TIDMSCAP
RNS Number : 3119G
Shariah Capital, Inc
28 June 2012
28 June 2012
Shariah Capital, Inc. ("Shariah Capital" or the "Company")
The Board of Directors of Shariah Capital (the "Board") is
pleased to announce the Company's audited annual results for the
year ended 31 December 2011.
Shariah Capital is a U.S. based company that creates and
customizes Shariah complaint financial products and platforms and
provides selective Shariah consulting and advisory services
primarily to financial institutions and investment firms with
product initiatives directed towards Islamic investors. The Company
is best known for its pioneering efforts in Shariah compliant hedge
funds. The Company formed and acts as the Shariah Advisor and
Sponsor for the Al Safi Trust, the first Shariah compliant
alternative investment platform.
2011 Operational Highlights
The Company, through its Dubai Shariah Asset Management, Ltd
("DSAM") joint venture with the Dubai Multi Commodities Centre
Authority ("DMCCA"), redirected its DSAM Kauthar Funds sales focus
from institutional to retail. DSAM extended Shariah Capital's
consulting contract for its 2011 fiscal year (July 1-June 30(th) ).
Shariah Capital receives $315,000 annually under that contract
($157,500 was received in 2011 and the balance of $157,500 is
expected to be received in the second half of 2012). In July 2011,
the DSAM Kauthar Natural Resources Fund was closed and
approximately $14,000,000 in assets was distributed from that
Fund.
The Company spent significant effort restructuring documents for
the DSAM Kauthar Gold Fund to migrate from an institutional to
retail offering. On 23 December 2011, the DSAM Kauthar Gold Fund
successfully listed on the official list of the Cayman Islands
Stock Exchange (CISX) the first Shariah compliant long/short fund
for retail with minimum subscriptions of $5,000 and weekly
liquidity. Subsequently the DSAM Kauthar Gold Fund has made good
progress in building its retail distribution base and gained
approval for sale through the Royal Skandia Fund Platform and the
Friends Provident Fund Platform, as well as with several
Independent Financial Advisory firms in the UAE.
Personnel
In May of 2011, Shaykh Yusuf Talal DeLorenzo left the Company
and resigned as a member of the Board.
In August of 2011, Charles Serocold was hired by the Company as
an associate executive.
In September of 2011, Joseph Gau left the Company and resigned
as a member of the Board.
The Company believes it is adequately staffed for its current
operations and the present business environment.
Financial Review
For the twelve months ending 31 December 2011, Shariah Capital
realised a net loss of approximately $463,984 compared to a net
loss of approximately $354,000 in 2010. The Company generated
revenues of approximately $1,148,120 in 2011 compared to revenues
of approximately $1,281,000 in 2010. Loss per share year over year
remained at $0.01.
Liquidity and Capital Resources
The Company's fee receivable, cash, and cash equivalents stood
at approximately $4.130 million at 31 December 2011, of which over
$3.9 million was held in cash and cash equivalents. This compares
to cash and cash equivalents and fee receivables at the end of 2010
of approximately $4.522 million (of which $4.3 million was held in
cash and cash equivalents). The Company believes its cash and cash
equivalent position is sufficient to meet ongoing and budgeted
operations.
Post period events of Note
On 6 June 2012, the Company announced a change of its NOMAD from
Investec Investment Banking to Allenby Capital Limited. Malcolm
Wall Morris resigned from the Board of Directors of the Company,
and Steven J. Adelkoff (the Company's Chief Financial Officer and
General Counsel) joined the Board.
On 13 June 2012, the DMCCA and the Company agreed that (i) the
Company would end providing to DSAM its fee of 35 basis points on
assets under management on the Al Safi Trust platform, and instead
will retain that fee (beginning with the second quarter of 2012),
(ii) the Company will continue to manage DSAM (including all budget
and operational decisions) from 1 July 2012 to 30 June 2014 and
(iii) the DMCCA would redeem its investment in the DSAM Kauthar
Energy Fund (which has just under $7,000,000 in assets). The impact
of the redirected 35 basis points will not be material to SCAP's
revenues in the immediate future as the 35 basis points contributed
to DSAM are offset by consulting fees received by Shariah Capital
from DSAM. The lock up of investment capital provided by DMCCA will
not be extended beyond 30 June 2012. This will promulgate even
greater care in the deployment of capital, especially longer term
capital/commitments by the Company, on behalf of DSAM. Assets under
management in the DSAM Kauthar Funds stood at approximately $76.30
million as at 31 May 2012.
Barclays Capital, Inc. informed the Company that it will soon
require Shariah Capital to modify new core Prime Broker Documents
in order for Barclays, acting as the Prime Broker, to be in a
position to execute arboon transactions (which replicates short
sales).
Outlook
The present business environment for the alternative fund
market, particularly in the Middle East, remains extremely
challenging. Caution remains the watchword in the Gulf as investors
flee from risk. The 2012 performance, year to date, of our Kauthar
Funds has suffered and assets under management have declined.
Against this difficult environment the Company has continued to cut
costs to better match expenses against expected revenues and to
preserve the Company's cash resources.
The Company continues in its efforts to protect and promote its
Shariah franchise. The Company intends to continue to support
DSAM's retail offering in the UAE. The Company does not believe
ultra cautious Gulf investors will change their mood until the
current crisis of sovereign credibility is demonstrably behind us.
That may take many seasons to achieve in the Company's view.
Benefiting from our strong and liquid balance sheet, the Company
for the first time is now reviewing business opportunities outside
of Shariah and the MENA region. The options being considered by the
Company, are in areas of historical expertise of management, which
includes forming an investment fund in which the Company would
invest in publicly traded securities and early stage angel/venture
investing. With this new business mindset, and as the expense and
complexities of remaining public increase, the Company is reviewing
the cost and benefits of maintaining its AIM listing.
We are grateful to our shareholders for their continued
confidence and support and will keep them updated on
developments.
Enquiries:
Eric Meyer
Chairman and Chief Executive Officer
Shariah Capital Inc.
125 Elm Street
New Canaan, CT 06840
Office: +1 (203) 972-0331
Fax: +1 (203) 972-0229
Email: emeyer@shariahcap.com
Website: www.shariahcap.com
Nick Harriss, Nick Athanas, James Reeve
Allenby Capital Limited
Nominated Adviser and Broker
Shariah Capital, Inc.
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 2011 AND 2010
Independent Auditors' Report 1
Financial Statements
Balance Sheets 2
Statements of Operations 3
Statements of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6 - 13
BALANCE SHEETS
December 31, 2011 2010
-------------------------------------------------------- --- ---------------- ----------------
ASSETS
Current assets
Cash and cash equivalents $ 3,915,644 $ 4,319,166
Fees receivable, less allowance for doubtful
accounts
of approximately $0 and $20,000 at 2011 and
2010, respectively 214,680 202,757
Due from related parties 83,196 160,640
Prepaid expenses and other current assets 68,091 213,426
Investment in DSAM Joint Venture 159,556 17,973
Total current assets 4,441,167 4,913,962
Property and equipment, net 5,642 6,812
---------------- ----------------
$ 4,446,809 $ 4,920,774
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 181,039 $ 129,120
Due to related party 8,425
Total current liabilities 181,039 137,545
---------------- ----------------
Stockholders' equity
Common stock, $.01 par value, 70,000,000 shares
authorized; 60,344,132 and 61,744,132 shares
issued
at 2011 and 2010 respectively; 59,975,832 and
61,670,232
shares outstanding at 2011 and 2010 respectively 603,441 617,440
Additional paid-in capital 12,601,793 12,587,729
Accumulated deficit 8,780,582) (8,326,598)
Treasury stock at cost, 368,300 and 73,900
shares
for 2011 and 2010 respectively (158,882) (105,343)
Total stockholders' equity 4,265,770 4,783,229
---------------- ----------------
$ 4,446,809 $ 4,920,774
STATEMENTS OF OPERATIONS
Years Ended December 31, 2011 2010
---------------------------------------------- --- ----------------- ------------------
Revenue
Advisory fee income $ 735,623 $ 1,028,167
Consulting fee income 412,503 252,499
Total revenue 1,148,126 1,280,666
----------------- ------------------
Expenses
Payroll and employee benefits 727,294 980,082
AIM expenses 70,642 85,336
Bad debt expense 70,003 20,416
Computer expenses 22,795 20,948
Depreciation 1,975 2,587
Insurance 56,680 57,904
Marketing 12,000 15,742
Office expense and supplies 24,483 11,462
Professional fees and other 420,459 347,760
Registrar fees 20,207 13,162
Rent 73,980 74,025
Other taxes 13,657 27,880
Stock-based compensation 64 3,944
Telephone 6,843 9,732
Travel and entertainment 7,523 22,598
----------------- ------------------
Total expenses 1,528,605 1,693,577
----------------- ------------------
Loss from operations (380,479) (412,912)
Other income
Interest and dividend income 34,069 38,644
Income (loss) attributable to unconsolidated
joint venture (117,574) 20,314
----------------- ------------------
Net loss $ (463,984) $ (353,954)
Loss per share, basic and diluted $ (0.01) $ (0.01)
Weighted average shares outstanding, basic
and diluted 60,234,634 60,344,132
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31 2011
and
2010
------------------------------- ---------------- ------------------- ----------------- ------------------ -------------------
Additional Total
Common Stock Paid-in Accumulated Treasury Stockholders'
Shares Amount Capital Deficit Stock Equity
--------------- ---------------- ------------------- ----------------- ------------------ -------------------
Balances,
December 31,
2009 61,744,132 $ 617,441 $ 12,583,785 $ (7,962,644) $ (105,343) $ 5,133,239
Stock-based
compensation 3,944 3,944
Net loss (353,954) (353,954)
--------------- ---------------- ------------------- ----------------- ------------------ -------------------
Balances,
December 31,
2010 61,744,132 $ 617,441 $ 12,587,729 $ (8,316,598) $ (105,343) $ 4,783,229
Stock-based
compensation 64 64
Forfeit of
restricted
stock (1,400,000) (14,000) 14,000 -
Redemption of
treasury
stock (53,539) (53,539)
Net loss (463,984) (463,984)
--------------- ---------------- ------------------- ----------------- ------------------ -------------------
Balances,
December 31,
2011 60,344,132 $ 603,441 $ 12,601,793 $ (8,780,582) $ (158,882) $ 4,265,770
STATEMENT OF CASHFLOWS
Years Ended December 31, 2011 2010
------------------------------------------------------ --- -------------------- -----------------
Cash flows from operating activities
Net loss $ (463,984) $ (353,954)
Adjustments to reconcile net loss
to net cash
used in operating activities:
Stock-based compensation 64 3,944
(Income) loss attributable to unconsolidated
joint venture 117,574 (20,314)
Unrealized depreciation (appreciation) - 3,226
Depreciation 1,975 2,587
Bad debt expense 70,003 20,416
Changes in operating assets and liabilities:
Fees receivable (81,926) 211,559
Due from related parties 69,019 (40,688)
Prepaid expenses and other current assets 91,796 (185,386)
Accounts payable and accrued expenses 51,919 25,587
-------------------- -----------------
Net cash used in operating activities (143,560) (333,023)
-------------------- -----------------
Cash flows from investing activities
Redemptions of certificates of deposit 2,722,496
Purchase of property and equipment (805) (2,936)
Investment in DSAM Joint Venture (259,157)
-------------------- -----------------
Net cash provided by (used in) investing
activities (259,962) 2,719,560
-------------------- -----------------
Net increase (decrease) in cash and cash equivalents (403,522) 2,386,537
Cash and cash equivalents, beginning of year 4,319,166 1,932,629
-------------------- -----------------
Cash and cash equivalents, end of
year $ 3,915,644 $ 4,319,166
Supplemental disclosure of non-cash operating
and financing activities,
Redemption of treasury stock for employee
loan receivable $ 53,539 $ 0
NOTES TO THE FINANCIAL STATEMENTS
1. Nature of operations
Shariah Capital, Inc. (the "Company") was incorporated on
September 6, 2006 as a Delaware corporation. The Company creates
and customizes Shariah-compliant financial products and platforms
and provides Shariah consulting and advisory services primarily to
financial institutions and investment management firms with product
initiatives directed to Islamic investors in the Middle East and
Far East and, specifically to, Islamic institutional and high net
worth investors. The Company has built proprietary solutions
endorsed by prominent Shariah scholars that enable hedge fund and
other alternative investment managers to manage their portfolios
consistent with their existing strategies and processes while
complying with Shariah. The Company explores business opportunities
with financial and investment management firms in Europe, Asia and
the United States.
2. Summary of significant accounting policies
Basis of Presentation
The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of
America ("GAAP").
These financial statements were approved by management and
available for issuance on June 26th 2012. Subsequent events have
been evaluated through this date.
Cash and Cash Equivalents and Concentration of Credit Risk
Cash and cash equivalents include cash held in banks and money
market funds with original maturities of three months or less. The
Company maintains cash balances in certain financial institutions
which, at times, may exceed federally insured limits. The Company
is subject to credit risk to the extent any financial institution
with which it conducts business is unable to fulfill contractual
obligations on its behalf. Management monitors the financial
condition of such financial institutions and does not anticipate
any losses from these counterparties.
Fees Receivable and Allowance for Doubtful Accounts
Fees receivable consist of advisory fees and consulting fees.
Advisory fees are based on the percentage of the net assets of the
fund for which the Company serves as the Shariah advisor.
Consulting fees primarily consist of up-front non-refundable fees
earned upon the commencement of the engagement, pursuant to the
service agreements; a progress fee based upon completion of certain
deliverables and a final payment based upon the completion of the
consulting and advisory services. Advisory fees and consulting fees
are recognized in the year they are earned. On a periodic basis,
the Company evaluates its fees receivable and determines if an
allowance for doubtful accounts is necessary, based on the history
of collections and current credit conditions. The Company recorded
an allowance for doubtful accounts of approximately $0 and $20,000
at December 31, 2011 and 2010 respectively.
Investment in DSAM Joint Venture
The Company has an investment in a joint venture that has been
accounted for under the equity method of accounting. Under the
equity method of accounting, the Company's investment is carried at
cost and adjusted for their proportionate share of earnings or
losses from the investment.
Property and Equipment
Property and equipment is stated at cost less accumulated
depreciation. The Company provides for depreciation utilizing the
straight-line method over the estimated useful lives of the related
assets. Computer equipment is depreciated using an estimated useful
life of five years. Expenditures for repairs and maintenance are
charged to expense as incurred.
Long-Lived Assets
The Company accounts for long-lived assets under GAAP which
requires the Company to review for impairment of long-lived assets,
whenever events or changes in circumstances indicate that the
carrying amount of an asset might not be recoverable. When such an
event occurs, management determines whether there has been an
impairment by comparing the anticipated undiscounted future net
cash flows to the related asset's carrying value. If an asset is
considered impaired, the asset is written down to fair value, which
is determined based either on discounted cash flows or appraised
value, depending on the nature of the asset. The Company did not
have any impairment losses on long-lived assets for the years ended
December 31, 2011 and 2010.
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
Stock-Based Compensation
GAAP requires an entity to measure the cost of employees
services received in exchange for stock-based awards based on the
grant date fair value of the awards. The grant date fair value of
employee restricted stock-based awards will be estimated based on
the market price of the Company's stock on the date of the grant.
All stock-based awards granted to employees are recognized as
compensation expense over the service period (generally the vesting
period) in the financial statements based on their fair values
established at the time the awards are granted. GAAP requires the
Company to estimate the future forfeitures which has an impact on
stock-based compensation expense. GAAP also requires the
realization of tax benefits in excess of amounts recognized for
financial reporting purposes to be recognized as a financing
activity rather than an operating activity in the statements of
cash flows.
If an award is modified after the grant date, incremental
compensation expense, if any, will be recognized in an amount equal
to the excess of the fair value of the modified award over the fair
value of the original award immediately before modification.
For non-employee stock-based awards, the Company recognizes an
expense in accordance with GAAP and values the stock-based award on
the fair value of the grant date of the award with subsequent
adjustments based on the fair value of the award as it vests. The
fair value of the restricted stock-based award is estimated based
on the market price of the Company's stock.
Income Taxes
The Company is responsible for minimum taxes to the state of
Connecticut. Due to losses incurred for the years ended December
31, 2011 and 2010, no income tax provision for federal taxes has
been recorded in the accompanying financial statements.
The Company complies with the provisions of GAAP, which requires
an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial
statement and tax bases of assets and liabilities that will result
in future taxable or deductible amounts, based on enacted tax laws
and rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred income tax assets
to the amount expected to be realized.
The determination of the Company's provision for income taxes
requires significant judgment, the use of estimates, and the
interpretation and application of complex tax laws. Significant
judgment is required in assessing the timing and amounts of
deductible and taxable items and the probability of uncertain tax
positions being sustained upon examination by the applicable taxing
authority. The benefits of uncertain tax positions are recorded in
the Company's financial statements only after determining a
more-likely-than-not probability that the uncertain tax positions
will withstand challenge, if any, from tax authorities. When facts
and circumstances change, the Company reassesses these
probabilities and records any changes in the financial statements
as appropriate. Accrued interest and penalties related to income
tax matters are classified as a component of income tax
expense.
In accordance with GAAP, the Company is required to determine
whether a tax position is more likely than not to be sustained upon
examination by the applicable taxing authority, including
resolution of any related appeals or litigation processes, based on
the technical merits of the position. The Company is subject to
income tax examinations by major taxing authorities for all tax
years since inception. The tax benefit recognized is measured as
the largest amount of benefit that has a greater than fifty percent
likelihood of being realized upon ultimate settlement.
De-recognition of a tax benefit previously recognized results in
the Company recording a tax liability that reduces member's equity.
The Company recognizes interest accrued and penalties related to
unrecognized tax benefits in income tax payable, if assessed. No
interest expense or penalties have been recorded as of and for the
year ended December 31, 2011. The Company may be subject to
potential examinations by U.S. federal, U.S. state or foreign
jurisdictions in the areas of income taxes. These potential
examinations may include questioning the timing and amounts of
deductions, the nexus of income among various jurisdictions and
compliance with U.S. federal, U.S. state and foreign tax laws. The
Company's management does not expect that the total amount of
unrecognized tax benefits will materially change over the next
twelve months.
Fair Value - Definition and Hierarchy
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (i.e., "the exit
price") in an orderly transaction between market participants at
the measurement date.
In determining fair value, the Company uses various valuation
approaches. A fair value hierarchy for inputs used in measuring
fair value maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs are those that
market participants would use in pricing the asset or liability
based on market data obtained from sources independent of the
Company. Unobservable inputs reflect the Company's assumptions
about the inputs market participants would use in pricing the asset
or liability developed based on the best information available in
the circumstances. The fair value hierarchy is categorized into
three levels based on the inputs as follows:
Level 1 - Valuations based on unadjusted quoted prices in active
markets for identical assets or liabilities that the Company has
the ability to access. Valuation adjustments and block discounts
are not applied to
Level 1 securities. Since valuations are based on quoted prices
that are readily and regularly available in active market,
valuation of these securities does not entail a significant degree
of judgment.
Level 2 - Valuations based on quoted prices in markets that are
not active or for which all significant inputs are observable,
either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and
significant to the overall fair value measurement.
Fair Value - Valuation Techniques
The Company values investments in mutual funds, which are
included in cash and cash equivalents, based on the quoted market
price of the net asset value of shares held at year end.
Certificates of deposits are based on a market value pricing
model.
Loss Per Share
Loss per share is based on the weighted average number of common
shares outstanding. The Company complies with GAAP, which requires
dual presentation of basic and diluted earnings per share on the
face of the statement of operations. Basic loss per share excludes
dilution and is computed by dividing income available to common
stockholders by the weighted-average common shares outstanding for
the year.
The unvested weighted average of the restricted stock granted to
employees of 1,400,000 for the years ended December 31, 2011 and
2010, respectively, are antidilutive and have been excluded from
the computation of loss per share.
Treasury Stock
During 2011 the Company received 250,000 shares of common stock
in satisfaction of a loan receivable in the amount of approximately
$53,500. During 2011, the Company also received 44,400 shares of
common stock from a stockholder who returned the shares to the
company for no consideration. There was no treasury stock acquired
during 2010.
3. Property and equipment
Property and equipment consists of the following at December 31,
2011 and 2010:
2011 2010
Computer Equipment $ 13,701 $ 12,896
Less Accumulated Depreciation $ 8,059 $ 6,084
5,642 6,812
Depreciation expense amounted to approximately $2,000 and $2,600
for the years ended December 31, 2011 and 2010, respectively.
4. Fair value measurements
The Company's assets recorded at fair value have been
categorized based upon a fair value hierarchy as described in the
Company's significant accounting policies in Note 2.
The following table presents information about the Company's
assets measured at fair value as of December 31, 2011 and 2010:
2011 2010
(Level 1) (Level 1)
Assets (at fair value)
Investment in money market funds $ 910,056 $ 3,259,318
5. Stock-based compensation
The Company granted 2,700,000 shares of restricted stock on
December 7, 2006 to several employees which vest over three years.
The fair value of the shares on the grant date was $2,700,000. In
December 2007, the Company amended the terms of the granted
restricted stock awards. The amendment increased the December 7,
2006 shares for certain employees by 5% or 47,500 shares, and
extended the vesting period from December 7, 2007 to March 31,
2008, subject to earlier acceleration at the option of the Company.
In December 2008, the Company amended the terms of the granted
restricted stock awards for two of its employees. The amendment
extended the vesting date for 600,000 shares of common stock from
December 7, 2008 to December 7, 2009.
In December 2009, the Company amended the terms of the granted
restricted stock awards for two of its employees. The amendment
extended the vesting date for 1,400,000 shares of common stock from
December 7, 2009 to December 7, 2010. During 2010, the Company
further amended the terms of the granted restricted stock awards
for the same two employees, extending the vesting date for
1,400,000 shares of common stock from December 7, 2010 to August
31, 2011.
The fair value of each restricted stock award was estimated on
the date of grant or the date of modification, if there was an
additional incremental compensation cost, based on the market price
of the Company's stock at that date.
The employees for whom restricted stock was awarded either
relinquished their right to such stock or were terminated before
the award vested. As such, all remaining restricted stock that had
not previously vested (1,400,000 shares) is no longer subject to
vesting and is treated as authorized but unissued shares.
Stock-based compensation expense amounted to approximately $64
and $4,000 for the years ended December 31, 2011 and 2010,
respectively.
6. Income taxes
The Company has an available net operating loss carry forward of
approximately $6,533,000 to offset future taxable income expiring
at various dates through 2030.
The Company has a deferred tax asset of approximately $2,700,000
and $2,600,000 at December 31, 2011 and 2010, respectively. In
recognition of the uncertainty regarding the ultimate amount of
income tax benefit to be derived, the Company has recorded a
valuation allowance at December 31, 2011 and 2010 for the full
amount of the deferred tax asset.
7. Commitments and contingencies
Operating Leases
In February 2010, the Company entered into an operating lease
for its corporate office in Connecticut, which expired in January
2011, with an optional one year extension. The Company is currently
renting its corporate office on a month to month basis. Rent
expense amounted to approximately $74,000 for the years ended
December 31, 2011 and 2010, respectively.
Employment Agreements
The Company had one employment agreement, with the Chairman and
Chief Executive Officer of the Company, in effect as at December
31, 2011. That agreement provides for termination upon 12 months
notice and a $650,000 termination fee.
Annual base salaries of approximately $585,000 and $796,000 were
paid to management employees for the years ended December 31, 2011
and 2010, respectively.
Non-Executive Director Service Agreement
A non-executive director for the Company received compensation
of approximately $15,000 for serving as a member on the Board of
Directors of the Company for each of the years ended December 31,
2011 and 2010, respectively.
8. Related party transactions
During 2008, the Company, in collaboration with various
professional organizations, formed the Al Safi Trust, a Cayman
Islands trust with related sub-trusts ("Al Safi"). Al Safi is a
Shariah-compliant alternative investment platform, and the first
known platform to provide an infrastructure for long and short-term
Shariah-compliant investments. The Company is the Shariah adviser
and receives a Shariah advisory fee based on the net asset value of
all Al Safi sub-trusts. In September 2008, three sub-trusts were
formed on Al Safi, each of which was seeded with $50,000,000 by the
Dubai Multi Commodities Centre Authority ("DMCCA"). In November
2008, a fourth sub-trust was seeded by DMCCA in the amount of
$50,000,000, for an aggregate total of $200,000,000 in invested
capital. As of December 31, 2011, assets under management in Al
Safi Trust were approximately $88,630,000. Advisory fee income from
Al Safi amounted to approximately $736,000 and $ 1,028,000 for the
years ended December 31, 2011 and 2010, respectively. The reduction
in advisory fee income resulted from a redemption of seed capital
by the DMCCA from Al Safi Trust. Consulting fee income from Al Safi
amounted to approximately $20,000 for the years ended December 31,
2011 and 2010.
In connection with forming the Al Safi Trust, the Company
announced a joint venture with DMCCA. The joint venture entity,
Dubai Shariah Asset Management Company, Ltd. ("DSAM") is owned 51
percent by Dubai Commodity Asset Management ("DCAM"), which is
wholly owned by DMCCA, and 49 percent by the Company. The
investment is accounted for under the equity method of accounting
for long-term investments. In conjunction with the joint venture,
DMCCA purchased a 4.99% equity share of the Company.
DSAM develops and manages Shariah-compliant investment products
focused on commodities. DSAM has the right to assess a fee based on
a percentage of the net asset value of the sub-trusts seeded by the
DMCCA (exclusive of capital invested by the DMCCA).
Consulting fee income from DSAM amounted to approximately
$325,000 and $162,000 for the years ended December 31, 2011 and
2010, respectively and is included in consulting fee income on the
statements of operations. In addition, the Company is the Shariah
adviser to DMCCA for related Shariah-compliant investments.
The Company's income (loss) attributable to DSAM amounted to
approximately $(118,000) and $20,000 for the years ended December
31, 2011 and 2010, respectively and is included in the accompanying
statements of operations.
The Company had a receivable from DSAM in the amount of
approximately $83,000 and $161,000 at December 31, 2011 and 2010,
respectively, representing reimbursement of expenses from DSAM and
is reported as a component of due from related parties in the
accompanying balance sheets.
9. Major customers
The Company had advisory fee income from one related party that
accounted for 100% of the Company's total advisory fee income for
the years ended December 31, 2011 and 2010.
The Company has two related parties that account for 100% of its
fees receivable and consulting fee income as of and for the years
ended December 31, 2011 and 2010.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Shariah Capital (LSE:SCAP)
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From Jun 2023 to Jun 2024
