 
Daily reports on credit exposures and market risks are compiled and distributed by the Risk department to senior 
management. 
 
(3) Risk mitigation 
 
Risk mitigants are used where possible. However the Company cannot use conventional derivative products to 
mitigate risk. Consequently as part of its overall risk management framework the Company utilises Sharia’a 
compliant products to hedge currency risk and profit rate risk. 
 
(4) Concentration risk 
 
Concentration risk arises when a number of counterparties are engaged in similar business activities, or activities in 
the same geographic regions, or have similar economic characteristics that would cause their ability to meet 
contractual obligations to be similarly affected by a change in economic, political or other conditions. 
 
In order to avoid excessive concentration risk the Company has specific guidelines and limits in place to restrict 
large exposure to Group, Issuer, Country and Industry sector exposures. 
41.2 Credit risk 
 
Credit risk is the risk that the Company’s customers, clients or counterparties will not be able or willing to repay 
capital and/or profit or otherwise be unable to meet their contractual obligations under credit facilities or in respect 
of other agreements. 
  European Islamic Investment Bank plc 
 
75 
 
The Company has a standard credit approval process for all customers, clients and counterparties and all are 
assigned an internal risk rating. Exposures are subject to regular review. All exposures are allocated to a country 
within a pre-approved country limit. 
 
(1)  Exposure 
  
Exposures by asset class were: 2014 
 
2014 
 
2013 
 
2013 
 
Group 
 
Company 
 
Group 
 
Company 
 
£ 
 
£ 
 
£ 
 
£ 
Assets carried at amortised cost        
    Cash and balances with banks       
6,561,726  
       
5,053,233  
       
9,488,406  
       
3,330,188  
    Due from financial institutions     
34,056,436  
     
34,225,916  
     
40,244,300  
     
38,001,173  
   -  Wakala   11,500,000     11,500,000       5,900,139       5,900,139  
   -  Treasury Bills     1,756,436  
 
   -  
 
 - 
 
 - 
   -  Murabaha   20,800,000     22,725,916     34,344,161     32,101,034  
    Financing arrangements     7,807,396  
 
    7,807,396  
 
  11,450,067  
 
  11,450,067  
Assets carried at fair value        
    Available for sale securities - sukuk   22,471,325     22,471,325     26,457,774     26,457,774  
Private equity financial assets available for sale   16,693,699   -    15,864,665   - 
        
Assets held for sale        
    Assets held for sale          91,491   -         910,109   - 
    Leased Assets held for sale                   -                     -       4,368,976       4,543,467  
        Fair value through income statement        
    QE investments designated FVTPL                   -                     -       6,466,921                     -  
    Financial assets designated at fair value   25,847,173     21,720,625       5,633,149    18,776,878  
    Fair value through profit and loss securities -
sukuk 
                  -   -    15,166,405   - 
    Fair value of foreign exchange agreements     24,394      24,394       1,377,797       1,377,797  
    Investments in subsidiaries                   -     30,626,590                     -     66,378,641  
    Accrued income     1,673,630        -   1,742,156          -  
        
Total credit exposure   
115,227,270  
   
121,929,479  
   
139,170,725  
   
170,315,985  
 
   European Islamic Investment Bank plc 
 
76 
 
(2) Geographical regions 
 
      
  
      
Exposures by geographical region were 2014  2014  2013  2013 
 
Group  Company  Group  Company 
 £  £ 
 
£  £ 
   
  
  
 
GCC countries     61,567,992       71,435,163  
 
    67,849,155     
120,298,652  
Bahrain         154,140           154,140  
 
     7,382,235     51,496,830  
UAE     57,764,717      68,012,303  
 
    44,440,717     63,504,866  
Kuwait                     -                     -         110,671                     -  
Saudi Arabia         380,415                   -    
 
     8,589,770                   -    
Qatar      3,268,720        3,268,720        7,325,762       5,296,956  
Middle East (Other)       3,497,300                    -    
 
      7,424,707       3,024,443  
Europe     24,361,320      35,983,210  
 
    31,092,892     31,092,890  
USA     13,500,000      13,500,000       21,531,818     15,900,000  
Turkey       2,206,180        1,011,106  
 
      2,807,599                    -    
Asia       3,715,948                    -    
 
      3,626,467                    -    
Australasia                  -                      -    
 
         288,180                    -    
Africa       6,378,530                    -    
 
      4,549,907                    -    
Total credit exposure   115,227,270    121,929,479     139,170,725            170,315,985  
 
 
 
 
      
(3) Industry Sector 
       
        
Exposures by industry sector were 2014 
 
2014 
 
2013 
 
2013 
 
Group 
 
Company 
 
Group 
 
Company 
 £  £  £  £ 
Financial services     47,273,198       47,690,621       73,786,507       55,812,173  
GCC banks     18,876,158      19,293,581       25,341,579      16,294,089  
Europe/Other banks     28,397,040      28,397,040       48,444,928      39,518,084  
Manufacturing & engineering       1,391,539         1,391,539         6,568,394         1,328,250  
Government       5,515,098         5,515,098       11,158,646         7,368,997  
Real estate     11,303,670         8,434,965       12,601,017         7,031,900  
Other financial     36,646,111       56,489,861       21,306,396       92,724,596  
Oil & gas                  -                      -              139,661                    -    
Mining       4,042,702                    -           2,788,070                    -    
Food       2,563,120                    -              299,156                    -    
Healthcare                  -                      -               92,029                    -    
Agricultural                  -                      -              220,523                    -    
Information & Communication technology       2,931,610                    -           2,763,348                    -    
Other       3,560,222         2,407,396         7,446,978         6,050,069  
Total credit exposure   115,227,270     121,929,480     139,170,725     170,315,985  
  
(4) Credit quality 
The credit quality of financial assets is managed by the Company using internal credit ratings which are mapped to 
external credit rating agencies’ ratings including Fitch, Moody’s and Standard & Poor’s. The table below shows the 
credit quality of the portfolio based on the Company’s internal credit rating. 
 
The Company’s Risk Framework guides the firm as to what and how much credit risk to take.  Adoption of and 
adherence to its Risk Appetite Statement and Tolerance Policy provides the principles to ensure the bank’s risk 
culture is consistent with its overall strategy and informs business development and risk decision-making. 
 
  European Islamic Investment Bank plc 
 
77 
 
Investment Grade: The company has classified financial instruments issued by financial institutions which were rated 
at least BBB-, Baa3 or BBB- (2013: same) by Standard and Poor’s, Moody’s or Fitch, respectively, as investment 
grade. 
 
Non-Investment Grade: Financial instruments issued by financial institutions rated below BBB-, Baa3 or BBB- by 
Standard and Poor’s, Moody’s or Fitch, respectively,  have been classified as non-investment grade.    
 
Investment 
Grade 
 
Non-
Investment 
Grade 
 
Total 
 
£ 
 
£ 
 
£ 
2014 Group  
 
   
Cash and balances with banks          6,034,874           526,852       6,561,726  
Available for sale securities -sukuk 12,892,824 
 
9,578,501  22,471,325 
Assets held for sale          -    
 
91,491  91,491 
Financing arrangements 2,407,396 
 
5,400,000  7,807,396 
Financial assets designated at fair value 2,563,120 
 
23,284,053  25,847,173 
Fair value of foreign exchange agreements 24,394 
 
-  24,394 
Due from Financial Institutions 34,056,436 
 
-  34,056,436 
Private equity financial assets designated at fair value 1,152,828 
 
15,540,871  16,693,699 
Accrued Income          -    
 
1,673,630  1,673,630 
Total credit exposure 
59,131,872 
 
56,095,398 
 
115,227,270 
   
 
     
 
 
2014 Company 
Investment 
Grade 
 
Non-
Investment 
Grade 
 
Total 
 
£ 
 
£ 
 
£ 
Cash and balances with banks 
5,051,974 
 
1,259  5,053,233 
Available for sale securities - sukuk 
12,892,824 
 
9,578,501  22,471,325 
Financing arrangements 
2,407,396 
 
5,400,000  7,807,396 
Financial assets designated at fair value 
         -    
 
21,720,625  21,720,625 
Fair value of foreign exchange agreements 24,394 
 
-  24,394 
Due from Financial Institutions 34,225,916 
 
-  34,225,916 
Investment in subsidiaries 
         -    
 
30,626,590  30,626,590 
Total credit exposure 
      54,602,504 
 
67,326,975 
 
121,929,479 
  
 
   
 
 
 
Investment 
Grade  
Non-
Investment 
Grade  Total 
2013 Group 
£  
£ 
 
£ 
Cash and balances with banks 9,480,513 
 
7,893  9,488,406 
Available for sale securities -sukuk 20,522,266 
 
5,935,508  26,457,774 
Assets held for sale          -    
 
910,109  910,109 
Leased assets held for sale          -    
 
4,368,976  4,368,976 
Financing arrangements 6,050,067 
 
5,400,000  11,450,067 
Financial assets designated at fair value 18,486,651 
 
8,779,824  27,266,475 
Fair value of foreign exchange agreements 1,305,900 
 
71,897  1,377,797 
Due from Financial Institutions 36,084,743 
 
4,159,557  40,244,300 
Private equity financial assets designated at fair value 1,187,613 
 
14,677,052  15,864,665 
Accrued Income          -    
 
1,742,156  1,742,156 
Total credit exposure 
93,117,753  46,052,972  139,170,725  European Islamic Investment Bank plc 
 
78 
 
 
 
Investment 
Grade  
Non-
Investment 
Grade  Total 
 
2013 Company £  
£ 
 
£ 
Cash and balances with banks 3,322,294 
 
7,894  3,330,188 
Available for sale securities - sukuk 
20,522,266 
 
5,935,508  26,457,774 
Leased assets held for sale 
         -    
 
4,543,467  4,543,467 
Financing arrangements 
6,050,067 
 
5,400,000  11,450,067 
Financial assets designated at fair value 
         -    
 
18,776,878  18,776,878 
Fair value of foreign exchange agreements 1,305,900 
 
71,897  1,377,797 
Due from Financial Institutions 35,001,173 
 
3,000,000  38,001,173 
Investment in subsidiaries 
         -    
 
66,378,641  66,378,641 
Total credit exposure 
      66,201,700  104,114,285  170,315,985 
  
 
   
 
(5) Aged analysis of impaired financial assets 
 
No financial assets are past due or impaired at the year-end (2013: Nil).  The Group holds no collateral in respect 
of financial assets. 
 
41.3 Market risk 
 
The Company had no trading portfolio during 2014 (2013: Nil). The commentary below relates to banking book 
positions. 
41.3.1 Profit Rate Risk 
Profit rate risk is the risk of loss arising from changes in profit rates. The Company manages profit rate risk by using 
maturity buckets to calculate the net profit rate gap whilst considering floating, fixed and non-sensitive rates of 
return. As outlined under Sensitivity to fair value of instruments below, the impact of these gaps on the Group and 
Company’s equity is not considered to be material. 
 
 
2014        
Profit Rate profile (£000)   Rate profile band   
Group  0-1 2-3 4-6 7-12 1-5 Over 5 
Assets Total month months months months years years 
        
Fixed Rate Items    63,722       21,564     15,145       7,156            -       19,857            -    
Variable Rate Items         676            -              -              -              -            676            -    
Non rate Sensitive    50,829       10,161          488            -         9,935            -       30,245  
Total Assets  115,227       31,725     15,633       7,156       9,935     20,533     30,245  
        
Liabilities        
        
Fixed Rate Items           -              -              -              -              -              -              -    
Variable Rate Items      6,630       3,000            -              -         3,630            -              -    
Non rate Sensitive           -              -              -              -              -              -              -    
Total Liabilities      6,630       3,000            -              -         3,630            -              -    
        
Net Gap     28,725     15,633       7,156       6,305     20,533     30,245  
        
Cumulative Gap     28,725     44,358     51,514     57,819     78,352   108,597  
 
 
         European Islamic Investment Bank plc 
 
79 
 
2014        
Profit Rate profile (£000)   Rate profile band   
Company  0-1 2-3 4-6 7-12 1-5 Over 5 
Assets Total month months months months years Years 
        
Fixed Rate Items    63,828     21,500     15,145       7,326            -       19,857            -    
Variable Rate Items         676            -              -              -              -            676            -    
Non rate Sensitive    57,425       5,078            -              -              -              -       52,347  
Total Assets  121,929     26,578     15,145       7,326            -       20,533     52,347  
        
 
Liabilities        
        
Fixed Rate Items           -              -              -              -              -              -              -    
Variable Rate Items           -              -              -              -              -              -              -    
Non rate Sensitive           -              -              -              -              -              -              -    
Total Liabilities           -              -              -              -              -              -              -    
        
Net Gap 121,929    26,578     15,145       7,326            -       20,533     52,347  
        
Cumulative Gap     26,578     41,723     49,049     49,049     69,582   121,929  
        
2013        
Profit Rate profile (£000)   Rate profile band   
Group  0-1 2-3 4-6 7-12 1-5 Over 5 
Assets Total month months months months years years 
        
Fixed Rate Items 88,570 32,365 8,000 - 19,522 8,434 20,249 
Variable Rate Items 1,845   -    -   -    844 1,001   -    
Non rate Sensitive 48,756 19,830 1,407 - 5,543 8,723 13,253 
Total Assets 139,171 52,195 9,407 - 25,909 18,158 33,502 
        
Liabilities        
        
Fixed Rate Items 4,280 4,026  -  -  254   -      -    
Variable Rate Items 8,721 5,223      -          1,749         1,749  -   -    
Non rate Sensitive   -      -      -      -      -      -      -    
Total Liabilities 13,001 9,249     -        1,749  2,003 -   -    
        
Net Gap  42,946 9,407 (1,749) 23,906 18,158 33,502 
        
Cumulative Gap  42,946 52,353 50,604  74,510 92,668 126,170 
 
        
   European Islamic Investment Bank plc 
 
80 
 
2013        
Profit Rate profile (£000)   Rate profile band   
Company  0-1 2-3 4-6 7-12 1-5 Over 5 
Assets Total month months months months years years 
        
Fixed Rate Items 74,064 33,026 8,000 - 4,356 28,682 - 
Variable Rate Items 1,845   -  -   - 844 1,001   -    
Non rate Sensitive 94,407 4,708 - - 48,454   -    41,245 
Total Assets 170,316 37,734 8,000 - 53,654 29,683 41,245 
        
Liabilities        
        
Fixed Rate Items 42,511 14,742 15,888 9,676 2,205   -      -    
Variable Rate Items   -      -      -      -      -      -      -    
Non rate Sensitive   -      -      -      -      -      -      -    
Total Liabilities 42,511 14,742 15,888 9,676 2,205   -      -    
        
Net Gap  22,992 (7,888) (9,676) 51,449 29,683 37,691 
        
Cumulative Gap  22,992 15,104 5,428 56,877 86,560 124,251 
        
Sensitivity to income  
 
Profit rate risk is managed within profit rate gap limits on a daily basis. The sensitivity of the Income Statement to 
various profit rate scenarios is considered on a daily basis. An analysis of sensitivity to an increase or decrease in 
market profit rates, assuming no asymmetrical movement in yield curves and a constant financial position, is as 
follows at the financial year end. The percentages used in the sensitivity analysis below represent the Board’s 
assessment of the reasonable possible change in profit rates at the reporting date. 
 
2014 
Group & Company  
Change in rates 
(Basis points) 
-100 bp -50 bp -25 bp +25 bp +50 bp +100bp 
Effect on income statement 
£ 000 
-368 -193 -106 107 214 428 
2013 
Group 
Change in rates 
(Basis points) 
-100 bp -50 bp -25 bp +25 bp +50 bp +100bp 
Effect on income statement 
£ 000 
-181 -171 -101 +101 +203 +405 
 
Company 
Change in rates 
(Basis points) 
-100 bp -50 bp -25 bp +25 bp +50 bp +100bp 
Effect on income statement 
£ 000 
-104 -95 -22 +22 +44 +88 
 
 
 
 
  European Islamic Investment Bank plc 
 
81 
 
Sensitivity to fair value of instruments   
 
While the Company does not hold or trade in profit rate products, the fair value of financial instruments held will be 
affected by current market forces including profit rates. The table below sets out the sensitivity of the Group’s and 
Company’s equity to changes in fair values of related instruments assuming all other factors remain constant.  
 
The percentages used in the sensitivity analysis below represent the Board’s assessment of the reasonable 
possible change in profit rates at the reporting date. 
 
2014 
Group & Company  
 
 
2013 
Group & Company  
 
41.3.2 Currency Risk 
Currency risk is the risk of loss arising from changes in foreign exchange rates. The Board has set limits on open 
currency positions and these positions are monitored daily to ensure positions are maintained within the 
established limits. 
 
The Company does not take significant currency positions as all positions other than the reporting currency are 
substantially covered. Small residual currency exposures remain which are well within the Board approved limits. 
 
The percentages used in the sensitivity analysis below represent the Board’s assessment of the reasonable 
possible change in currency rates at the reporting date. 
 
2014 
Group 
 
 
Bank 
 
 
 
2013 
Group 
 
 
Change in rates 
(Basis points) 
-100 bp -50 bp -25 bp +25 bp +50 bp +100bp 
Effect on fair value (equity) 
£ 000 
+929 +465 +232 -232 -465 -929 
Change in rates 
(Basis points) 
-100 bp -50 bp -25 bp +25 bp +50 bp +100bp 
Effect on fair value (equity) 
£ 000 
+1,098 +549 +275 -275 -549 -1,098 
Change in currency rates 
(%) 
-10% -5% -2% +2% +5% +10% 
Effect on income statement 
£ 000 
-1343 -672 -269 +269 +672 +1343 
Change in currency rates 
(%) 
-10% -5% -2% +2% +5% +10% 
Effect on income statement 
£ 000 
-77 -39 -15 +15 +39 +77 
Change in currency rates 
(%) 
-10% -5% -2% +2% +5% +10% 
Effect on income statement 
£ 000 
-359 -180 -72 +72 +180 +359  European Islamic Investment Bank plc 
 
82 
 
Company 
 
 
41.3.3 Equities Risk 
 
Equities risk is the risk of loss arising from changes in equity prices. In addition to investments made in equity 
funds, EIIB also held a portfolio of MENA equities as at December 2014 (2013: none).  Exposure comprises direct 
exposure to this discretionary portfolio and indirect exposure to equities held by a fund all of which are separately 
managed and administered. The impact of a reasonable price shift in the Group and Company’s equity investment 
is not deemed significant in the context of the figures reported in the relevant statement of financial position. The 
analysis is based in the assumption that the price of these investments had increase/decreased by 5% at the 
reporting date with all other variables being constant. 
 
41.3.4 Commodities Risk 
 
Commodities risk is the risk of loss arising from changes in commodity prices. No commodities were held during 
2014 (2013: none).  Investments are made in trade finance funds from time to time.  Exposure to a trade finance 
fund may include indirect exposure to commodities held by a fund which is separately managed and administered.  
 
41.4 Operational risk 
Operational risk is the risk of loss arising from inadequate or failed systems, human error and fraud, processes and 
external events. Operational risks can result in damage to reputation, have legal or regulatory implications or lead 
to financial loss. The Company has implemented a control framework to mitigate these risks. 
 
Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff 
education and assessment processes, including the use of internal audit. Risk registers and matrices have been 
developed for each department which form part of a quality self-assessment process. 
  
41.5 Liquidity risk 
Liquidity risk is the risk that the Company will be unable to meet its payment obligations when they fall due. To limit 
this risk the Company manages the maturities of its assets and liabilities and its cash flows on a daily basis and 
maintains a portfolio of short-term bank deposits. Liquidity risk management is the responsibility of ALCO. 
41.5.1 Liquidity profile 
 
Liquidity is managed based on contractual cash flows.   Liquidity risk is quite minimal since EIIB no longer takes 
deposits and is lowly leveraged. The Company’s gross cash outflows are largely self-liquidating from offsetting 
transactions.  Treasury manages any resulting liquidity risk by utilising some or all of the following techniques:  
 matching cash inflows with expected cash outflows using specific cash flow projections or more general 
asset and liability matching techniques such as duration matching;  
 maintaining sufficient cash resources;  
 maintaining a prudent level of investments in higher credit-quality securities with deep and liquid markets; 
and  
 monitoring investment concentrations and restricting them where appropriate, for example, by debt issues 
or issuers. 
 
 
The Group and Company had the following liquidity profiles that are representative of its contractual undiscounted 
cash flows and which include forward foreign exchange commitments: 
 
 
 
 
Change in currency rates 
(%) 
-10% -5% -2% +2% +5% +10% 
Effect on income statement 
£ 000 
-91 -45 -18 +18 +45 +91  European Islamic Investment Bank plc 
 
83 
 
 
(Foreign currency amounts in sterling equivalents) 
 
 
2014 
   
      Cash flow band 
    Liquidity profile 
(£000) 
  
  0-1 
 
2-3 
 
4-6 
 
7-12 
 
1-5 
 
Over 5 
Group Total 
 
month 
 
months 
 
months 
 
months 
 
years 
 
years 
GBP 
             
Assets 127,089 
 
44,817  
 
70,235  
 
5,400  
 
4,043  
 
2,594  
 
-  
Liabilities 83,348 
 
21,289  
 
62,059  
 
-  
 
-  
 
-  
 
-  
Net 43,741 
 
23,528  
 
8,176  
 
5,400  
 
4,043  
 
2,594  
 
-  
 
  
            
USD   
            
Assets 62,664 
 
6,008  
 
4,345  
 
-  
 
4,127  
 
17,939  
 
30,245  
Liabilities 10,318 
 
6,688  
 
-  
 
-  
 
3,630  
 
-  
 
-  
Net 52,346 
 
(680) 
 
4,345  
 
-  
 
497  
 
17,939  
 
30,245  
 
             
Euro 
             
Assets 21  
 
21  
 
-  
 
-  
 
-  
 
-  
 
-  
Liabilities -  
 
-  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 21  
 
21  
 
-  
 
-  
 
-  
 
-  
 
-  
 
             
GCC currencies 
             
Assets 2,849  
 
1,175  
 
-  
 
-  
 
1,674  
 
-  
 
-  
Liabilities -  
 
-  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 2,849  
 
1,175  
 
-  
 
-  
 
1,674  
 
-  
 
-  
 
             
Other currencies 
             
Assets 2,845  
 
510  
 
488  
 
1,756  
 
91  
 
-  
 
-  
Liabilities 124  
 
124  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 2,721  
 
386  
 
488  
 
1,756  
 
91  
 
-  
 
-  
 
             
Total 
             
Assets 195,468  
 
52,531  
 
75,068  
 
7,156  
 
9,935  
 
20,533  
 
30,245  
Liabilities 93,790  
 
28,101  
 
62,059  
 
-  
 
3,630  
 
-  
 
-  
Net 101,678  
 
24,430  
 
13,009  
 
7,156  
 
6,305  
 
20,533  
 
30,245  
           
 
 
                 European Islamic Investment Bank plc 
 
84 
 
2013 
   
      Cash flow band 
    Liquidity profile 
(£000) 
  
  0-1 
 
2-3 
 
4-6 
 
7-12 
 
1-5 
 
Over 5 
Group Total 
 
month 
 
months 
 
months 
 
months 
 
years 
 
Years 
GBP 
             
Assets 133,048  
 
66,442  
 
40,210  
 
18,208  
 
- 
 
8,188  
 
- 
Liabilities 87,954  
 
35,262  
 
34,194  
 
18,244  
 
254  
 
-  
 
-  
Net 45,094  
 
31,180  
 
6,016  
 
(36) 
 
(254) 
 
8,188  
 
- 
 
             
USD 
             
Assets 71,355  
 
7,966  
 
- 
 
- 
 
21,660  
 
13,627  
 
28,102  
Liabilities 22,242  
 
8,250  
 
712  
 
1,749  
 
1,749  
 
9,782  
 
- 
Net 49,113  
 
(284) 
 
(712) 
 
(1,749) 
 
19,911  
 
3,845  
 
28,102  
 
             
Euro 
             
Assets 111  
 
111  
 
-  
 
-  
 
-  
 
-  
 
-  
Liabilities -  
 
-  
 
-  
 
-  
 
-  
 
-  
 
-  
 Net 111  
 
111  
 
-  
 
-  
 
-  
 
-  
 
-  
 
             
GCC currencies 
             
Assets 15,499  
 
11,829  
 
36  
 
-  
 
1,892  
 
1,742  
 
-  
Liabilities - 
 
-  
 
-  
 
-  
 
- 
 
-  
 
-  
Net 15,499  
 
11,829  
 
36  
 
-  
 
1,892  
 
1,742  
 
-  
 
             
Other currencies 
             
Assets 3,209  
 
-  
 
852  
 
-  
 
2,357  
 
-  
 
- 
Liabilities 849  
 
-  
 
- 
 
-  
 
849  
 
-  
 
-  
Net 2,360  
 
-  
 
852  
 
-  
 
1,508  
 
-  
 
- 
 
             
Total 
             
Assets 223,222  
 
86,348  
 
41,098  
 
18,208  
 
25,909  
 
18,157  
 
33,502  
Liabilities 111,045  
 
43,512  
 
34,906  
 
19,993  
 
2,852  
 
9,782  
 
- 
Net 112,177  
 
42,836  
 
6,192  
 
(1,785) 
 
23,057  
 
8,375  
 
33,502  
                 European Islamic Investment Bank plc 
 
85 
 
2014 
   
      Cash flow band 
    Liquidity profile 
(£000) 
  
  0-1 
 
2-3 
 
4-6 
 
7-12 
 
1-5 
 
Over 5 
Company Total 
 
month 
 
months 
 
months 
 
months 
 
years 
 
Years 
GBP 
             
Assets 123,046  
 
44,817  
 
70,235  
 
5,400  
 
-  
 
2,594  
 
-  
Liabilities 81,299  
 
21,289  
 
60,010  
 
-  
 
-  
 
-  
 
-  
Net 41,747  
 
23,528  
 
10,225  
 
5,400  
 
-  
 
2,594  
 
-  
 
             
USD 
             
Assets 78,926  
 
2,369  
 
4,345  
 
1,926  
 
-  
 
17,939  
 
52,347  
Liabilities -  
 
-  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 78,926  
 
2,369  
 
4,345  
 
1,926  
 
-  
 
17,939  
 
52,347  
 
             
Euro 
             
Assets 21  
 
21  
 
-  
 
-  
 
-  
 
-  
 
-  
Liabilities -  
 
-  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 21  
 
21  
 
-  
 
-  
 
-  
 
-  
 
-  
 
             
GCC currencies 
             
Assets 176  
 
176  
 
-  
 
-  
 
-  
 
-  
 
-  
Liabilities -  
 
-  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 176  
 
176  
 
-  
 
-  
 
-  
 
-  
 
-  
 
             
Total 
             
Assets 202,169  
 
47,383  
 
74,580  
 
7,326  
 
-  
 
20,533  
 
52,347  
Liabilities 81,299  
 
21,289  
 
60,010  
 
-  
 
-  
 
-  
 
-  
Net 120,870  
 
26,094  
 
14,570  
 
7,326  
 
-  
 
20,533  
 
52,347  
                 European Islamic Investment Bank plc 
 
86 
 
 
 
2013 
   
       
 
Cash flow band 
    Liquidity profile 
(£000) 
  
  0-1 
 
2-3 
 
4-6 
 
7-12 
 
1-5 
 
Over 5 
Company Total 
 
month 
 
months 
 
months 
 
months 
 
years 
 
Years 
GBP 
             
Assets 130,214  
 
66,915  
 
39,691  
 
18,208  
 
-  
 
5,400  
 
-  
Liabilities 87,649  
 
35,262  
 
33,889  
 
18,244  
 
254  
 
-  
 
-  
Net 42,565  
 
31,653  
 
5,802  
 
(36) 
 
(254) 
 
5,400  
 
-  
 
             
USD 
             
Assets 71,670  
 
1,786  
 
- 
 
- 
 
4,356  
 
24,283  
 
41,245 
Liabilities 40,648  
 
13,133  
 
15,888  
 
9,676  
 
1,951  
 
-  
 
-  
Net 31,022  
 
(11,347) 
 
(15,888) 
 
(9,676) 
 
2,405  
 
24,283  
 
41,245 
 
             
Euro 
             
Assets 94  
 
94  
 
-  
 
-  
 
-  
 
-  
 
-  
Liabilities -  
 
-  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 94  
 
94  
 
-  
 
-  
 
-  
 
-  
 
-  
 
             
GCC currencies 
             
Assets 52,389  
 
3,091  
 
-  
 
-  
 
49,298  
 
- 
 
- 
Liabilities 659  
 
659  
 
-  
 
-  
 
-  
 
-  
 
-  
Net 51,730  
 
2,432  
 
-  
 
-  
 
49,298  
 
- 
 
- 
 
             
Total 
             
Assets 254,367  
 
71,886  
 
39,691  
 
18,208  
 
53,654  
 
29,683  
 
41,245  
Liabilities 128,956  
 
49,054  
 
49,777  
 
27,920  
 
2,205  
 
-  
 
-  
Net 125,411  
 
22,832  
 
(10,086) 
 
(9,712) 
 
51,449  
 
29,683  
 
41,245  
              
 
As at 31 December 2014 and at 31 December 2013, the Company had no contingent liabilities.  As at 31 December 
2014 the Company had undrawn funding commitments of £6.4m (2013: £1.3m) (note 35). 
 
 
41.6      Capital management and risk  
 
The Firm’s lead regulator, the Financial Conduct Authority (previously the Prudential Regulatory Authority (“PRA”)) 
sets and monitors capital requirements for the Company. The Company complies with the regulatory framework in 
respect of regulatory capital. To calculate capital requirements for the firm, it uses the “standardised approach” for 
credit risk, the “standardised approach” for market risk and the “basic indicator approach” for operational risk. 
 
The Group’s capital comprises ordinary share capital, share premium, capital redemption reserve, special reserve, 
accumulated losses and fair value reserve subject to other regulatory adjustments. All banking operations are 
categorised as ‘Banking book’ business and accordingly the risk-weighted assets are calculated to reflect the varying 
levels of risks attached to assets. 
 
The Group’s primary objective and policy is to maintain a strong capital base so as to maintain investor, depositor 
and market confidence. The firm has along with its major subsidiary, Rasmala has complied with all regulatory capital 
requirements throughout the year.  
 
 
  
 
 
 
  
 
     
 
         ¤          European Islamic Investment Bank plc 
 
87 
 
 
£000 
 
£000 
  2014 
 
2013   
Group   
 
    
Regulatory Capital 102,161 
 
100,965   
  
 
 
 
  
Total Risk Weighted Assets 
 
123,643  
 
116,895   
  Credit Risk  
 92,882   
86,134   
  Market Risk 
 12,000   
12,400   
  Operational Risk 
 18,761   
18,361   
  
 
 
 
  
Capital Adequacy Ratio  83% 
 
86%   
 
 
 
 
 
The current level of capital is considered to be adequate to support future growth.  
 
Capital and risk-reward management are the responsibility of ALCO, which monitors capital and risk limits for the 
various areas of the Company’s business. Currently capital is not a constraint on growth. 
 
42. Post reporting date events 
 
The Directors confirm that there are no significant events arising since the reporting date that should be reported to 
shareholders other than a tender offer for up to £20 million (the “Tender Offer”) which was posted to shareholders on 
17 April 2015. The Tender Offer is expected to close on 6 May 2015. During July 2014 the court approved a 
reduction of the Company’s Share Premium Account by the amount of £40,000,000 to create extra distributable 
reserves required to complete the Tender Offer. The Company intends to purchase up to 8,000,000 shares 
(approximately 21% of the Company’s issued share capital) for £2.50 per share. The price per share represents a 
discount of 22% to the net asset value per ordinary share at 31 December 2013 of 6.4p.