ANNUAL REPORT 2015 - Arcapita · 2019-08-18 · 6 | ARCAPITA ANNUAL REPORT 2015 CHAIRMAN’S...

ARCAPITA ANNUAL REPORT 2015 | 1

2015ANNUAL REPORT

| ARCAPITA ANNUAL REPORT 20152

This Annual Report contains certain “forward-looking” statements, and such information is based on the beliefs of Arcapita, as well as on assumptions made by, and information currently available to, Arcapita. When used in this Annual Report, the words “anticipate”, “believe”, “estimate”, “expect”, “plan”, “intend”, and words or phrases of similar import, are intended to identify forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to the following: Arcapita’s plans, strategy, objectives or goals; Arcapita’s future economic performance or prospects; specific country, region and worldwide business environment; potential effect on future performance of certain contingencies; and assumptions underlying any such statements. These statements are inherently subject to significant business, economic, competitive, regulatory and operational uncertainties, contingencies and risks, both specific and general in nature, many of which are beyond the control of Arcapita. Any forward-looking statements are speculative in nature, and it can be expected that one or more of the assumptions underlying such statements will prove not to be accurate, and unanticipated events and circumstances may occur. Actual results and events will likely vary from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements, and such variations may be material. Consequently, this Annual Report should not be regarded as a representation by Arcapita that the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements will be achieved and should not be relied on. Arcapita does not intend to update these forward-looking statements.

Note: “$” refers to US dollars throughout.


TABLE OF CONTENTS

Overview Geographic Presence 5

Arcapita Values 5

Chairman’s Message 6

Chief Executive Officer’s Message 8

Our Business Business Model 10

Clients 10

Lines of Business 10

Investment Process 12

Current and Exited Portfolio 13

Corporate Governance Overview 14

Board Committees 15

Management 16

Organizational Structure 17

Financial Highlights 20

Arcapita GroupHoldings Limited

Independent Auditors’ Report to the Shareholders 22

Consolidated Statement of Financial Position 23

Consolidated Statement of Income and other Comprehensive Income 24

Consolidated Statement of Cash Flows 25

Consolidated Statement of Changes in Equity 26

Notes to the Consolidated Financial Statements 27

Shari’ah Supervisory Board’s Report to the Shareholders - AGHL 43

Arcapita Investment Management B.S.C. (c)

Independent Auditors’ Report to the Shareholders 45

Report of the Board of Directors 46

Statement of Financial Position 47

Statement of Income and Other Comprehensive Income 48

Statement of Cash Flows 49

Statement of Changes in Equity 50

Notes to the Financial Statements 51

Shari’ah Supervisory Board’s Report to the Shareholders - AIM 59

Our People Board of Directors 60

Shari’ah Supervisory Board 62

Senior Management 63

Management Team 64

Contact Information 66


OVERVIEW

Arcapita originates global alternative investments, which comply with Shari’ah principles, for its investors and shareholders. At the center of one of the fastest growing wealth markets in the world, Arcapita serves anexclusive group of investors in the GCC regionand Southeast Asia. With offices in Bahrain, Atlanta, London and Singapore, Arcapita possesses the footprint to invest on a global scale.


Atlanta

London

Bahrain

Singapore

GEOGRAPHIC PRESENCE

ARCAPITA VALUES

Arcapita currently operates out of the following offices:

• Manama, Bahrain: Covering the GCC region and India;

• Atlanta, US: Covering the United States;

• London, UK: Covering the UK, Western, Central and Eastern Europe; and

• Singapore: Covering Southeast Asia, China, Japan and Australia.

Quality

We believe passionately in the long-term

value creation that comes from insisting on

the very best people, systems and processes.

The professionalism of our people is at the

heart of everything that we do and the way

in which the firm approaches its business

with all of its stakeholders. This leads to

the strong and long-lasting relationships on

which we have built our business.

Transparency

We have built a system of governance to

ensure that our processes, our products

and services are all clearly defined and

communicated to ensure full transparency

for all stakeholders.

Alignment with our investors

We believe wholeheartedly in the

importance of investing alongside our

investors, ensuring that our success is always

closely correlated with theirs.

Selected countries where Management has overseen investments

Arcapita offices


CHAIRMAN’S MESSAGE

Arcapita has ended fiscal year (“FY”) 2015 successfully, having achieved revenues of $35.5 million and net income of $11.4 million, representing increases of 21% and 13% respectively over FY 2014. Total equity as at June 30, 2015 amounted to $81.1 million, including approximately $61.7 million of funded capital, $14.9 million of retained earnings and $4.7 million in proposed dividend distribution, subject to the approval of the shareholders at the Annual General Meeting.

Financial performance during FY 2015 was driven by the accelerated exit of several investments and the enhanced value of the investment portfolio. During FY 2015, we generated approximately $2.3 billion in exit proceeds for our investors through the sale of a number of significant assets including Arcapita Qatar Real Estate Investment (Lusail), Arcapita Senior Living IV, PODS and J.Jill in the United States, and Freightliner in the United Kingdom. We are pleased with the profitable outcome of these investments, which follow a series of positive and notable exits achieved by Arcapita over the past two years.

Our ability to create value by driving operational and financial improvements within the investment portfolio was a critical success factor in achieving our year-end targets. We have dedicated significant resources over the past few years to developing our portfolio management expertise and this has yielded positive results. Our investment teams create value by efficiently allocating capital, accelerating the growth of key revenue lines, streamlining operations and ensuring management incentives are aligned. Market conditions were also a key success factor in helping us achieve strong exits this year. Lower oil prices, buoyant equity markets and the abundant supply of low-cost financing have created a favorable environment for exits.

We continue to focus on maximizing the value of the investment portfolio we manage on behalf of our investors and on introducing new investment opportunities. We have an active new deal pipeline and expect to complete a number of new investments across global markets over the next 12 months.

In May 2015, Arcapita signed an agreement with Mubadala Development Company to acquire a residential complex of three-low rise buildings within the gated Saadiyat Beach Residences

Abdulaziz Hamad Aljomaih

Chairman


community in Abu Dhabi (“Saadiyat Beach Apartments”) for a total transaction value of approximately $187 million. The residential complex is under a three-year master lease to the Tourism Development & Investment Company (TDIC), a sovereign Abu Dhabi entity. Constructed in 2013 to high-quality standards, the complex is composed of 285 apartments and is designed to foster a close-knit community while providing high-end facilities and amenities. We believe that our investment in Saadiyat Islands offers unique access to the residential real estate sector in Abu Dhabi, which is driven by large government-led development projects, a fast-growing population and a limited supply of high-quality residential apartments.

We will continue to pursue investments in sectors where (i) Arcapita’s management team has a strong track record and has built significant expertise; (ii) we have a clear opportunity to generate superior risk-adjusted returns; and (iii) we have sufficient demand from our clients.

Arcapita is focused on growing its real estate and private equity product offerings. We will seek stabilized real estate assets offering investors a recurring income stream with a target size of approximately $50 to $150 million in equity capital. Arcapita anticipates partnering reputable joint venture partners and asset managers, as appropriate. We hope to pursue private equity opportunities. We intend to source and acquire controlling and non-controlling interests in established, US middle market companies with a target size of approximately $25 to $100 million in equity capital. We will also leverage our existing capabilities to introduce and grow a range of service offerings including managed accounts and real estate solutions.

We believe that Arcapita is well positioned to take advantage of the dynamic economic landscape. Our strength comes from the diversity and commitment of our people, our global network of relationships and from our unique investor relationships. We are keen to continue executing our growth plan in line with our new corporate investment philosophy, which includes:

• Maintaining a balance sheet-light model that adopts a more conservative approach to underwriting new investments, and relies on pre-placements and ”club” syndications;

• Maintaining a flexible cost base relative to our peers, together with a culture of accountability; and

• Deepening our risk management expertise through a comprehensive capital allocation process and risk management framework to guide our new investment activity.

Arcapita’s Board and management team is focused on maximizing value for our shareholders and investors, and we are grateful for the active support of all of our stakeholders. In particular, we recognize the contribution of the Government of the Kingdom of Bahrain and the Central Bank of Bahrain in our continued success. We look forward to another successful year ahead.

Abdulaziz Aljomaih


CHIEF EXECUTIVE OFFICER’S MESSAGE

We have built a global investment platform with the capability to access investment opportunities across the core markets of the US, Europe, the Middle East and Asia. Today, Arcapita has a diversified business model and a management team that brings experience and expertise across different investment areas. We aim to deliver sustainable returns to our shareholders and investors using our sectoral and geographic insights and a risk-adjusted approach to investing.

Over the years, we have played a major part in providing access to alternative investments for Shari’ah-aligned investors and we have completed transactions valued at approximately $30 billion. We believe in the importance and value of long-term relationships with our shareholders, our investors and our investment partners, and our model stresses the importance of aligned interests. We use these partnerships to bring a wide range of different skills and experiences to our investments, enhancing transaction access and execution for the benefit of all stakeholders.

We are proud to announce that we exceeded our revenue and net income targets for fiscal 2014 and 2015 and we expect to maintain this momentum by exceeding our targets for fiscal 2016. The robust financial performance during the last two years has been driven mainly by the positive performance of our investment portfolio. Arcapita management team has delivered in excess of $3.0 billion in exit proceeds to our investors from 16 exits achieved during the past 24 months.

As a result of the accelerated pace of exit activity, our investment team’s efforts are now focused on making new investments. With an active deal pipeline across all of our markets, a strong balance sheet footing, committed shareholder base and a quality management team, we look forward to introducing a range of new investment opportunities for our investors during fiscal 2016.

Atif A. Abdulmalik

Chief Executive Officer


OUR BUSINESS

Arcapita was established to provide investors with alternative investments and financial services that are Shari’ah-compliant. Arcapita seeks to capitalize on the GCC region’s status as a net exporter of capital to provide clients with investments that target long-term returns at or exceeding those offered by conventional public equity markets. Arcapita comprises Arcapita Group Holdings Limited (“AGHL”), an exempted company organized under the laws of the Cayman Islands, and AIM Investment Management B.S.C(c) (“Arcapita Bahrain”), a company organized under the laws of the Kingdom of Bahrain, and their respective subsidiaries. Arcapita maintains offices in Bahrain, Atlanta, London and Singapore.


Arcapita was formed to:

• Provide investors with opportunities in alternative investment products structured in a Shari’ah-compliant manner, and investment management services in connection with such products;

affairs and philanthropic interests of high net worth families;

• Institutions: Large, sophisticated investment groups that include pension funds, university endowments, asset managers and insurance companies; and

• Sovereign Wealth Funds: State-owned investments funds. .

BUSINESS MODEL

CLIENTS

LINES OF BUSINESS

• Co-invest with its investors in Arcapita-sponsored investment products to generate a return on such investments; and

• Provide investment management and administration services.

The firm serves a broad network of over 1,300 valuable investors from across the GCC and Southeast Asia.

Arcapita’s investor base is composed primarily of investors from the following four segments:

• HNWI: High net worth individuals with investable assets in excess of $1 million;

• Family offices: Professional entities set up to manage the investments, business

Real Estate

Overview

Arcapita’s real estate team acts as a principal, arranger and manager of real estate investments, operating out of its offices in Atlanta, London, Bahrain and Singapore. Its experienced real estate professionals analyze opportunities across a broad spectrum of transaction structures, geographies and return profiles in an effort to provide a diverse mix of attractive real estate investment opportunities to investors. To date, Arcapita’s senior management have completed real estate investments in the industrial and logistics warehousing, self-storage, residential, senior living, mixed-use, business parks and retail sectors. The team has completed investments across the world; from North America, through Europe, the Middle East and Asia.

In support of Arcapita’s overall business strategy, and to provide more diverse investment opportunities for investors, the real estate team at Arcapita extended its focus to develop initiatives that include the establishment and management of real estate investment funds. In addition to real estate funds, the team is also focused on

providing more real estate financial services and solutions by leveraging its experience in specific real estate sectors.

Arcapita’s investment model has been developed and refined over a large number of investments and structures. The process begins with Arcapita sourcing projects, from direct approaches made to partners and sellers, and by working with specialist intermediaries within the real estate industry. Arcapita performs project analysis and due diligence in varying degrees on sourced projects. A full investment process typically lasts between two to six months. The real estate team also carefully assesses potential risks associated with the project, from broad macroeconomic trends to more narrowly defined issues specific to the particular project. Arcapita consults closely with its co-investment partners, and reviews extensive analysis of the post-acquisition execution and exit strategies for realizing value over the investment term.

The real estate team typically seeks to exit from investments within three to seven years, depending on the type of investment and the market. Partial or full exit may occur through recapitalization, private sale or public sale.


Portfolio Management in Real Estate

Arcapita’s portfolio management approach is designed to ensure the highest possible performance of each of its real estate investments. After closing the transaction, the asset managers, corporate management teams or joint venture partners are directly responsible for the execution of the business plan. Arcapita works closely with these partners to monitor and evaluate the progress of each real estate investment. Early in the ownership period, the deal team works with its partners to identify the primary operating statistics to be monitored through regular meetings and reports. In this fashion, the deal team is able to apply continuous oversight to each investment. On a bi-monthly or quarterly basis, the deal team receives an asset performance report which includes a comprehensive set of marketing and financial updates for the investment and, on an annual basis, the deal team also receives and reviews audited financial statements for every investment.

The deal team conducts on-site operational reviews on a quarterly basis. At these sessions, the team conducts a deeper assessment of the investment’s performance, working with the operating partner to understand the underlying factors influencing current/future performance. This process helps to ensure early recognition of any performance concerns, and to determine appropriate course corrections, if necessary. More extensive involvement is undertaken as needed.

Private Equity

Overview

Arcapita acts as a principal and arranger in the acquisition of established middle-market companies, with an emphasis on the United States, Europe, the Middle East and Asia. The firm targets growth-oriented corporate acquisitions with a total transaction size between $50 million and $300 million per transaction. Arcapita focuses on sectors where its management team have established industry knowledge and a successful track record. Future acquisitions will most likely be in the transportation & logistics, food & beverage and industrial/energy sectors.

Arcapita looks for companies that score highly in a number of important areas. These companies should have innovative products or services; growing market positions and strong management teams, in place or identified; be capable of building shareholder value through market strength in product line, technology, distribution, manufacturing or brand; a clear business strategy with multiple avenues for growth and market share gains; industry growth drivers that are fundamental and compelling; and exit potential through a financial or strategic sale, or IPO. Furthermore, Arcapita targets companies where it has a unique angle to secure the acquisition or to create value thereafter. In practice, this has arisen from transactions being offered to Arcapita on a proprietary basis, the opportunity to install a new expert management team, a special situation or industry knowledge that leads to identification of an opportunity, or in situations where Arcapita is able to leverage its extensive network of business relationships to the advantage of the target company, especially within the Middle East.

Once an acquisition is completed, and the target company becomes part of the private equity portfolio, Arcapita’s executives work closely with the portfolio company management team in establishing a clearly defined business plan for creating equity value, while designing a tailored capital structure and management equity incentives to foster growth and profitability. Arcapita aims to nurture and grow the investments through the holding period with strategic and financial support when necessary and, at the appropriate time, to position the company for sale to a financial or strategic buyer, or through an IPO.

Portfolio Management in Private Equity

Arcapita’s portfolio management approach is designed to ensure the highest possible performance of each of its portfolio companies - bringing critical insights, strategic capabilities and world-class best practices in delivering superior investor returns. Arcapita’s portfolio management approach is applied in each of the critical stages of an asset ownership process—including pre-acquisition and due diligence, early ownership, the core

ownership period and the process leading to exit. Prior to the acquisition of a company, we conduct market and operational due diligence, along with an assessment of the management team.

During the critical early ownership period, the approach includes process disciplines in the areas of strategy, operations, and people management, as well as leading-edge board governance and audit protocols. Early on, we work with senior management to identify the key industry and company-specific operating and financial measures that best reflect the true performance levers for a particular business. We design incentive plans to encourage and motivate management teams to meet agreed-upon metrics. Through a disciplined program of monthly performance reviews and quarterly board meetings, we work with each management team to evaluate the company’s performance, ensure early recognition of any deviations from expected performance and determine appropriate course corrections. More extensive involvement is undertaken as needed. During the ownership period, Arcapita executives serve as members of each company’s Board of Directors, seeking to increase the value of the investment in three primary ways: (1) assisting management in defining and continuously updating the optimal three to five year action-based strategy, (2) identifying and driving initiatives in the company’s annual operating plans that improve the near-term operating performance of the business and support achievement of ambitious financial objectives, and (3) improving the company’s human resource management and succession planning. We also regularly identify opportunities where our functional capabilities (both in-house and with selected third-party advisors) can be leveraged in support of marketing, sales, and growth-related initiatives, as well as cost reduction, working capital reduction, process improvement and supply chain initiatives. Finally, we also play a critical role in evaluating, selecting, and developing CEO candidates, and often assist the CEO in the recruitment and selection of senior management team members.


Deal sourcing• Direct approach

to partners/sellers

• Referrals from specialist intermediaries

• Dialogue with investment banks & other relationships

• Follow-on transactions within the portfolio

Due diligence • Market sounding

• Extensive analysis

• Consult external experts & advisors

• Identify risks & mitigants

• Arrange senior financing

• Documentation

• Investment approvals

• Risk management

Closing acquisition/underwriting• Close documentation

• Form investment structure

• Equity and financing funded

• Finalize pricing & investment for investors

• Set placement price

• Prepare closing memo

• Prepare post-acquisition strategy

Fundraising• First contact with investors

• Book building starts

• Investors’ meetings

• Release Private Placement Memorandum

• Process client orders

• Investors’ queries response

• Commitments through Share Purchase Agreements

• Funding & reduction of Arcapita’s position

Post-acquisition• Activate portfolio management

• Ongoing oversight by Risk Management Group

• Value optimization to maximize returns

Exit• Partial or full realization

• Deal team’s responsibility

• Approvals

• Distributions to investors & Arcapita

• Allocation of performance fees

INVESTMENT PROCESS

Deal Sourcing(ONGOING)

Fundraising(3-6 MONTHS)

Due Diligence(2-6 MONTHS}

Exit

Post-Acquisition(3-5 YEARS)

Closing Acquisition /Underwriting


CURRENT AND EXITED PORTFOLIO

Current Private Equity Investments Under ManagementArcapita GCC Utilities Development I

Arcapita India Growth Capital I

Arcapita Ventures I Limited

Meridian Surgical Partners, LLC

Viridian Group

Current Real Estate Investments Under ManagementArcapita CEE Residential Development I

Arcapita India Business Park Development I

Arcapita International Luxury Residential Development I

Arcapita US Residential Development I

Bahrain Bay Development B.S.C.(c)

Bahrain Bay Development II B.S.C.(c)

Arcapita Saadiyat Beach Apartments, Limited

Exited Private Equity Investments American Pad & Paper LLCB.R. Lee Industries, Inc.

Bijoux Terner, LLC

Caribou Coffee Company, Inc.

Church Street Health Management

Church’s Chicken

Cirrus Design Corporation

Compagnie Européenne de Prestations Logistiques (CEPL)

Computer Generation Incorporated

Cypress Communications

DVT Corporation

Falcon Gas Storage Company, Inc.

Freightliner Group Limited

Honiton Energy Caymans Ltd

J.Jill Acquisition, LLC

Loehmann’s Holdings, Inc.

Medifax-EDI, Inc.

PODS

Profine GmbH

Roxar AS

Smart Document Solutions, LLC

South Staffordshire Plc

Southland Log Homes, Inc.

The Tensar Corporation, LLC

TLC Health Care Services, Inc.

Transportation Safety Technologies, Inc.

Varel International Energy Services, Inc.

Watermark, Inc.

Working Rx

Yakima Products , Inc.

Zephyr Investments Limited

Exited Real Estate Investments Arcapita Asian Industrial Yielding IArcapita European Industrial Development I

Arcapita European Industrial Yielding I

Arcapita European Self-Storage Development I

Arcapita European Self-Storage Development II

Arcapita India Business Park Development II

Arcapita Japan Residential Yielding I

Arcapita Qatar Residential Development I

Arcapita Real Estate Income Fund

Arcapita UK Senior Living Yielding I

Arcapita UK Senior Living Yielding II

Arcapita US Residential Development II

Arcapita US Residential Development III

Arcapita US Retail Yielding I

Arcapita US Senior Living Yielding I

Arcapita US Senior Living Yielding II

Arcapita US Senior Living Yielding III

Arcapita US Senior Living Yielding IV

Multifamily I

Multifamily II

Prologis I

Prologis II

Prologis III

Riffa Views B.S.C.(c)

Victory Heights Golf Residential and Development Company LLC

To date, Arcapita Management have completed over 70 investments with a total transaction value of approximately $30 billion.


CORPORATE GOVERNANCE OVERVIEW

The system of procedures and principles governing Arcapita’s management and operations are fundamental to our future success. The Board of Directors and senior management are committed to an efficient, entrepreneurial decision-making structure that is fair, transparent and accountable. The illustration below describes Arcapita’s current governance framework:

Arcapita has assembled a distinguished Board of Directors comprising preeminent businessmen across the GCC region. Drawing on deep experience in management, industry and investments, the Board of Directors is well positioned to represent the best interests of investors and management with expert advice and counsel.

Mr. Abdulaziz Hamad Aljomaih, the Chairman of Arcapita’s Board of Directors, is not an independent director, as recommended by the CBB’s Rulebook “High Level Controls” Module, Paragraph HC-1.5.7. Mr. Aljomaih represents AlJomaih Company Limited E.C., the single largest shareholder of Arcapita. Mr. Aljomaih is a professional with over 26 years of business experience and is the Head of International Investments at Aljomaih Group in Saudi Arabia. Other key positions held by Mr. Aljomaih include: member of the Boards of Directors of Ittihad Etisalat (Mobily), Saudi Arabia and Dana Gas, United Arab Emirates and Vice Chairman of the Board of Governors of the Pearl Initiative, a private sector-led not-for-profit organization set up to improve transparency, accountability and business practices in the Gulf region. The AlJomaih Group have been the principal sponsor of Arcapita, and Arcapita believes that

Market Sounding Group

Board of Directors

Board and Management Corporate Governance Framework

Board of Director's Level

Board Committee's Level

Risk ManagementCommittee

Executive CommitteeManagement Committee's Level

Investment Executive CommitteeInvestment Team's Level

ExecutiveInvestmentCommittee

ExecutiveAdministrative and Corporate

Governance Committee

Executive Audit & Risk Management

Committee

Mr. Aljomaih’s chairmanship gives the business a competitive advantage.

Arcapita’s Board of Directors take responsibility for the strategy of Arcapita and for the supervision and oversight of its senior management, who have been entrusted with implementing day-to-day management policies. Arcapita’s Board of Directors consists of nine members, including non-executive members and Mr. Atif A. Abdulmalik, the firm’s CEO, representing management. The Board of Directors meet as often as business requires, and a minimum of four times a year. The functions of Chairman of the Board of Directors and the CEO are carried out by separate individuals, thus providing a separation of power. Arcapita’s management works closely with the Board of Directors, both directly and through its various committees. Management regularly provides investment and financial updates and strategic forecasts to the Board of Directors, as well as openly discussing all investment decisions and any other major decisions or issues facing Arcapita. By facilitating this free flow of information, Arcapita seeks to encourage transparency and accountability at all levels and to provide effective oversight by the Board of Directors.


BOARD COMMITTEES

Arcapita’s Board of Directors is assisted in its monitoring and oversight responsibilities by the Executive Investment Committee (“EIC”), the Executive Administration and Corporate Governance Committee (“EAC”) and the Executive Audit and Risk Management Committee (“ARC”).

Executive Investment Committee

The EIC’s primary duties and responsibilities are to:

• Establish operating guidelines for investment activities

• Approve new investments / exits

• Monitor investment performance

• Approve financing and issuing of securities

• Establish banking relationships

Executive Administration and Corporate Governance Committee

The EAC’s primary duties and responsibilities are to:

• Approve and recommend corporate and administrative policies and procedures (“P&P”)

• Review and recommend approval of the annual budget

• Recommend and revise corporate governance policies and procedures

• Oversee and monitor the governance framework

Executive Audit & Risk Management Committee

The ARC’s primary duties and responsibilities are to:

• Approve and recommend for further approval by the Board of Directors:

- Approve annual financial statements and budgets

- Appoint auditors

• Monitor financial reporting, risk and internal control

• Review and appraise activities of auditors


MANAGEMENT Arcapita has assembled a management team with deep experience in building and managing investment platforms globally. Drawing upon management’s collective experience and track record, Arcapita enjoys a seasoned management team that has lived through multiple investment cycles. Arcapita will utilize crossfunctional management committees to operate its business:

Executive Committee (“EC”)

The EC oversees the strategic planning for Arcapita and the decision making for all new investments. For example, prior to making a commitment to sign definitive agreements relating to investments (equity and financing), each new investment will need to be reviewed by the EC. Roles of the EC include the following:

• Set global strategy for Arcapita Group;

• Review and recommend new investments;

• Review and approve business plans, budgets and control systems; and

• Manage human capital, including determining compensation, and benefits plans and overseeing human resource development.

Risk Management Committee (“RMC”)

The RMC’s duty is to establish and maintain a risk management framework throughout the firm to best manage Arcapita’s shareholder and client interests. Its mandate is to identify, assess and measure risks arising from the firm’s activities, and to define the appropriate course of action to mitigate or manage them. Roles of the RMC include the following:

• Establish and maintain a risk management framework throughout the firm by working with the Board Audit and Risk Committee

• Oversee risk functions.

Market Sounding Group (“MSG”)

The MSG is intended to deem the marketability of investment products brought in by the deal team members. The MSG comprises of the Investors Relationship Management team, members of the Financial Management Group and Shari’ah. The MSG is responsible for the initial assessment of investor and market reaction to the following:

• Additional funding for an existing legacy transaction; and

• New transactions.


ORGANIZATIONAL STRUCTURE

Investors Relationship Management (“IRM”)

IRM is responsible for developing and maintaining relationships within Arcapita’s network of potential investors. The team members are the main point of contact for clients, delivering portfolio updates and presenting new investment opportunities. This group is also the first point of contact for investment opportunities which may be sourced from potential clients. Investor relation operations are based in Bahrain; the firm also has personnel located in Singapore. Arcapita operates a sophisticated marketing system to plan, execute and monitor investment syndication, providing investors with a personalized and efficient service. Further support is provided through the client support team within the Financial Management Group, which is responsible for providing the team with the support necessary to respond to queries and requests in a timely and efficient manner.

Legal

Arcapita’s legal department (in coordination with related compliance personnel) has responsibility for Arcapita’s compliance with all applicable laws and regulations in its business activities and advises with respect to

all legal matters. Its activities include advising investment teams on investments and divestments, and advising senior management and the Board of Directors on corporate governance, financing, arrangements and strategic planning. Arcapita’s legal department also assists with the administration of Cayman Islands, European, Middle Eastern and Mauritius offshore corporate structures in various investments. The legal department operates out of Bahrain.

Corporate Management

Corporate Management provides support to all of Arcapita’s departments. The Corporate Management department comprises multiple disciplines, including: Administration, Information Technology and Treasury Operations. Corporate Management operates out of Bahrain.

Human Resources

Arcapita’s HR Department is responsible for the administration and management of the firm’s most valued assets – the employees, the administration and management of the global compensation & benefits, and the design and administration of the firm’s long-term incentive programs. The primary goal of our Human Resources Department is to

Organizational Structure and Business Divisions

Private EquityLegal

Corporate Management

Board of Directors


Chief OperatingOfficer

Investors RelationshipManagement

Chief InvestmentOfficer

Real Estate

FinancialManagement Group

FinancialManagement Group

Financial Control

Reporting & Internal Control

Corporate Accounts,Payables & Imprest Accounts

Investment Accounting &Administration

System Development &Integration

CorporateCommunications

Risk Management

Shari'ah

Human Resources


help the organization meet its strategic goals by attracting and maintaining employees and also managing them effectively through several processes. Most of these processes are performed by the HR Department in Bahrain. Some of the HR processes for Arcapita offices outside Bahrain are outsourced to third-party service providers whose service levels are monitored and managed from Bahrain. When all of these processes are effectively integrated, they provide significant economic benefits to the firm.

Investments: Real Estate and Private Equity

Arcapita employs investment teams and independent consultants that are active globally, and their activities are coordinated under a Chief Investment Officer. Through the investment teams, Arcapita (i) originates, manages and exits investment products and services, and (ii) in the case of the current portfolio, manages and exits investments.

Financial Management Group (“FMG”)

The FMG is responsible for client reporting, the coordination of information across the firm, corporate level strategic/financial planning, preparation of Board of Directors packages, risk assessment of prospective investments, Shari’ah and corporate communications. The Financial Management Group operates out of Bahrain. Client reporting includes preparing fundraising documentations, responding to investor queries, preparing quarterly valuations and preparing biannual investment updates. These tasks are completed in relation to the current portfolio and new investments.

Financial Control

Financial Control is responsible for preparing and maintaining accounts records including; subsidiary accounting, internal and external financial reporting, regulatory reporting of financial numbers and the related internal controls of the foregoing internal and external reporting of Arcapita’s financial information to the respective stakeholders.


Income Statement (US$ millions)

Arcapita’s revenues are driven by the asset management of the existing investment portfolio and new Shari’ah-compliant alternative investment products and services, such as Saadiyat. Under the terms of a Management Services Agreement with RA Holding Corp., Arcapita is paid an assets under management (“AUM”) fee from March 16, 2015 to March 15, 2018; RA Holding also pays Arcapita incentive fees based on exit outcomes in the current portfolio, and deferred incentive fees. Additionally, Arcapita receives performance fees from investors based on exit performances. Arcapita achieved net income for FY 2015 totaling $11.4 million. G&A expenses for the year totaled $4.8 million. Total staff expenses, including professional and consultancy fees for FY 2015, totaled approximately $18.3 million.

For the year ended 30 June 2015

AGHLGroup

USD ‘000

ArcapitaBahrain

USD ‘000

Consolidation adjustments

USD ‘000

Arcapita Group

USD ‘000

INCOME

Fee income and other 35,463 12,674 (12,649) 35,488

TOTAL OPERATING INCOME 35,463 12,674 (12,649) 35,488

EXPENSES

Staff compensation (12,893) (8,489) 8,489 (12,893)

Professional and consultancy fees (5,383) (1,502) 1,502 (5,383)

General and administration expenses (4,779) (2,454) 2,547 (4,686)

Share based compensation cost (1,481) (111) 111 (1,481)

Total operating expenses (24,536) (12,556) 12,649 (24,443)

Foreign Exchange gain / (loss) 520 (118) - 402

NET INCOME 11,447 - - 11,447

FINANCIAL HIGHLIGHTS


Balance Sheet

Arcapita’s balance sheet is 100% equity-funded, with no bank borrowings. Total equity as at June 30, 2015 amounted to approximately $86.1 million, including approximately $64.3 million of funded capital, approximately $8.1 million of retained earnings and $2.4 million in shares pending allotment. Arcapita ended FY 2015 with a cash balance of approximately $84.7 million.

As at 30 June 2015

AGHLGroup

USD ‘000

ArcapitaBahrain

USD ‘000

Consolidation adjustments

USD ‘000

Arcapita Group

USD ‘000

ASSETS

Cash and cash equivalents 78,324 6,343 26 84,693

Investments 50,438 - - 50,438

Receivables and other assets 9,183 1,174 (994) 9,363

TOTAL ASSETS 137,945 7,517 (968) 144,494

LIABILITIES

Investment related payable 45,438 - - 45,438

Accurated expenses and other liabilities 10,781 1,549 - 12,330

Fee received in advance 613 - - 613

Payable to AGHL Group - 968 (968) -

TOTAL LIABILITIES 56,832 2,517 (968) 58,381

EQUITY

Share capital and premium 61,667 2,646 - 64,313

Shares pending allotment - 2,354 - 2,354

Retained earnings 14,906 - - 14,906

Proposed dividents 4,667 - - 4,667

Exchange equalisation reserve (127) - - (127)

TOTAL EQUITY 81,113 5,000 - 86,113

TOTAL EQUITY AND LIABILITIES 137,945 7,517 (968) 144,494


ARCAPITA GROUP HOLDINGS LIMITEDINDEPENDENT AUDITORS’ REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2015


Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of Arcapita Group Holdings Limited (the ‘Company’) and its subsidiaries (together ‘the Group’) which comprise the consolidated statement of financial position as at 30 June 2015 and the consolidated statements of comprehensive income, cash flows and changes in equity for the year ended 30 June 2015 and a summary of significant accounting policies and other explanatory information.

Board of Directors’ responsibility for the consolidated financial statements

The Board of Directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as the Board of Directors determines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including

ARCAPITA GROUP HOLDINGS LIMITED

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF ARCAPITA GROUP HOLDINGS LIMITED

the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate for the circumstances. but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 30 June 2015, and its consolidated financial performance and cash flows for the year ended 30 June 2015 in accordance with International Financial Reporting Standards.

Partner’s registration no. 121

12 July 2015

Manama, Kingdom of Bahrain



CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2015

2015 2014

Note USD ‘000 USD ‘000

ASSETS

Cash and cash equivalent 7 78,324 56,620

Investment 8 50,438 -

Receivables and other assets 9 9,183 901

TOTAL ASSETS 137,945 57,521

EQUITY AND LIABILITIES

LIABILITIES

Investment related payable 10 45,438 -

Accrued expenses and other liabilities 11 10,781 5,094

Fee received in advance 613 2,832

Payable to a related party 11 - 2,281

TOTAL LIABILITIES 56,832 10,207

EQUITY

Share capital 12 6 2

Share premium 13 61,661 17,379

Shares pending allotment 14 - 21,896

Retained earnings 14,906 8,126

Proposed dividend 4,667 -

Foreign currency translation reserve (127) (89)

TOTAL EQUITY 81,113 47,314

TOTAL EQUITY AND LIABILITIES 137,945 57,521

Atif A. AbdulmalikChief Executive Officer and Director

Abdulaziz AljomaihChairman of the Board of Directors

The attached explanatory notes 1 to 23 form part of these consolidated financial statements.




CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2015

Note

For the year ended

30 June 2015USD’000

For the period from

30 January 2013 to 30 June 2014

USD ‘000

OPERATING INCOMEFee income and other 16 35,463 29,296

Total operating income 35,463 29,296

OPERATING EXPENSES

Staff compensation and benefits (12,893) (9,528)

Professional and consultancy fees (5,383) (4,133)

General and administration expenses (4,779) (5,499)

Share based compensation expenses (1,481) -

Total operating expenses (24,536) (19,160)

Foreign exchange gain / (loss) 520 (10)

NET INCOME 11,447 10,126

Other comprehensive income to be reclassified to profit and loss in subsequent periods:

Exchange differences on translation of foreign operations (38) (89)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR / PERIOD 11,409 10,037





CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2015

Note

For the year ended

30 June 2015USD’000

For the period from


USD ‘000

OPERATING ACTIVITIES

Net income for the period 11,447 10,126

Adjustment for non cash items:

Share based compensation costs 1,481 -

Operating income before changes in

operating assets and liabilities 12,928 10,126

Changes in operating assets and liabilities:

Investment (50,438) -

Receivables and other assets (8,282) (901)

Accrued expenses and other liabilities 4,168 5,005

Fee received in advance (2,219) 2,832

Investment related payables 45,438 -

Payable to a related party (2,281) 2,281

Net cash flows (used in) from operating activities (686) 19,343

FINANCING ACTIVITIES

Proceeds from the issuance of share capital 14 22,390 39,277

Dividend paid - (2,000)

Net cash flows from financing activities 22,390 37,277

NET INCREASE IN CASH AND CASH EQUIVALENTS 21,704 56,620

Cash and cash equivalents at beginning of period 56,620 -

CASH AND CASH EQUIVALENTS AT END OF YEAR / PERIOD 7 78,324 56,620



Share capital

USD ‘000

Share premium USD ‘000

Shares pending

allotment USD ‘000

Retained earnings

USD ‘000

Proposed Dividend USD ‘000

Foreign currency

translation reserve

USD ‘000Total equity

USD ‘000

As at 1 July 2014 2 17,379 21,896 8,126 - (89) 47,314

Net income - - - 11,447 - - 11,447

Exchange differences arising from translation of foreign operations - - - - - (38) (38)

Total comprehensive income - - - 11,447 - (38) 11,409

Issue of share capital 4 44,282 (21,896) - - - 22,390

Dividends proposed - - - (4,667) 4,667 - -

Balance as at 30 June 2015 6 61,661 - 14,906 4,667 (127) 81,113

Sharecapital

USD ‘000

SharepremiumUSD ‘000

Sharespending

allotmentUSD ‘000

Retainedearnings

USD ‘000

ProposedDividendsUSD ‘000

Exchange equalization

reserveUSD ‘000

Totalequity

USD ‘000

As at 30 January 2013 - - - - - - -

Net income - - - 10,126 - - 10,126

Exchange differences arising from translation of foreign operations - - - - - (89) (89)

Total comprehensive income - - - 10,126 - (89) 10,037

Issue of share capital 2 17,379 21,896 - - - 39,277

Interim dividend paid - - - (2,000) - - (2,000)

Balance as at 30 June 2014 2 17,379 21,896 8,126 - (89) 47,314


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2015




NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015

1 ORGANISATION AND ACTIVITIES

Arcapita Group Holdings Limited (“the Company”) was incorporated in the Cayman Islands on 30 December 2013 as an exempt company. The registered office of the Company is at P.O. Box 1111, George Town, Grand Cayman, British West Indies. The Company and its subsidiaries (together the ‘Group’) provide alternative Islamic financial products.

These consolidated financial statements have were authorized for issue by the Board of Directors on 12 July 2015.

2 BASIS OF PREPARATION

The consolidated financial statements has been prepared under the historical cost convention. The consolidated financial statements have been presented in US Dollars (USD) being the functional currency of the Group and all values are rounded to the nearest USD thousand, except when otherwise indicated.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

3 BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June 2015. Control is achieved if and only if the Group has:

- Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee,

- Exposure, or rights, to variable returns from its involvement with the investee, and

- The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

- The contractual arrangement with the other vote holders of the investee,

- Rights arising from other contractual arrangements, and

- The Group’s voting rights and potential voting rights.

The Company acquired control of AIM Group Limited (a wholly owned subsidiary of the Company) on 30 January 2014. As at the time of acquisition Aljomaih Company Limited E.C wholly controlled both the Company and AIM Group Limited and as a result the business combination was excluded from IFRS 3 : Business Combination and the use of the acquisition method of accounting for the consolidation. Thus, for the prior period consolidated financial statements, the Group included the results of the combining entities for the full financial period ended 30 June 2014 irrespective of when the combination took place.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:


- Derecognizes the assets (including goodwill) and liabilities of the subsidiary,

- Derecognizes the carrying amount of any non-controlling interests,

- Derecognizes the cumulative translation differences recorded in equity,

- Recognizes the fair value of the consideration received,

- Recognizes the fair value of any investment retained,

- Recognizes any surplus or deficit in the income statement, and

- Reclassifies the parent’s share of components previously recognized in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

Subsidiary Companies

The following are the principal subsidiaries of the Company and are consolidated in these financial statements.

Subsidiary OwnershipYear of

IncorporationCountry of

Incorporation

AIM Group Limited The primary activity of AIM Group Limited is to provide asset management and administrative services.

100% 2013 Cayman Islands

Arcapita Investment LimitedThe primary activity of Arcapita Investment Limited is to hold the investments of the Group.


Arcapita Management LimitedThe primary activity of Arcapita Management Limited is to administer or manage the Group’s investment structure companies.


Arcapita Investment Partners Limited The primary activities of Arcapita Investment Partners Limited is to structure Islamically compliant investment products and act as placement agent.


AIM Cayman SPE Limited The primary activity of Arcapita Cayman SPE Limited is to act as deposit agent to the investors of the Group.


Arcapita Investment Advisors UK Limited The primary activity of Arcapita Investment Advisors UK Limited are to source investment opportunities in Europe and provide investment advisory services.

100% 2013 United Kingdom

Arcapita Investment Management US Inc. The primary activities of Arcapita Investment Management US Inc. are to provide advisory services with respect to investment opportunities in the United States of America.

100% 2013 United States of America

Arcapita Investment Management Singapore Pte Limited The primary activities of Arcapita Investment Management Singapore Pte Limited are to source investment opportunities in Asia and to provide financial advisory services to its related companies.

100% 2013 Singapore


Investment entity

The Group meets the definition of an investment entity as per the following criteria prescribed under IFRS 10 and is required to account for investments in subsidiaries held for sale in the normal course of business, at fair value through the statement of income.

- The Group, obtains funds from multiple investors for the purpose of providing those investors with investment management services;

- The Group’s business purpose is holding, managing and disposing of Islamically compliant investments through orderly market transactions and in a manner which would result in capital appreciation and maximization of benefits to all stakeholders;

- The Group intends to exit investments through orderly market transactions rather than hold them for the long term; and

- The Group measures and evaluates the performance of substantially all its investments, and communicates information about the performance of each investment to investors and stakeholders on a fair value basis.

Unconsolidated subsidiaries Note Effective ownership Country of incorporation

SBA Capital Limited 8 73% Cayman Islands

SBA Holdings Limited 8 100% Cayman Islands

4 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of these consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts in the consolidated financial statements. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. Significant judgments applied in the preparation of the consolidated financial statements are given below:

Going concern

The Group’s Board of Directors has made an assessment of the Group’s ability to continue as a going concern and is satisfied that the Group has the resources to continue in business for the foreseeable future. Furthermore, the Board of Directors is not aware of any material uncertainties that may cast significant doubt about the Group’s ability to continue as a going concern. Therefore, the consolidated financial statements are prepared on a going concern basis.

Impairment of financial assets

The management of the Group reviews its individually significant financial assets at each statement of financial position date to assess whether an impairment loss should be recorded in the statement of income. In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the impairment loss.

Assets that have been assessed individually and found not to be impaired and all individually insignificant assets are then assessed collectively, in groups of assets with similar risk characteristics, to determine whether impairment should be made due to incurred loss events for which there is objective evidence but whose effects are not yet evident.

Fair value of financial instruments

The Group measures certain financial instruments at fair value at each date of statement of financial position. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best


interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

5 NEW AND AMENDED STANDARDS AND INTERPRETATIONS

The accounting policies adopted are consistent with those of the previous financial year, except for the disclosure relating to the following new and amended IFRS and the IFRS Interpretations Committee (the “IFRIC”) interpretations which became effective for accounting periods beginning on or after 1 January 2014:

IFRS 10 ‘Consolidated financial statements’ (IFRS 10) and Amendments to IFRS 10

The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements. It sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee. It also sets out the accounting requirements for the preparation of consolidated financial statements. The amendments to IFRS 10 define an investment entity and introduce an exception from the consolidation requirements for investment entities. On adoption the Group has determined that it meets the definition of an investment entity and has therefore accounted for its investment in companies in which it may have control, at fair value through the statement of income.

IFRS 12 ‘Disclosure of interests in other entities’ (IFRS 12) and amendments to IFRS 12

The standard requires entities to disclose significant judgements and assumptions made in determining whether the entity controls, jointly controls, significantly influences or has some other interests in other entities. Entities will also be required to provide more disclosures around certain ‘structured entities’. The amendments also introduce new disclosure requirements related to investment entities. Adoption of the standard has impacted the Group’s level of disclosures, but has not impacted the carrying value of assets in the Group’s consolidated financial position.

6 SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the consolidated financial statements are set out below:

a) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i) Financial assets

Financial assets comprise of cash and cash equivalent, receivables and investment.

Initial recognition

The Group classifies its financial assets into two categories: at fair value through income statement and receivables. The classification depends on the purpose for which the financial assets were acquired or transferred to the Group. The Board of Directors determines the classification of its financial assets upon initial recognition.

Financial assets are initially recognised at fair value plus, for an item not at fair value through income statement, transaction costs that are directly attributable to its acquisition or issue.

Subsequent measurement

Financial assets at fair value through income statement

Financial assets designated at fair value through income statement upon inception are those that are not held for trading but are managed and their performance evaluated on a fair value basis in accordance with the Group’s objectives. The Group’s objectives require the Board of Directors to evaluate information about these assets on a fair value basis together with other related financial information. Subsequent to initial recognition, financial assets at fair value through income statement are measured at fair value. Gains and losses arising from changes in the fair value are recognised in the statement of comprehensive income.


Receivables

These are non-derivative financial assets that are not quoted in an active market and are stated at fair value plus transaction costs. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability. Balances with banks and receivables which have fixed or determinable payments are classified as receivables.

An allowance for doubtful receivables is made when collection of the full amount is no longer probable. Receivables are written off when there is no possibility of recovery.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

i. the right to receive cash flows from the asset have expired; or

ii. the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass- through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets

The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

(ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as loans and borrowings and payables. All financial liabilities are recognised initially at fair value, net of directly attributable transaction costs.

The Group’s financial liabilities include accrued expenses and other liabilities.

Subsequent measurement

After initial recognition, financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the consolidated statement of income, when the liabilities are derecognised, as well as through the effective interest rate method (EIR) amortisation process.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the consolidated statement of income.

b) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if and only if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.


c) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) arising from a past event and the costs to settle the obligation are both probable and able to be reliably measured.

d) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.

Fee income

The fee income represents income the Group earns for investment placement, investment structuring and arranging, asset management and administrative services rendered in accordance to the contractual terms agreed between the parties.

Placement and arrangement fee

The Company earns arrangement and placement fees during the acquisition and placement process for rendering investment management services. These fees are recognised when earned based on the signed share purchase agreements by the Company.

e) Foreign currencies

Transactions in foreign currencies are initially recorded in the functional currency at the rate of exchange prevailing at the date of the transaction.

Monetary assets and liabilities in foreign currencies are translated into USD at exchange rates prevailing at the statement of financial position date. Any gains or losses are recognized in the statement of income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial recognition. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Exchange gains and losses on non-monetary items classified as “fair value through statement of income” are taken to the consolidated statement of income and for items classified as “fair value through equity” such differences are taken to the consolidated statement of comprehensive income.

f) Payables, accruals and provisions

Provisions are made when the Group has a present obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

g) Standards issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the Group’s consolidated financial statements are listed below. This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt these standards when they become effective.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the first phase of the IASB’s work though the adoption date is subject to the recently issued Exposure Draft on the replacement of IAS 39 and applies to classification and measurement of financial assets and liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2015, but amendments to IFRS 9 issued in November 2013, removed the mandatory effective date of 1 January 2015 for IFRS 9. A new mandatory date for IFRS 9 will be determined by the IASB when IFRS 9 is closer to completion.


7 CASH AND CASH EQUIVALENT

Note

As at 30 June 2015

USD ‘000

As at 30 June 2014

USD ‘000

Cash and balances with banks 73,090 34,724

Murabaha with financial institution 5,234 -

Capital raise proceeds with deposit agent 7.1 - 21,896

78,324 56,620

7.1 Capital raise proceeds with deposit agent

As at 30 June 2014, proceeds from the capital raise were held by the deposit agent Arcapita Cayman SPE Limited (a wholly owned subsidiary of the Company) through a segregated client account operated by a reputed international bank until allocation and issuance of shares.

8 INVESTMENT

Note

As at 30 June 2015

USD ‘000

As at 30 June 2014

USD ‘000

Real estate 8.1 50,438 -

50,438 -

8.1 Real estate

The Group has invested (through its structured entities, SBA Capital Limited and SBA Holdings Limited) USD 50.438 million in three residential buildings in a regional residential real estate investment.

9 RECEIVABLES AND OTHER ASSETS

As at 30 June 2015

USD ‘000

As at 30 June 2014

USD ‘000

Placement and arrangement fee 3,829 -

Other receivables 3,706 499

VAT refund receivable 391 300

Prepayments and other assets 674 100

Property, plant and equipment 583 2

9,183 901


10 INVESTMENT RELATED PAYABLE

Investment related payable consist of a payable arising from the recent acquisition of a regional residential real estate investment. The liability was settled subsequent to the balance sheet date.

11 RELATED PARTY TRANSACTIONS

Related parties represent associated companies, the parent and its major shareholders, directors and key management personnel of the Group, the Group’s Shari’ah Supervisory Board and entities controlled, jointly controlled or significantly influenced by such parties. Transactions with related parties arise from the ordinary course of business. Pricing policies and terms of these transactions are approved by the Group’s management.

Income and Expenses paid to related parties are as follows:

Note

For the year ended

30 June 2015USD ‘000

For the period from


USD ‘000

Income

Placement income 142 -

Expenses

Reimbursement of expenses 11.1 12,649 8,995

Key management personnel costs 2,901 1,540

Share based compensation to key personnel 17 1,481 -

Balances with related parties

Assets

Receivable from related parties 4,323 -

Liabilities

Payable to key personnel 1,436 677

Payable to related parties 3,206 2,281

Payable to Board members 816 -

11.1 Reimbursement of expenses

The Group and Arcapita Investment Management B.S.C.(c) (Formerly AIM Investment Management B.S.C(c)) are under the common control of the same shareholders and share an identical Board of Directors. As a result Arcapita Investment Management B.S.C.(c) is a related party to the Group. The Group reimburses the expenditures incurred by Arcapita Investment Management B.S.C.(c) in providing services to the Group. In the consolidated statement of income for the year ended 30 June 2015, the reimbursement is included with general and administration expenses, legal and professional expenses, staff compensation and benefit expenses and share based compensation cost.


11.2 Accrued expenses and other liabilities

Included in accrued expenses and other liabilities are amounts recovered by the Group from a customer, under a fiduciary capacity, on behalf of certain employees and consultants of the Group. The Group collects such amounts on behalf of such employees and consultants as per agreed terms. At no point in time, any portion of amounts so collected, will revert to the Group.

12 SHARE CAPITAL

As at 30 June 2015

USD

As at 30 June 2014

USD

Authorized capital

50,000,000 ordinary shares with a par value of USD 0.001 per share 50,000 50,000

Issued and paid up capital

As at 1 July 2014 / 30 January 2013

(2015: 1,738,095.2 ordinary shares, 2014: Nil ordinary shares) 1,738 -

Issued during the year / period

(2015:4,428,571.8 ordinary shares 2014: 1,738,095.2 ordinary shares) 4,429 1,738

As at 30 June 2015 / 30 June 2014

(2015: 6,166,667 shares 2014:1,738,095.2 shares) 6,167 1,738

The shareholders have subscribed to share capital in two tranches with the first tranche of USD 6,167 (USD 61,666,670 including share premium) being fully paid up. A further USD 3,083 (USD 30,833,333 including share premium) will be called the second tranche of capital issue.

13 SHARE PREMIUM

Amounts collected in excess of the par value of the issued share capital during any issue of shares is treated as share premium.

14 SHARES PENDING ALLOTMENT

As of the prior period ended 30 June 2014, the Group had received signed share purchase agreements (“SPA”) for shares worth USD 67.802 million and investors had paid up USD 39.277 million. Out of the paid up amounts, USD 21.896 million was unallocated and held with the deposit agent of the Group. During the current year ended 30 June 2015, the allotment of shares have been completed. No shares were pending allotment as at 30 June 2015.

15 PROPOSED DIVIDEND

Proposed dividends are disclosed as appropriations within equity until the time they are approved by the shareholders. On approval by shareholders, these are transferred to liabilities. As at 30 June 2015, the Group has proposed dividend amounting to USD 4.667 million.


16 FEE INCOME AND OTHER

For the year ended

30 June 2015USD ‘000

For the period from


USD ‘000

Management and performance fee 31,593 29,197

Placement fee 2,472 -

Arrangement fee 1,357 -

Other 41 99

35,463 29,296

17 EQUITY INCENTIVE PROGRAM

New investment units comprising shares of the Company and shares of Arcapita Investment Management B.S.C. (c) (collectively the “Arcapita Group”) equal to 10 percent of the issued and outstanding equity, on a fully diluted basis, will be allocated to the program upon its inception. Participants may be granted investment units, up to a maximum of twenty percent in aggregate, of the plan allocation each year, based on Arcapita Group’s performance. For the year ended 30 June 2015, the Arcapita Group has met the criteria for the grant of shares. The allocation of the grant among individual program participants has not been finalized by Arcapita Group as of 30 June 2015, management expects it to be finalized subsequent to the year end and consequently an accrual of USD 1.481 million, as share based compensation expense, in the consolidated financial statements for the financial year 2015 is recorded.

18 INVESTOR FUNDS

From time to time the Group receives funds from or due to its investors. These funds are placed in a segregated client account with an established reputed international bank based in New York and are held pursuant to control agreements with investors and portfolio investment companies in which these investors have invested. The control agreements restrict the Group’s access to these funds and requires the consent and instructions of the investors or portfolio companies to transact. As a result the Group does not have legal authority to solely control the funds nor an obligation to the investor and as such these funds are not reflected in the Group’s financial statements.

19 RISK MANAGEMENT

19.1 Introduction

The Group is in the process of establishing a risk management department and a robust risk management framework. While such a framework is being established management has identified and is monitoring the risks identified below. Significant matters if any are brought to the attention of the Board of Directors.

19.2 Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is exposed to credit risk on its bank balance and receivables. This risk is considered minimal as the bank balances are maintained in current accounts with reputed international banks having good credit standings. The receivable balances primarily represents prepayments to vendors and receivable from staff.

19.3 Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may arise from an inability to realize a financial asset quickly at an amount close to its fair value. The Group has enough cash and bank balances available as of 30 June 2015 in order to discharge its financial liabilities when they fall due.


19.4 Market risk

Market risk is the risk that changes in market prices, such as profit rate and foreign exchange rates will affect the Group’s income. Market risk comprises three types of risk: profit rate risk, currency risk and other price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the risk adjusted return on capital.

Profit rate risk

Profit rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market profit rates. The Groups exposure to such instruments derive from its investment in Sukuk and Murabaha receivable with financial institutions.

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Group’s exposure to currency risk arises from its foreign operations which are insignificant as at the statement of financial position date.

19.5 Operational risk

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications or lead to financial loss. The Group minimizes the operational risk by maintaining a strong internal control environment and continuous oversight by the Board of Directors.

20 CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it in line with the changes in operating conditions and the risk characteristics of its activities.


21 FAIR VALUE OF FINANCIAL INSTRUMENTS

As at the statement of financial position date the Group carried its financial assets and liabilities at amortized cost or fair value through income statement. The following table sets out the fair values of financial instruments and analyses them by the level in the fair value hierarchy into which each fair value measurement is categorized.

As at 30 June 2015

Level 1USD ‘000

Level 2USD ‘000

Level 3USD ‘000

Total fair values

USD ‘000

Total carrying amount

USD ‘000

Financial assets

Investments - - 50,438 50,438 50,438

Balance due from banks 78,319 - - 78,319 78,319

Receivables - - 7,926 7,926 7,926

78,319 - 58,364 136,683 136,683

Financial liabilities

Other liabilities - - 6,012 6,012 6,012

Fee received in advance - - 613 613 613

- - 6,625 6,625 6,625

As at 30 June 2014

Level 1USD ‘000

Level 2USD ‘000

Level 3USD ‘000

Total fair values USD ‘000


USD ‘000

Financial assets


Capital raise proceeds with deposit agent 21,896 - - 21,896 21,896

Receivables - - 799 799 799

56,615 - 799 57,414 57,414



Fee received in advance - - 2,832 2,832 2,832

- - 6,390 6,390 6,390

As at 30 June 2015, the fair values of the Company’s financial instruments approximated their carrying values.


Determination of fair value and fair value hierarchy

The Group uses the following hierarchy for determining and disclosing fair value of financial assets and liabilities:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

Level 3: Techniques which use inputs which have significant effect on the recorded fair value that are not based on observable market data.

Movements in level 3 financial instruments measured at fair value

The following table shows a reconciliation of the opening and closing amount of level 3 financial assets which are recorded at fair value:

As at 30 June 2015

USD’000

As at 30 June 2014

USD’000

Balance as at 1 July 2014 /30 January 2013 - -

Acquisition of investment 50,438 -

50,438 -

Valuation process of the Group

Balances with banks represent cash and cash equivalents and are due on demand. The carrying value of these balances represents their fair value.

The recoverability of receivable were determined by the management as part of impairment testing by calculating the net present values of the expected cash flows. The carrying amounts therefore approximate the fair value of these receivables.

For investment in real estate sector, fair value is determined by reference to valuations by an independent real estate valuation expert. The determination of the fair value of such assets is based on local market conditions.

Fee received in advance, other liabilities and payable to related party are current in nature and the fair value of these financial instruments represents their carrying value.

22 SEGMENTAL INFORMATION

The sole business of the Group is to provide and manage alternative Islamic investment products and as a result it does not have any other reportable segments for this financial period.

23 EARNINGS PROHIBITED BY SHARI’AH

The Group receives interest from incidental deposits. These earnings are prohibited by Shari’ah, hence set aside as a liability to be used exclusively for charitable purposes and amount to USD 9,071.84 (Period ended 30 June 2014 : USD 3,970.57)


SUPPLEMENTARY INFORMATION

Arcapita Group consists of Arcapita Group Holdings Limited(“AGHL”), AGHL’s direct and indirect subsidiaries and Arcapita Investment Management B.S.C.(c) (“Arcapita Bahrain”) (Formerly AIM Investment Management B.S.C.(c)).

AGHL and Arcapita Bahrain currently are owned by the same shareholders in the same shareholding ratios. This is as a result of contractual arrangements and the terms of the articles of association, which requires the shareholders of each entity to be identical. The shareholders have to hold their interests in Arcapita Group in the same ratio of AGHL shares to Arcapita Bahrain shares and to appoint identical members to Board of Directors in both entities, now and in the future. However, under the requirements of IFRS, in order to consolidate the financial position and results of Arcapita Bahrain with AGHL certain conditions have to be met. These conditions have not been fulfilled at this time and Arcapita Bahrain results cannot be consolidated with AGHL.

Therefore, in order to provide supplementary information to the shareholders we provide below a summarized pro-forma consolidated statement of income and financial position.

Arcapita group pro-forma statement of income

For the year ended 30 June 2015

AGHL Group

USD ‘000

Arcapita Bahrain

USD ‘000

Consolidation Adjustments

USD ‘000

Arcapita Group

USD ‘000

INCOME

Fee Income and other 35,463 12,674 (12,649) 35,488

Total operating income 35,463 12,674 (12,649) 35,488

EXPENSES

Staff compensation and benefits (12,893) (8,489) 8,489 (12,893)



Share based compensation cost (1,481) (111) 111 (1,481)


Foreign exchange gain / (loss) 520 (118) - 402

NET INCOME 11,447 - - 11,447


SUPPLEMENTARY INFORMATION

For the period 30 January 2013 to 30 June 2014

AGHL Group

USD ‘000

Arcapita Bahrain

USD ‘000


USD ‘000

Arcapita Group

USD ‘000

INCOME

Fee Income and other 29,296 9,006 (8,995) 29,307

Total operating income 29,296 9,006 (8,995) 29,307

EXPENSES

Staff compensation and benefits (9,528) (5,544) 5,544 (9,528)




Foreign exchange gain / (loss) (10) 12 - 2

NET INCOME 10,126 - - 10,126

Arcapita group pro-forma statement of financial position

As at 30 June 2015

AGHL Group

USD ‘000

Arcapita Bahrain

USD ‘000


USD ‘000

Arcapita Group

USD ‘000

ASSETS

Cash and cash equivalents 78,324 6,343 26 84,693

Investment 50,438 - - 50,438

Receivables and other assets 9,183 1,174 (994) 9,363

TOTAL ASSETS 137,945 7,517 (968) 144,494

LIABILITIES

Investment related payable 45,438 - - 45,438

Accrued expenses and other liabilities 10,781 1,549 - 12,330

Fee received in advance 613 - - 613

Payable to AGHL Group - 968 (968) -

TOTAL LIABILITIES 56,832 2,517 (968) 58,381

EQUITY

Share capital and premium 61,667 2,646 - 64,313

Shares pending allotment - 2,354 - 2,354


Proposed dividends 4,667 - - 4,667

Exchange equalization reserve (127) - - (127)

TOTAL EQUITY 81,113 5,000 - 86,113

TOTAL EQUITY AND LIABILITIES 137,945 7,517 (968) 144,494


Arcapita group pro-forma statement of financial position (continued)

As at 30 June 2015

AGHL Group

USD ‘000

Arcapita Bahrain

USD ‘000


USD ‘000

Arcapita Group

USD ‘000

ASSETS

Cash and cash equivalents 56,620 1,081 - 57,701

Receivables and other assets 901 558 (26) 1,433

Receivable from AGHL Group - 2,281 (2,281) -

TOTAL ASSETS 57,521 3,920 (2,307) 59,134

LIABILITIES

Accrued expenses and other liabilities 5,094 - - 5,094

Fee received in advance 2,832 738 - 3,570

Payable to Arcapita Bahrain 2,281 - (2,281) -

TOTAL LIABILITIES 10,207 738 (2,281) 8,664

EQUITY

Share capital and premium 17,381 2,645 (26) 20,000

Shares pending allotment 21,896 537 - 22,433


Exchange equalization reserve (89) - - (89)

TOTAL EQUITY 47,314 3,182 (26) 50,470

TOTAL EQUITY AND LIABILITIES 57,521 3,920 (2,307) 59,134


Shari’ah Supervisory Board’s Report to Shareholders

Assalam Alaikum Wa Rahmat Allah Wa Barakatuh,

In compliance with the letter of appointment and article 110 of the Articles of Association of Arcapita Group Holdings Limited, we are required to submit the following report:

We have reviewed the principles and the contracts relating to the transactions and applications introduced by Arcapita Group Holdings Limited and its subsidiaries (“the Group”) during the year ended 30 June 2015. We have also conducted our review to form an opinion as to whether the Group has complied with Shari’ah rules and principles and also with the specific fatwas, rulings and guidelines issued by us.

The Group’s management is responsible for ensuring that it conducts its business in accordance with Islamic Shari’ah rules and principles. It is our responsibility to form an independent opinion, based on our review of the operations of the Group and to report to you.

We planned and performed our review so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give assurance that the Group has not violated the rules and principles of Islamic Shari’ah. The Shari’ah Supervisory Board will conduct site visits and audits to ensure Shari’ah compliance.

In our opinion:(a) The contracts entered by the Group during the year are in compliance with Islamic Shari’ah rules and principles.

(b) The Group is managing an investment portfolio on behalf of its clients and this investment portfolio was acquired by its clients prior to establishing the Group and the investment portfolio was structured and approved by the clients previous Shari’ah committee.

(c) The investments undertaken by the Group during the year has been reviewed by us and is in accordance with Islamic Shari’ah principles.

(d) The allocation of profit and charging of losses conform to the basis that had been approved by us in accordance with Islamic Shari’ah rules and principles.

We beg Allah the Almighty to grant us all success and straightforwardness.

Shari’ah Supervisory Board:

Sh. Muhammad Taqi Usmani

Chairman

Sh. Essam Mohammed IshaqMember

Sh. Mohammed Al JameaMember

6 July 2015

بســم اهلل الرمحن الرحيم


ARCAPITA INVESTMENT MANAGEMENT B.S.C. (C)(Formerly AIM Investment Management B.S.C. (c))

SHARI’AH SUPERVISORY BOARD REPORT, REPORT OF THE BOARD OF DIRECTORS, INDEPENDENT AUDITORS’ REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2015


Report on the financialstatements

We have audited the accompanying statement of financial position of Arcapita Investment Management B.S.C.(c) (the “Company”), as at 30 June 2015, and the related statements of income, cash flows and changes in owners’ equity for the year then ended. These financial statements and the Company’s undertaking to operate in accordance with Islamic Shari’a Rules and Principles are the responsibility of the Company’s Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Auditing Standards for Islamic Financial Institutions issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (“AAOIFI”). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 30 June 2015, the results of its operations, its cash flows and changes in owners’ equity for the year then ended in accordance with the Financial Accounting Standards issued by AAOIFI.

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS

OF ARCAPITA INVESTMENT MANAGEMENT B.S.C.(C)

Report on other regulatory requirements

As required by the Bahrain Commercial Companies Law and the Central Bank of Bahrain (“CBB”) Rule Book (Volume 4), we report that:

a. the Company has maintained proper accounting records and the financial statements are in agreement therewith; and

b. the financial information contained in the Report of the Board of Directors is consistent with the financial statements.

We are not aware of any violations of the Bahrain Commercial Companies Law, the Central Bank of Bahrain and Financial Institutions Law, the CBB Rule Book (Volume 4 and applicable provisions of Volume 6) and CBB directives, or the terms of the Company’s memorandum and articles of association during the year ended 30 June 2015 that might have had a material adverse effect on the business of the Company or on its financial position. Satisfactory explanations and information have been provided to us by management in response to all our requests. The Company has also complied with the Islamic Shari’a Rules and Principles as determined by the Shari’a Supervisory Board of the Company.

12 July 2015

Manama, Kingdom of Bahrain


The Directors have pleasure in submitting their report and the audited financial statements of Arcapita Investment Management B.S.C. (c) (the “Company”) for the year ended 30 June 2015.

Principal activities and review of business developments

The Company operates under an Investment Firm license - Category I (Islamic Principles) issued by the Central Bank of Bahrain (“CBB”), to operate under Islamic Shari’ah principles, and is supervised and regulated by the CBB. The Company’s principal activities are in dealing in financial instruments as an agent, and arranging, managing, safeguarding and advising on financial instruments.

Financial Highlights

Year ended 30 June 2015

USD’000

For the period from 10 October 2013 to 30 June 2014

USD’000

OPERATING INCOME

Fee income and other 12,674 9,006

Foreign exchange (loss) / gain (118) 12


OPERATING EXPENSES



Professional and consulting fees (1,502) (1,720)


Auditors

EY have expressed their willingness to continue in office and a resolution proposing their appointment as auditors of Arcapita Investment Management B.S.C. (c), for the year ending 30 June 2016, will be submitted to the Annual General Meeting.

Signed on behalf of the Board

Chairman of the Board of Directors

12 July 2015

ARCAPITA INVESTMENT MANAGEMENT B.S.C. (C)

REPORT OF THE BOARD OF DIRECTORS



STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2015

Note2015

USD ‘0002014

USD ‘000

ASSETS

Cash and cash equivalents 5 6,343 1,081

Receivables and other assets 6 1,174 558

Receivable from a related party - 2,281

TOTAL ASSETS 7,517 3,920

LIABILITIES AND EQUITY

LIABILITIES

Accrued expenses and other liabilities 2,517 738

TOTAL LIABILITIES 2,517 738

EQUITY

Share capital 7 2,645 2,645

Shares pending allotment 8 2,355 537

TOTAL EQUITY 5,000 3,182

TOTAL LIABILITIES AND EQUITY 7,517 3,920



The attached notes 1 to 14 form part of these financial statements.



STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2015

Note


USD ‘000

For the period from10 October 2013 to

30 June 2014 USD ‘000

OPERATING INCOME

Fee income and other 9.1 12,674 9,006


OPERATING EXPENSES



Professional and consulting fees (1,502) (1,720)


Foreign exchange (loss) / gain (118) 12

NET INCOME AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR / PERIOD - -






STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2015

Note


USD ‘000

For the period from10 October 2013 to

30 June 2014 USD ‘000

CASH FLOWS FROM OPERATING ACTIVITIES

Net income for the period - -

Changes in operating assets and liabilities

Receivable from a related party 2,281 (2,281)

Receivables and other assets (616) (558)

Accrued expenses and other liabilities 1,779 738

Net cash from (used) in operating activities 3,444 (2,101)

CASH FLOWS FROM FINANCING ACTIVITY

Proceeds from the issuance of share capital 7 & 8 1,818 3,182

Net cash from financing activity 1,818 3,182

NET INCREASE IN CASH AND CASH EQUIVALENTS 5,262 1,081

Cash and cash equivalents at the beginning 1,081 -

CASH AND CASH EQUIVALENTS AT END OF THE YEAR / PERIOD 5 6,343 1,081




STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2015

Sharecapital

USD ’000

Shares pending allotmentUSD ’000

Retainedearnings

USD ’000

Totalequity

USD ’000

As at 1 July 2014 2,645 537 - 3,182

Net income for the year - - - -

Amount received from issuance of share capital - 1,818 - 1,818

As at 30 June 2015 2,645 2,355 - 5,000

Net income for the period

Amount received from issuance of share capital 2,645 537 - 3,182

As at 30 June 2014 2,645 537 - 3,182




NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015

1 ORGANISATION AND ACTIVITIES

Arcapita Investment Management B.S.C. (c) (“the Company”) is a closed joint stock company registered with the Ministry of Industry and Commerce in the Kingdom of Bahrain and operates under the commercial registration number 87184 obtained on 10 October 2013, which is the date the Company commenced commercial operations. The address of the Company’s registered office is P O Box 1357. Arcapita Building, 5th floor, Bahrain Bay, Manama, Kingdom of Bahrain.

The Company operates under an Investment Firm license - Category I (Islamic Principles) issued by the Central Bank of Bahrain (“CBB”), to operate under Islamic Shari’ah principles, and is supervised and regulated by the CBB. The Company’s principal activities are in dealing in financial instruments as an agent, and arranging, managing, safeguarding and advising on financial instruments.

As at 30 June 2015, the Company has USD nil (2014: nil) as asset under management.

These financial statements have been prepared for the year ended 30 June 2015 and were authorized for issue by the Board of Directors on 12 July 2015.

2 BASIS OF PREPARATION

2.1 Statement of compliance

The financial statements are prepared in accordance with the Financial Accounting Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (“AAOIFI”), the Shari’ah Rules and Principles as determined by the Shari’ah Supervisory Board of the Company, the Bahrain Commercial Companies Law, Financial Institutions Law, the CBB Rulebooks, directives, regulations and associated resolutions and the terms of the Company’s memorandum and articles of association. In accordance with the requirements of AAOIFI, for matters for which no AAOIFI standard exists, the Company uses the relevant International Financial Reporting Standards (“IFRS”) issued by International Accounting Standards Board (“IASB”).

2.2 Accounting convention

The financial statements have been prepared on the historical cost basis and presented in United States Dollars, which is the functional currency of the Company.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of these financial statements are:

a. Cash and cash equivalents

Cash and cash equivalents include cash on hand, amounts due from banks on demand or with an original maturity of three months or less and balances held with deposit agents.

b. Receivables and other assets

Receivables and other assets are carried at their anticipated values. An estimate is made for impaired receivables based on a review of all outstanding amounts at the year end.


c. Financial instruments

Recognition and de-recognition

Financial instruments comprise financial assets and financial liabilities.

All financial assets and financial liabilities are initially recognised on the trade date, i.e. the date that the Company becomes a party to the contractual provisions of the instrument.

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized where:

- the right to receive cash flows from the asset has expired; or

- the Company retains the right to receive cash flows from the asset. but has assumed an obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or

- the Company has transferred its right to receive cash flows from the asset and either: (a) has transferred substantially all the risks and rewards of the assets, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Company’s continuing involvement in the asset.

The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

Fair value of financial instruments

The Company measures certain financial instruments at fair value at each date of statement of financial position. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

d. Accrued expenses and other liabilities

Accrued expenses and other liabilities are recognized for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.

e. Amortized cost measurement

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as such when the Company has the positive intention and ability to hold them to maturity. After initial measurement, these investments are measured at amortised cost using the effective profit rate (EPR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EPR. The EPR amortisation is included in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss under ‘provisions’.

f. Offsetting

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a legally enforceable or religious right to set off the recognized amounts and the Company intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously.


g. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Fee income

The fee income represents income the Company earns for asset management and administrative services rendered in accordance to the contractual terms agreed between the parties.

h. Shari’ah supervisory board

The Company’s business activities are subject to the supervision of a Shari’ah supervisory board consisting of at least three members appointed by the general assembly.

i. Earnings prohibited by Shari’ah

The Company is committed to avoid recognizing any income generated from non-Islamic sources. Accordingly all non-Islamic income is credited to a charity account where the Group uses these funds for various social welfare activities.

j. Foreign currencies

Transactions in foreign currencies are initially recorded at the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities in foreign currencies are translated into United States Dollars at exchange rates prevailing at the statement of financial position date. Any gains or losses are recognized in the statement of profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial recognition. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Exchange gains and losses on non-monetary items classified as “fair value through statement of income” are taken to the statement on income and for items classified as “fair value through equity” such differences are taken to the statement of income.

k. Employees’ end of service benefits

Bahraini employees are covered by the Social Insurance Organization scheme which comprises a defined contribution scheme to which the Company contributes a monthly sum based on a fixed percentage of the salary. The contribution is recognized as an expense in the statement of profit or loss.

The Company provides end of service benefits to its non-Bahraini employees Entitlement to these benefits is usually based upon the employees’ length of service and the completion of a minimum service period. The expected costs of these benefits which comprise a defined benefit scheme are accrued over the period of employment based on the notional amount payable if all employees had left at the statement of financial position date.

1. Impairment of financial assets

An assessment is made at each financial position date to determine whether there is objective evidence that a specific financial asset or a Group of financial assets may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and any impairment loss, based on the assessment by the Company of the estimated cash equivalent value, is recognized in the statement of profit or loss. Specific provisions are created to reduce all impaired financial contracts to their realizable cash equivalent value. Financial assets are written off only in circumstances where effectively all possible means of recovery have been exhausted.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment value was recognized, the previously recognized impairment loss is reversed.


m. Events after the statement of financial position date

The financial statements are adjusted to reflect events that occurred between the statement of financial position date and the date the financial statements are authorized for issue, provided they give evidence of conditions that existed as of the statement of financial position date. Events that are indicative of conditions that arose after the statement of financial position date are disclosed, but do not result in an adjustment to the financial statements.

n. Zakah

Individual shareholders are responsible for payment of Zakah.

4 SIGNIFICANT ACCOUNTING JUDGEMENTS,ESTIMATES AND ASSUMPTIONS

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities, and the accompanying disclosures as well as the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgments

In the process of applying the Company’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements.

(i) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(ii) Going concern

The Company’s management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, the management is not aware of any material uncertainties that may cast significant doubt upon the Company’s ability to continue as a going concern. Therefore, the financial statements are prepared on the going concern basis.

5 CASH AND CASH EQUIVALENTS

Note

As at 30 June 2015

USD ‘000

As at 30 June 2014

USD ‘000

Cash and balances with banks 3,989 544

Capital raise proceeds with deposit agent 5.1 2,354 537

6,343 1,081

5.1 Capital raise proceeds with deposit agent

Proceeds from the capital raise were held by the deposit agent, Arcapita Cayman SPE Limited through a segregated client account operated by a reputed international bank until allocation and issuance of shares.

6 RECEIVABLES AND OTHER ASSETS

Receivables and other assets comprise of prepaid expenses, reimbursables and equipment.


7 SHARE CAPITAL As at

30 June 2015USD ‘000

As at 30 June 2014

USD ‘000

Authorized capital

26,455,030 ordinary shares with a par value of USD 1 per share 26,455,030 26,455,030

Issued and paid up capital

As at 1 July 2014 / 10 October 2013 (2015: 2,645,503 Ordinary shares 2014 : Nil) 2,645,503 -

Issued during the year or period (2015: Nil: 2014: 2,645,503) - 2,645,503

As at 30 June 2015 / 30 June 2014 (2015:2,645,503 : 2014: 2,645,503) 2,645,503 2,645,503

On 30 January 2014, the Board of Directors recommended to re-designate the share capital from Bahraini Dinars to United States Dollars by way of an amendment to the Memorandum and Articles of Association. The amendment was approved by the shareholders in an Extraordinary General Meeting held on 28 August 2014. As a result of the proposed amendment the par value of shares was also amended to 1 USD per share from BHD 1 per share. As a result the comparative figures for the period ended 30 June 2014 have been restated at USD equivalents.

The shareholders have subscribed to share capital in two tranches with the first tranche of USD 5,000,000 fully paid up. A further USD 2,500,000 can be called as a second tranche.

8 SHARES PENDING ALLOTMENT

As at 30 June 2015 the company had received USD 5,000,000, the full commitment as part of the first tranche of capital issuance. Out of the capital raised of USD 5,000,000, an amount of USD 2,354,497 is still categorized as shares pending allotment as the legal formalities necessary to issue shares have still not been completed. These formalities are expected to be completed subsequent to year end.

9 RELATED PARTY TRANSACTIONS AND BALANCES

Related parties represent associated companies, the parent and its major shareholders, directors and key management personnel of the Company, the Company’s Shari’ah Supervisory Board and entities controlled, jointly controlled or significantly influenced by such parties. Transactions with related parties arise from the ordinary course of business. Pricing policies and terms of these transactions are approved by the Company’s management. Outstanding balances at year end if any, are unsecured.

Income received from related parties is as follows:

Note

Year ended30 June 2015

USD’000

For the period from 10 October to30 June 2014

USD’000

Fee income 9.1 12,649 8,995

Key management personnel costs 3,670 2,114

Balances with related parties

Assets

Receivable from a related party - 2,281

Liabilities

Payable to a related party 968 -


9.1 Fee income

AIM Group Limited is a wholly owned subsidiary of Arcapita Group Holdings Limited. As of the statement of financial position date Arcapita Group Holdings Limited is beneficially controlled by the same shareholders and has an identical board of directors as the Company. In accordance with the terms of a service agreement with AIM Group limited for the provision of advisory and administrative services, the Company earns a fee equivalent to the Company’s net expenses after adjusting for foreign exchange movements and other income.

10 SEGMENTAL INFORMATION

The Company’s sole business is the provision of advisory and administrative services. Therefore the Company does not have any other reportable segments for this financial period.

11 FAIR VALUE OF FINANCIAL INSTRUMENTS

Determination of fair value and fair value hierarchy

The Company uses the following hierarchy for determining and disclosing fair value of financial assets and financial liabilities:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

Level 3: Techniques which use inputs which have significant effect on the recorded fair value that are not based on observable market data.

As at the statement of financial position date the Company carried it’s financial assets and financial liabilities at cost or amortized cost. The following table sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierarchy into which each fair value measurement is categorized.

As at 30 June 2015

Level 1USD ‘000

Level 2USD ‘000

Level 3USD ‘000

Total fair values

USD ‘000


USD ‘000

Financial assets


Capital raise proceeds with deposit agent 2,354 - - 2,354 2,354

Receivables - - 107 150 150

6,343 - 107 6,493 6,493



- - 1,634 1,634 1,634


As at 30 June 2014

Level 1USD ‘000

Level 2USD ‘000

Level 3USD ‘000

Total fair values USD ‘000


USD ‘000

Financial assets

Balance due from banks 544 - - 544 544

Capital raise proceeds with deposit agent 537 - - 537 537

Receivables - - 2,355 2,355 2,355

1,081 - 2,355 3,436 3,436


Other liabilities - - 206 206 206

- - 206 206 206

As at 30 June 2015 and 2014, the fair values of the Company’s financial instruments approximated their carrying values.

Balances with banks represent cash and cash equivalents and are due on demand. The carrying value of these balances represents their fair value.

The recoverability of receivable were determined by the management as part of impairment testing by calculating the net present values of the expected cash flows. The carrying amounts therefore approximate the fair value of these receivables.

Other liabilities are current in nature and the fair value of these financial instruments represents their carrying value.

12 CAPITAL MANAGEMENT

The objective of capital management is to ensure the Company’s ability to operate as a going concern by maintaining an appropriate capital base in line with regulatory requirements.

13 RISK MANAGEMENT

13.1 Introduction

The Company is in the process of establishing a risk management department and a robust risk management framework. While such a framework is being established management has identified and is monitoring the risks identified below. Significant matters if any are brought to the attention of the Board of directors.

13.2 Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company is exposed to credit risk on its bank balance and receivables. This risk is considered minimal as the bank balances are maintained in current accounts with reputable international banks having good credit standings. The receivable balances primarily represent prepayments to vendors and other receivable.

13.3 Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may arise from an inability to realize a financial asset quickly at an amount close to its fair value. The Company has enough cash and bank balances available as of 30 June 2015 in order to discharge its financial liabilities when they fall due. All of the assets and liabilities as presented in the statement of financial position of the Company are of current nature.


13.4 Market risk

Market risk is the risk that changes in market prices, such as profit rate and foreign exchange rates will affect the Company’s income. Market risk comprises three types of risk: profit rate risk, currency risk and other price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the risk adjusted return on capital.

Profit rate risk

Profit rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market profit rates.

The Company does not have any such financial instrument which are profit linked and are likely to change due to changes in market profit rates.

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

13.5 Operational risk

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications or lead to financial loss. The Company minimizes the operational risk by maintaining a strong internal control environment and oversight by the Board of Directors.

14 CHANGE OF NAME

The name of the Company was changed to Arcapita Investment Management B.S.C.(c) during the year ended 30 June 2015 and all required regulatory approvals and other legal formalities have been completed.


Shari’ah Supervisory Board’s Report to Shareholders

Assalam Alaikum Wa Rahmat Allah Wa Barakatuh,

In compliance with the letter of appointment and article 54(e) of the Articles of Association of Arcapita Investment Management B.S.C.(c) (”the Company”), we are required to submit the following report:

We have reviewed the principles and the contracts relating to the transactions and applications introduced by the Company during the year ended 30 June 2015. We have also conducted our review to form an opinion as to whether the Company has complied with Shari’ah rules and principles and also with the specific fatwas, ruling and guidelines issued by us.

The Company’s management is responsible for ensuring that the Company conducts its business in accordance with Islamic Shari’ah rules and principles. It is our responsibility to form an independent opinion, based on our review of the operations of the Company, and to report to you.

We planned and performed our review so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give assurance that the Company has not violated the rules and principles of Islamic Shari’ah.

In our opinion:

The services agreement entered into by the Company with AIM Group Limited, and the transactions and dealings resulting from such agreement during the year ended 30 June 2015 are in compliance with the Islamic Shari’ah rules and principles.

We beg Allah the Almighty to grant us all success and straightforwardness.

Shari’ah Supervisory Board:

Sh. Muhammad Taqi Usmani

Chairman

Sh. Essam Mohammed IshaqMember

Sh. Mohammed Al JameaMember

6 July 2015

بســم اهلل الرمحن الرحيم


BOARD OF DIRECTORS

Abdulaziz Hamad Aljomaih - Chairman

Mr. Aljomaih has been the Head of International Investments at Aljomaih Holding Co. in Saudi Arabia since 1988. His other key positions include: member of the Board of Directors of Ittihad Etisalat (Mobily), Saudi Arabia; Dana Gas, United Arab Emirates; and Vice Chairman of Pearl Initiative (a U.N. initiative). A professional with over 26 years of experience, Mr. Aljomaih was Vice Chairman of Arcapita’s Board of Directors from 1997 to 2013.

Ghazi Fahad Alnafisi

Mr. Alnafisi is Co-Founder and Chairman of Salhia Real Estate Company K.S.C. , Kuwait . His other current positions include: Chairman of Kuwait Hotel Owners Association, Kuwait; and Co-Founder and Vice Chairman of Independent Petroleum Group s.a.k., Kuwait. A professional with over 40 years of experience, Mr. Alnafisi was a member of Arcapita’s Board of Directors from 1999 to 2013.

Abdulrahman Abdulaziz Al-Muhanna

Mr. Al-Muhanna joined the Almarai Company in the Kingdom of Saudi Arabia in 1979 and was appointed Managing Director and a member of the board in 1997. His other board memberships include ARASCO; the publishing company Al Jazirah; and the National Committee for Biodiversity, as well as various commercial establishments in Riyadh, Kingdom of Saudi Arabia. A professional with 30 years of experience, Mr. Al-Muhanna was a member of Arcapita Bank’s Board of Directors from 2000 to 2013.

Mahmood Hashim Al Kooheji

Mr. Al Kooheji is a Director of Arcapita Group Holdings Limited. He is the Chief Executive Officer of Bahrain Mumtalakat Holding Company. Mr. Al Kooheji sits on the board of Gulf Air. He is also a board member at McLaren Automotive Limited and McLaren Group Limited. In addition, he sits on the boards of Durrat Khaleej Al Bahrain Company and the Arab Petroleum Investment Corporation (“APICORP”), and serves the role of Governor at the Royal College of Surgeons in Ireland, Bahrain. He holds a Bachelors Degree in Mechanical Engineering from Staffordshire University, and a Masters of Business Administration from Henley College of Management, Brunel University, UK.

Khalid Jassim Bin Kalban

Mr. Kalban is a Director of Arcapita Group Holdings Limited. He is the Managing Director and Chief Executive Officer of Dubai Investments PJSC. His extensive experience covers the industrial, financial, investment and real estate sectors. He currently holds many important positions including: member of the Board of Directors of National General Insurance PJSC. Presently he is the Chairman of Union Properties PJSC. Mr. Kalban has a degree in Business Management from the USA. and also majored in management at the Metropolitan State College, USA.

Noorur Rahman Abid

Mr. Abid is a Fellow Chartered Accountant from the Institute of Chartered Accountants in England and Wales. He has more than 35 years’ experience in the profession across Europe, the Middle East and Africa. Mr. Abid spent 33 years with Ernest & Young, joining them in 1979 and rising to become an Office Managing Partner, then the Assurance Leader for the MENA region. Mr. Abid previously served as the Chairman of the Auditing Standards Committee, and the Deputy Chairman of the Accounting and Auditing Standards Board of Accounting and Auditing Organization for Islamic Financial Institutions.

OUR PEOPLE


Usama Mohammed Al Barwani

Mr. Al Barwani is a Director of Arcapita Group Holdings Limited. He is an Executive Director of MB Holding, a major Omani family conglomerate, and is responsible for new projects and the investments of the MB Group. He is also Managing Director of United Engineering Services, a major oil and gas, and defense manufacturing business. He is on the Board of Directors of Ahli Bank SAOG, and Chairman of Ubar Hotels and Resorts both listed on the Muscat Securities Markets, as well as Nautilus Minerals which is listed on the Toronto Stock Exchange. He has obtained a B.Sc. in Petroleum Engineering from Tulsa University (USA) and an M.Sc. (Energy, Trade and Finance) from City University, London.

Aamer Abdul Jalil Al Fahim

Mr. Al Fahim is the Executive Director of Al Fahim Group, one of the most successful groups in the UAE, encompassing the automotive, travel, hospitality, oil & gas and real estate sectors. The group represents a wide range of blue-chip international brands including Mercedes-Benz, Jeep, Fiat and Lancia, Michelin and the Fairmont. Mr. Al Fahim was a Member of Federal National Council, UAE and is a board member in a number of establishments and financial institutions in the UAE. Mr. Al Fahim was a member of Arcapita Bank’s Board of Directors from 2011 to 2013.

Atif Ahmed Abdulmalik - CEO

Mr. Abdulmalik is the Chief Executive Officer and executive member of the Board of Directors of Arcapita. Previously, Atif was at Investcorp where he served in numerous management positions. In 2007, he was awarded The Proficiency Medal First Class by His Majesty King Hamad bin Isa Al Khalifa in acknowledgement of his outstanding contribution to the Kingdom of Bahrain. Atif obtained his BBA in Accounting, Finance and Management from Saint Edward’s University, Texas.


SHARI’AH SUPERVISORY BOARD

Arcapita’s Shari’ah Supervisory Board is fully supported by the internal Shari’ah department and other Arcapita Group departments. The Shari’ah department is responsible for ensuring that there is an ongoing process of reviewing and auditing of the business of Arcapita generally, including existing and new investments. For Shari’ah compliance, Shari’ah Supervisory Board members and Shari’ah department members also make regular portfolio company visits. The Shari’ah Supervisory Board ensures that all investments undertaken by the lines of business are structured in a manner that comply strictly with Shari’ah principles and resolve any Islamic investment issues that may arise. The Shari’ah Supervisory Board also approves the audited financial statements of Arcapita, confirming adherence to Islamic Shari’ah principles.

The Shari’ah Supervisory Board is composed of the following prominent scholars:

Sheikh Muhammed Taqi Usmani

Vice President, Darul-Uloom University, Karachi, Pakistan; Member of the Islamic Fiqh Academy; Ex-Member of the Shari’ah Appellate Bench of the Supreme Court, Karachi, Pakistan; Member of the Shari’ah Supervisory Boards of a number of Islamic banks and financial institutions.

Sheikh Esam Mohamed Ishaq

Chairman of the Board, Muslim Educational Society, Bahrain; Director and Shari’ah Advisor, Discover Islam, Bahrain; Member of Board of Trustees, Al Iman Islamic School, Bahrain; Member, Accounting and Auditing Organization for Islamic Financial Institutions, Bahrain; Member of the Shari’ah Supervisory Boards of a number of Islamic banks and financial institutions.

Sheikh Mohammed Isa Al Jamea

Sheikh Mohammed is the Director heading the Shari’ah department of the firm. Previously, he was with the Royal Bahraini Air Force. Sheikh Mohammed has a BS in Islamic Shari’ah Law from Imam Mohamed Bin Saud University, Saudi Arabia (UAE Branch), and several Shari’ah certificates/licenses in Islamic studies from different prominent scholars. He is a member of the Shari’ah Supervisory Board of the Arcapita Real Estate Income Fund. He has a BS in Aerospace Engineering from Northrop University in California.


SENIOR MANAGEMENT

Atif Abdulmalik

Chief Executive Officer & Chairman of the Executive Committee

Atif is the Chief Executive Officer and executive member of the Board of Directors of Arcapita. Previously, Atif was at Investcorp where he served in numerous management positions. In 2007, he was awarded The Proficiency Medal First Class by His Majesty King Hamad bin Isa Al Khalifa in acknowledgement of his outstanding contribution to the Kingdom of Bahrain. Atif obtained his BBA in Accounting, Finance and Management from Saint Edward’s University, Texas.

Hisham Al Raee

Chief Operating Officer & Member of the Executive Committee

Hisham is the Chief Operating Officer and a member of the Executive Committee, responsible for the daily operations of the firm. He also serves as the Head of the Investors Relationship Management team with his extensive investor experience across the GCC region and Asia. Previously, Hisham was the Senior Director of Business Development with Reuters Middle East in Saudi Arabia for five years and prior to that he worked in the finance department at Citibank N.A., Bahrain. Hisham received his Master’s degree in Business Administration from the University of Hull, United Kingdom, and a CSD in Business Administration from the University of Bahrain.

Martin Tan

Chief Investment Officer & Member of the Executive Committee

Martin is the Chief Investment Officer and a member of the firm’s Executive Committee where he is responsible for developing and overseeing the firm’s investment strategy and capabilities. Prior to joining Arcapita in 2007, Martin spent about 15 years in the real estate industry. As the CEO of CapitaLand Commercial & Integrated Development, he managed a global portfolio in excess of SGD 10 billion and he has extensive experience in listed and private real estate investments. Martin started his career in the manufacturing and construction industries, and obtained his MBA and Bachelor’s degrees from Washington State University.

Mohammed Chowdhury

Global Head of Financial Management Group & Member of the Executive Committee

Mohammed is responsible for overseeing Corporate Finance, Shari’ah, Risk and Corporate Communications. Previously, Mohammed spent nine years in the accounting profession working for Ernst & Young in Bahrain and KPMG in London. Mohammed is a member of the Institute of Chartered Accountants in England and Wales, completing his training contract while working for KPMG in London. Mohammed is a graduate of the London School of Economics and has an MBA from the London Business School.

Essa Zainal

Global Head of Financial Control

Essa is a Managing Director and the Global Head of the Financial Control Department, responsible for overseeing the Accounting, Internal Control, Finance and Investment Administration Operations. Previously, Essa was with Al Baraka Banking Group in Bahrain for three years as financial controller, responsible for the consolidation of Al Baraka’s financial institutions. Before then, he was with Arthur Andersen in Bahrain for more than 15 years, during which he headed the assurance and then the advisory services division. Essa has a BS in Accounting from the University of Bahrain and is a certified public accountant in the state of Georgia, USA.


MANAGEMENT TEAM


Atif Abdulmalik, Chief Executive Officer & Chairman of the Executive Committee

Managing Directors

Hisham Al Raee, Chief Operating Officer & Member of the Executive Committee

Martin Tan, Chief Investment Officer & Member of the Executive Committee

Mohammed Chowdhury, Global Head of Financial Management & Member of the Executive Committee

Essa Zainal, Global Head of Financial Control

Kevin Keough, Global Head of Portfolio Management

Jay Fortin, General Counsel

Directors

Michael Casey, Real Estate

Vivian Chian, Private Equity & Real Estate

Abdulhameed Juma, Corporate Management

Yasser Al Raee, Real Estate

Salah Al Shaikh, System Development & Integration

Ahmed Al Shirawi, Investors Relationship Management

Gagan Suri, Real Estate

Elaine Zhao, Investors Relationship Management

Principals

Yousif Al Abdulla, Real Estate

Gana Balaratnam, Financial Control

Muhannad Buhindi, Investors Relationship Management

Amy Doshi, Legal

Osama Al Haram, Investors Relationship Management

Mishal Al Hellow, Information Technology

Amin Jawad, Treasury Operations

Amy Kim, Legal

Hafedh Al Najem, Financial Control

Tony Nambiar, Human Resources

Adrian Peck, Real Estate

Mohamed Sharif, Investors Relationship Management

Hassan Shujaie, Administration

Pik Sian Sim, Real Estate

Osama Al Tamimi, Financial Control

Ahmed Al Zayani, Investors Relationship Management


Senior Associates

Basil Ahmed, Financial Management Group

Mohammed Shakir Maka, Legal

Brian Tsang, Investment Team

Associates

Farooq Aqeel, Financial Control

Ali Ardati, Financial Management Group

Vincent Favier, Investment Team

Isa Al Ghatam, Financial Management Group

Ali Ghuloom, Information Technology

Isa Al Khalifa, Real Estate

Mani Kuttickal, Financial Control

Salwa Makarem, Human Resources

Joseph Mathai, Financial Control

Mohammed Al Saie, Information Technology

Kaleel Sainul, Human Resources

Eman Sharif, Financial Control


www.arcapita.com

Manama

P.O. Box 1357

Manama

Kingdom of Bahrain

Telephone: +973 17 218333

Atlanta

118 Peachtree St NE

Suite 3000, Atlanta GA 30309

United States of America

Telephone: +1 404 920 9000

London

15th floor, The Shard

32 London Bridge Street

London SE1 9SG

United Kingdom

Telephone: +44 20 7824 5600

Singapore

8 Marina Boulevard

Marina Bay Financial Centre

Tower 1, Level 11

Singapore 018981

Telephone: +65 6653 4387

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