Half Yearly Report

RNS Number : 5987Z

The Family Shariah Fund Ltd

24 September 2009

 



THE FAMILY SHARI'AH FUND LIMITED

(the 'Company' or 'Fund')

The Family Shari'ah Fund Limited, a multi-asset class fund providing investors with exposure to a variety of Shari'ah compliant investments predominantly outside of the GCC region, is pleased to announce its unaudited interim half year results for the six month period ended 30 June 2009.  

A full copy of the half year results which have been reviewed by the auditors, the financial timetable and the latest monthly investment manager's report are also available on the Fund's website (www.familyshariahfund.com).

For further information, please contact: 

The Family Office (Investment Manager)	Tel: [phone]
Andrew Paine - CFO
Richard Joye - Projects Manager
Blomfield Corporate Finance  (Nominated Adviser and Broker)	Tel: [phone]
James Pinner  / Alan MacKenzie

INVESTMENT MANAGER'S REPORT 

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009

We have been appointed by the Board of Directors of the Company as Investment Manager with the objective of achieving long-term capital appreciation from a Shari'ah-Compliant, diversified, investment portfolio characterised by a moderate level of risk. 

The first half of 2009 has been eventful and demonstrated that the path to recovery was still uncertain. As markets inflected, there remains a high level of uncertainty and we witness that market estimates for the end of the year target range for the World Islamic Equity Index is extremely wide. Whilst stablising, the global economy and markets remain uncertain. Massive and unprecedented levels of global central bank liquidity support schemes do not look like ending anytime soon and global fiscal stimulus plans continue into the implementation phase. Global imbalances have yet to be fixed, which lead and will continue to lead to volatility over the coming 6-12 months at least. The developed world is in the first stage of its necessary deleveraging, with private leverage unwind being supported by public leverage build-up, which will have to eventually be unwound in turn causing potential longer-term volatility and uncertainty.

We have now revised our budget plan to focus on wealth preservation across market cycles and a prudent approach to investing; as a result we have deployed further capital during the first half of 2009 in a cautious manner, focusing on risk management and long-term objectives. 

Within the boundaries of the Investing Policy, we have revised our targets to allow us to remain overweight in cash. We have deployed capital into Islamic income and rebalanced the equity allocation, whilst keeping the exposure to these two asset classes as underweight. Anticipating that Private Equity could structure highly attractive new or rescue financing deals in the current a capital constrained environment, we have ramped up our sourcing and originating efforts to identify and execute transactions that present great potential for high multiple returns.

Acting in accordance with the objectives of the Company and the expectations of the shareholders, our prudent approach implemented in phases resulted in a decrease of the net asset value of the Company's assets, net of all fees, of US $211,525 during the reporting period. 

As at 30 June 2009, the portfolio of assets is still positioned with the objective of preserving capital and getting more exposure to the financial markets.

Richard Joye

Member of the Investment Committee

On behalf of the Investment Manager

The Family Office Co. BSC(c)

INTERIM STATEMENT OF FINANCIAL POSITION

30 JUNE 2009 (Unaudited)

	Note	30 June 2009				31 December 2008
		(Unaudited) US$				(Audited) US$
ASSETS
Balances with banks		4,105,436				16,805,698
Investments at fair value through statement of   income	3	10,667,415				7,827,150
Murabaha receivables		13,084,765				3,038,750
Other assets		29,995				500,707
TOTAL ASSETS		27,887,611				28,172,305
LIABILITIES AND EQUITY
LIABILITIES
Due to investment manager	6	138,505				204,942
Other payables and accruals		198,769				205,501
TOTAL LIABILITIES		337,274				410,443
EQUITY
Share capital		315,500				315,500
Share premium		31,234,500				31,234,500
Accumulated loss		(3,999,663)				(3,788,138)
TOTAL EQUITY		27,550,337				27,761,862
TOTAL LIABILITIES AND EQUITY		27,887,611				28,172,305

INTERIM STATEMENT OF INCOME 

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009 (Unaudited)

	Note	30 June 2009
		(Unaudited) US$
INCOME
Net income from investments at fair value through statement of income		520,269
Murabaha income		46,017
TOTAL INCOME		566,286
EXPENSES
Management fee	6	205,781
General and administration expenses		572,030
TOTAL EXPENSES		777,811
NET LOSS FOR THE PERIOD		(211,525)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		31,550,000
EARNINGS PER SHARE (BASIC AND DILUTED)		(0.01)

INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009 (Unaudited)

		30 June 2009
		(Unaudited) US$
NET LOSS AND TOTAL COMPREHENSIVE INCOME     FOR THE PERIOD		(211,525)

INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009 (Unaudited)

	Share capital		Share premium		Accumulated loss		Total
	US$		US$		US$		US$
Balance at 1 January 2009	315,500		31,234,500		(3,788,138)		27,761,862
Total comprehensive income for the period	-		-		(211,525)		(211,525)
Balance at 30 June 2009	315,500		31,234,500		(3,999,663)		27,550,337

INTERIM STATEMENT OF CASH FLOWS

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009 (Unaudited)

	30 June 2009
	(Unaudited) US$
OPERATING ACTIVITIES
Net loss for the period	(211,525)
Net changes in:
Investments at fair value through statement of income	(2,840,265)
Murabaha receivables	(10,046,015)
Other assets	470,712
Due to investment manager	(66,437)
Other payables and accruals	(6,732)
Net cash used in operating activities	(12,700,262)
NET DECREASE IN BALANCES WITH BANKS	(12,700,262) )
BALANCES WITH BANKS AT 1 JANUARY 2009	16,805,698
BALANCES WITH BANKS AT 30 JUNE 2009	4,105,436
Supplemental information:
Dividends received	12,862

1    ACTIVITIES

The Family Shari'ah Fund Limited (the 'Fund') is a Shari'ah-compliant multi-asset class investment company. The Fund is a Cayman Islands exempted company which is not registered with the Cayman Islands Monetary Authority ('CIMA'). The Fund invests in a range of Shari'ah-compliant assets, products and investments. The Fund's strategy is to focus on providing specialised Shari'ah-compliant financial products that appeal to a growing market of investors who desire Shari'ah-compliant economic equivalents to conventional assets and instruments.

The address of the registered office of the Fund is SH Corporate Services Ltd., P.O. Box 61, 4th Floor, Harbour Centre, George Town, Grand Cayman, KY1, 1102, Cayman Islands. 

The investment objective of the Fund is to achieve long-term capital appreciation from a Shari'ah-compliant, diversified, investment portfolio characterised by a moderate level of risk. The Fund operates under the overriding principle that all investments must be Shari'ah-compliant. The Fund's investment objectives are therefore devised so as to provide investors with a diversified pool of Shari'ah-compliant assets, consistent risk-adjusted returns over a market cycle via an active and diversified asset allocation programme, geographic diversification of investments and liquidity through trading of the Fund's shares on the AIM market of the LSE.

The activities of the Fund are subject to Islamic Investment Guidelines, as defined from time to time by the Shari'ah Supervisory Board ('SSB'). The SSB consists of two members, as mentioned on page 3.

The SSB is responsible for:

·      reviewing and approving the 'Islamic Investment Guidelines' of the Fund;

·      reviewing the Fund's investments to ensure that they are Shari'ah compliant;

·      receiving reports from the investment manager to ensure adherence to Islamic Investment Guidelines; and

·      advising the Directors on corporate interest revenue purification and selecting appropriate charities

  

The Family Office Company B.S.C. (c), a company incorporated in the Kingdom of Bahrain, is the investment manager of the Fund ('Investment Manager').

The Fund has appointed Apex Fund Services (Ireland) Limited ('the Administrator' or 'Apex'), an Irish limited liability company as administrator.

The Fund commenced operations on 25 July 2008. Hence, there are no comparative statements.

The interim condensed financial statements of the Fund for the six month period ended 30 June 2009 was approved by the Board of Directors on 20 August 2009.

2    BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The interim condensed financial statements of the Fund are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting.

The interim condensed financial statements does not contain all information and disclosures required for full financial statements prepared in accordance with International Financial Reporting Standards and should be read in conjunction with the Fund's annual financial statements as at 31 December 2008. In addition, results for the six month period ended 30 June 2009 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2009.

The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Fund's annual financial statements for the year ended 31 December 2008, except for the adoption of new Standards and Interpretations as of 1 January 2009, noted below.

• IAS 1 'Presentation of Financial Statements' (Revised):
  
  The revised standard requires changes in equity arising from transactions with owners in their capacity as owners (i.e. owner changes in income) to be presented in the statement of changes in equity. All other changes in equity (i.e. non-owner changes in equity) are required to be presented separately in a statement, statement of comprehensive income. Components of comprehensive income are not permitted to be presented in the statement of changes in equity.
  
  
• IFRS 8 'Operating Segments'
  
  The new standard which replaced IAS 14 'Segment reporting' requires a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. The adoption of this standard has not resulted in any significant change in the reportable segments, as the existing external segmental disclosures are more consistent with the internal reporting provided to the chief operating decision makers.

The amendments to the following standards below did not have any impact on the accounting policies, financial position or performance of the Fund:

• IFRS 2 Share based Payment - Vesting Conditions and Cancellations
• IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
• IFRS 7 Financial Instruments: Disclosures
• IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and Measurement
• IFRIC 13 Customer Loyalty Programmes
• IFRIC 16 Hedges of a Net Investment in a Foreign Operation
• IAS 8 Accounting Policies, Change in Accounting Estimates and Error
• IAS 10 Events After the Reporting Period
• IAS 16 Property, Plant and Equipment
• IAS 18 Revenue
• IAS 19 Employee Benefits
• IAS 20 Accounting for Government Grants and Disclosures of Government Assistance
• IAS 23 Borrowing Costs
• IAS 27 Consolidated and Separate Financial Statements
• IAS 28 Investments in Associates
• IAS 31 Interest in Joint ventures
• IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation
• IAS 34 Interim Financial Reporting
• IAS 36 Impairment of Assets
• IAS 38 Intangible Assets
• IAS 39 Financial Instruments: Recognition and Measurement

3    INVESTMENTS AT FAIR VALUE THROUGH STATEMENT OF INCOME

This section represents investments in instruments compliant with, or in compliance with, the principles and precepts of Shari'ah as determined by the Shari'ah Supervisory Board. Investments are made in accordance with the investment policies as laid down in the Admission Document of the Fund.  

After initial measurement, the Fund re-measures financial instruments which are classified as at fair value through statement of income at their fair values. The fair values of financial instruments are as follows:

		30 June 2009		31 December 2008
		(Unaudited) US$		(Audited) US$
Listed equities		8,141,646		6,554,096
Unlisted equities		2,525,769		1,273,054
Total		10,667,415		7,827,150

As stated in the Admission Document, the unlisted equity investments are subject to a quarterly third party valuation and therefore the NAV as stated herein differs from the unaudited net asset value as at 30 June 2009 as previously announced on 16 July 2009.

4    COMMITMENTS

The Fund has a capital commitment to TFO Shari'ah Co-Investment SPC program (a related party fund), representing a portfolio of assets. This capital commitment as at the balance sheet date amounted to US$ 1.35 million. The capital call depends upon investment opportunities identified by the related party fund.

5    SEGMENT REPORTING

The Fund has one class of business and all other services provided are ancillary to this.

6    RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability to control the other party or exercises significant influence over the other party in making financial or operational decisions. All transactions with related parties were in the normal course of business. The Investment Manager and related companies are deemed to be related to the Fund. Fees incurred with related parties during the period and amounts payable to related parties at the period end are disclosed below.

Nature		Payable to				Basis
Management fee		The Family Office Company B.S.C. (c)				1.5% of the net asset value (NAV) of the Fund, calculated monthly as of the last day of each fiscal quarter using the month end net asset value and paid quarterly in arrears.
Performance fee		The Family Office Company B.S.C. (c)				is calculated in respect of each fiscal quarter if the hurdle rate (the Murabaha 3 month return) and a high water mark are met. The performance fee is equal to 10% of the excess NAV per share over the hurdle rate multiplied by the time weighted average of the number of shares in issue in the fiscal quarter.

Balances and transactions with related parties included in the interim condensed financial statements is as follows:

	30 June 2009 (Unaudited) US$		31 December 2008 (Audited) US$
Interim statement of financial position
Assets:
Investments at fair value through statement of income*	2,525,769		1,273,054
Liabilities:
Due to investment manager	138,505		204,942
			Six month ended 30 June 2009 (Unaudited) US $
Interim statement of income:
Unrealised loss on investments*			97,284
Management fee			205,781
General and administration expenses			241,009

* Investments made through investment vehicles that have common control of investment manager

Notes to Editors

The Family Shari'ah Fund Limited is the first multi-asset class fund to gain admission to AIM and

provides investors with exposure to a variety of Shari'ah Compliant investments predominantly outside

of the GCC region.

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