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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Shariah (Regs) | LSE:SCAP | London | Ordinary Share | COM SHS USD0.01 (REGS) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMSCAP
RNS Number : 3119G
Shariah Capital, Inc
28 June 2012
28 June 2012
Shariah Capital, Inc. ("Shariah Capital" or the "Company")
The Board of Directors of Shariah Capital (the "Board") is pleased to announce the Company's audited annual results for the year ended 31 December 2011.
Shariah Capital is a U.S. based company that creates and customizes Shariah complaint financial products and platforms and provides selective Shariah consulting and advisory services primarily to financial institutions and investment firms with product initiatives directed towards Islamic investors. The Company is best known for its pioneering efforts in Shariah compliant hedge funds. The Company formed and acts as the Shariah Advisor and Sponsor for the Al Safi Trust, the first Shariah compliant alternative investment platform.
2011 Operational Highlights
The Company, through its Dubai Shariah Asset Management, Ltd ("DSAM") joint venture with the Dubai Multi Commodities Centre Authority ("DMCCA"), redirected its DSAM Kauthar Funds sales focus from institutional to retail. DSAM extended Shariah Capital's consulting contract for its 2011 fiscal year (July 1-June 30(th) ). Shariah Capital receives $315,000 annually under that contract ($157,500 was received in 2011 and the balance of $157,500 is expected to be received in the second half of 2012). In July 2011, the DSAM Kauthar Natural Resources Fund was closed and approximately $14,000,000 in assets was distributed from that Fund.
The Company spent significant effort restructuring documents for the DSAM Kauthar Gold Fund to migrate from an institutional to retail offering. On 23 December 2011, the DSAM Kauthar Gold Fund successfully listed on the official list of the Cayman Islands Stock Exchange (CISX) the first Shariah compliant long/short fund for retail with minimum subscriptions of $5,000 and weekly liquidity. Subsequently the DSAM Kauthar Gold Fund has made good progress in building its retail distribution base and gained approval for sale through the Royal Skandia Fund Platform and the Friends Provident Fund Platform, as well as with several Independent Financial Advisory firms in the UAE.
Personnel
In May of 2011, Shaykh Yusuf Talal DeLorenzo left the Company and resigned as a member of the Board.
In August of 2011, Charles Serocold was hired by the Company as an associate executive.
In September of 2011, Joseph Gau left the Company and resigned as a member of the Board.
The Company believes it is adequately staffed for its current operations and the present business environment.
Financial Review
For the twelve months ending 31 December 2011, Shariah Capital realised a net loss of approximately $463,984 compared to a net loss of approximately $354,000 in 2010. The Company generated revenues of approximately $1,148,120 in 2011 compared to revenues of approximately $1,281,000 in 2010. Loss per share year over year remained at $0.01.
Liquidity and Capital Resources
The Company's fee receivable, cash, and cash equivalents stood at approximately $4.130 million at 31 December 2011, of which over $3.9 million was held in cash and cash equivalents. This compares to cash and cash equivalents and fee receivables at the end of 2010 of approximately $4.522 million (of which $4.3 million was held in cash and cash equivalents). The Company believes its cash and cash equivalent position is sufficient to meet ongoing and budgeted operations.
Post period events of Note
On 6 June 2012, the Company announced a change of its NOMAD from Investec Investment Banking to Allenby Capital Limited. Malcolm Wall Morris resigned from the Board of Directors of the Company, and Steven J. Adelkoff (the Company's Chief Financial Officer and General Counsel) joined the Board.
On 13 June 2012, the DMCCA and the Company agreed that (i) the Company would end providing to DSAM its fee of 35 basis points on assets under management on the Al Safi Trust platform, and instead will retain that fee (beginning with the second quarter of 2012), (ii) the Company will continue to manage DSAM (including all budget and operational decisions) from 1 July 2012 to 30 June 2014 and (iii) the DMCCA would redeem its investment in the DSAM Kauthar Energy Fund (which has just under $7,000,000 in assets). The impact of the redirected 35 basis points will not be material to SCAP's revenues in the immediate future as the 35 basis points contributed to DSAM are offset by consulting fees received by Shariah Capital from DSAM. The lock up of investment capital provided by DMCCA will not be extended beyond 30 June 2012. This will promulgate even greater care in the deployment of capital, especially longer term capital/commitments by the Company, on behalf of DSAM. Assets under management in the DSAM Kauthar Funds stood at approximately $76.30 million as at 31 May 2012.
Barclays Capital, Inc. informed the Company that it will soon require Shariah Capital to modify new core Prime Broker Documents in order for Barclays, acting as the Prime Broker, to be in a position to execute arboon transactions (which replicates short sales).
Outlook
The present business environment for the alternative fund market, particularly in the Middle East, remains extremely challenging. Caution remains the watchword in the Gulf as investors flee from risk. The 2012 performance, year to date, of our Kauthar Funds has suffered and assets under management have declined. Against this difficult environment the Company has continued to cut costs to better match expenses against expected revenues and to preserve the Company's cash resources.
The Company continues in its efforts to protect and promote its Shariah franchise. The Company intends to continue to support DSAM's retail offering in the UAE. The Company does not believe ultra cautious Gulf investors will change their mood until the current crisis of sovereign credibility is demonstrably behind us. That may take many seasons to achieve in the Company's view.
Benefiting from our strong and liquid balance sheet, the Company for the first time is now reviewing business opportunities outside of Shariah and the MENA region. The options being considered by the Company, are in areas of historical expertise of management, which includes forming an investment fund in which the Company would invest in publicly traded securities and early stage angel/venture investing. With this new business mindset, and as the expense and complexities of remaining public increase, the Company is reviewing the cost and benefits of maintaining its AIM listing.
We are grateful to our shareholders for their continued confidence and support and will keep them updated on developments.
Enquiries:
Eric Meyer
Chairman and Chief Executive Officer
Shariah Capital Inc.
125 Elm Street
New Canaan, CT 06840
Office: +1 (203) 972-0331
Fax: +1 (203) 972-0229
Email: emeyer@shariahcap.com
Website: www.shariahcap.com
Nick Harriss, Nick Athanas, James Reeve
Allenby Capital Limited
Nominated Adviser and Broker
Shariah Capital, Inc.
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 2011 AND 2010
Independent Auditors' Report 1 Financial Statements Balance Sheets 2 Statements of Operations 3 Statements of Changes in Stockholders' Equity 4 Statements of Cash Flows 5 Notes to Financial Statements 6 - 13
BALANCE SHEETS
December 31, 2011 2010 -------------------------------------------------------- --- ---------------- ---------------- ASSETS Current assets Cash and cash equivalents $ 3,915,644 $ 4,319,166 Fees receivable, less allowance for doubtful accounts of approximately $0 and $20,000 at 2011 and 2010, respectively 214,680 202,757 Due from related parties 83,196 160,640 Prepaid expenses and other current assets 68,091 213,426 Investment in DSAM Joint Venture 159,556 17,973 Total current assets 4,441,167 4,913,962 Property and equipment, net 5,642 6,812 ---------------- ---------------- $ 4,446,809 $ 4,920,774 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 181,039 $ 129,120 Due to related party 8,425 Total current liabilities 181,039 137,545 ---------------- ---------------- Stockholders' equity Common stock, $.01 par value, 70,000,000 shares authorized; 60,344,132 and 61,744,132 shares issued at 2011 and 2010 respectively; 59,975,832 and 61,670,232 shares outstanding at 2011 and 2010 respectively 603,441 617,440 Additional paid-in capital 12,601,793 12,587,729 Accumulated deficit 8,780,582) (8,326,598) Treasury stock at cost, 368,300 and 73,900 shares for 2011 and 2010 respectively (158,882) (105,343) Total stockholders' equity 4,265,770 4,783,229 ---------------- ---------------- $ 4,446,809 $ 4,920,774
STATEMENTS OF OPERATIONS
Years Ended December 31, 2011 2010 ---------------------------------------------- --- ----------------- ------------------ Revenue Advisory fee income $ 735,623 $ 1,028,167 Consulting fee income 412,503 252,499 Total revenue 1,148,126 1,280,666 ----------------- ------------------ Expenses Payroll and employee benefits 727,294 980,082 AIM expenses 70,642 85,336 Bad debt expense 70,003 20,416 Computer expenses 22,795 20,948 Depreciation 1,975 2,587 Insurance 56,680 57,904 Marketing 12,000 15,742 Office expense and supplies 24,483 11,462 Professional fees and other 420,459 347,760 Registrar fees 20,207 13,162 Rent 73,980 74,025 Other taxes 13,657 27,880 Stock-based compensation 64 3,944 Telephone 6,843 9,732 Travel and entertainment 7,523 22,598 ----------------- ------------------ Total expenses 1,528,605 1,693,577 ----------------- ------------------ Loss from operations (380,479) (412,912) Other income Interest and dividend income 34,069 38,644 Income (loss) attributable to unconsolidated joint venture (117,574) 20,314 ----------------- ------------------ Net loss $ (463,984) $ (353,954) Loss per share, basic and diluted $ (0.01) $ (0.01) Weighted average shares outstanding, basic and diluted 60,234,634 60,344,132
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31 2011 and 2010 ------------------------------- ---------------- ------------------- ----------------- ------------------ ------------------- Additional Total Common Stock Paid-in Accumulated Treasury Stockholders' Shares Amount Capital Deficit Stock Equity --------------- ---------------- ------------------- ----------------- ------------------ ------------------- Balances, December 31, 2009 61,744,132 $ 617,441 $ 12,583,785 $ (7,962,644) $ (105,343) $ 5,133,239 Stock-based compensation 3,944 3,944 Net loss (353,954) (353,954) --------------- ---------------- ------------------- ----------------- ------------------ ------------------- Balances, December 31, 2010 61,744,132 $ 617,441 $ 12,587,729 $ (8,316,598) $ (105,343) $ 4,783,229 Stock-based compensation 64 64 Forfeit of restricted stock (1,400,000) (14,000) 14,000 - Redemption of treasury stock (53,539) (53,539) Net loss (463,984) (463,984) --------------- ---------------- ------------------- ----------------- ------------------ ------------------- Balances, December 31, 2011 60,344,132 $ 603,441 $ 12,601,793 $ (8,780,582) $ (158,882) $ 4,265,770
STATEMENT OF CASHFLOWS
Years Ended December 31, 2011 2010 ------------------------------------------------------ --- -------------------- ----------------- Cash flows from operating activities Net loss $ (463,984) $ (353,954) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 64 3,944 (Income) loss attributable to unconsolidated joint venture 117,574 (20,314) Unrealized depreciation (appreciation) - 3,226 Depreciation 1,975 2,587 Bad debt expense 70,003 20,416 Changes in operating assets and liabilities: Fees receivable (81,926) 211,559 Due from related parties 69,019 (40,688) Prepaid expenses and other current assets 91,796 (185,386) Accounts payable and accrued expenses 51,919 25,587 -------------------- ----------------- Net cash used in operating activities (143,560) (333,023) -------------------- ----------------- Cash flows from investing activities Redemptions of certificates of deposit 2,722,496 Purchase of property and equipment (805) (2,936) Investment in DSAM Joint Venture (259,157) -------------------- ----------------- Net cash provided by (used in) investing activities (259,962) 2,719,560 -------------------- ----------------- Net increase (decrease) in cash and cash equivalents (403,522) 2,386,537 Cash and cash equivalents, beginning of year 4,319,166 1,932,629 -------------------- ----------------- Cash and cash equivalents, end of year $ 3,915,644 $ 4,319,166 Supplemental disclosure of non-cash operating and financing activities, Redemption of treasury stock for employee loan receivable $ 53,539 $ 0
NOTES TO THE FINANCIAL STATEMENTS
1. Nature of operations
Shariah Capital, Inc. (the "Company") was incorporated on September 6, 2006 as a Delaware corporation. The Company creates and customizes Shariah-compliant financial products and platforms and provides Shariah consulting and advisory services primarily to financial institutions and investment management firms with product initiatives directed to Islamic investors in the Middle East and Far East and, specifically to, Islamic institutional and high net worth investors. The Company has built proprietary solutions endorsed by prominent Shariah scholars that enable hedge fund and other alternative investment managers to manage their portfolios consistent with their existing strategies and processes while complying with Shariah. The Company explores business opportunities with financial and investment management firms in Europe, Asia and the United States.
2. Summary of significant accounting policies
Basis of Presentation
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
These financial statements were approved by management and available for issuance on June 26th 2012. Subsequent events have been evaluated through this date.
Cash and Cash Equivalents and Concentration of Credit Risk
Cash and cash equivalents include cash held in banks and money market funds with original maturities of three months or less. The Company maintains cash balances in certain financial institutions which, at times, may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.
Fees Receivable and Allowance for Doubtful Accounts
Fees receivable consist of advisory fees and consulting fees. Advisory fees are based on the percentage of the net assets of the fund for which the Company serves as the Shariah advisor. Consulting fees primarily consist of up-front non-refundable fees earned upon the commencement of the engagement, pursuant to the service agreements; a progress fee based upon completion of certain deliverables and a final payment based upon the completion of the consulting and advisory services. Advisory fees and consulting fees are recognized in the year they are earned. On a periodic basis, the Company evaluates its fees receivable and determines if an allowance for doubtful accounts is necessary, based on the history of collections and current credit conditions. The Company recorded an allowance for doubtful accounts of approximately $0 and $20,000 at December 31, 2011 and 2010 respectively.
Investment in DSAM Joint Venture
The Company has an investment in a joint venture that has been accounted for under the equity method of accounting. Under the equity method of accounting, the Company's investment is carried at cost and adjusted for their proportionate share of earnings or losses from the investment.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. The Company provides for depreciation utilizing the straight-line method over the estimated useful lives of the related assets. Computer equipment is depreciated using an estimated useful life of five years. Expenditures for repairs and maintenance are charged to expense as incurred.
Long-Lived Assets
The Company accounts for long-lived assets under GAAP which requires the Company to review for impairment of long-lived assets, whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. When such an event occurs, management determines whether there has been an impairment by comparing the anticipated undiscounted future net cash flows to the related asset's carrying value. If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. The Company did not have any impairment losses on long-lived assets for the years ended December 31, 2011 and 2010.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Stock-Based Compensation
GAAP requires an entity to measure the cost of employees services received in exchange for stock-based awards based on the grant date fair value of the awards. The grant date fair value of employee restricted stock-based awards will be estimated based on the market price of the Company's stock on the date of the grant. All stock-based awards granted to employees are recognized as compensation expense over the service period (generally the vesting period) in the financial statements based on their fair values established at the time the awards are granted. GAAP requires the Company to estimate the future forfeitures which has an impact on stock-based compensation expense. GAAP also requires the realization of tax benefits in excess of amounts recognized for financial reporting purposes to be recognized as a financing activity rather than an operating activity in the statements of cash flows.
If an award is modified after the grant date, incremental compensation expense, if any, will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before modification.
For non-employee stock-based awards, the Company recognizes an expense in accordance with GAAP and values the stock-based award on the fair value of the grant date of the award with subsequent adjustments based on the fair value of the award as it vests. The fair value of the restricted stock-based award is estimated based on the market price of the Company's stock.
Income Taxes
The Company is responsible for minimum taxes to the state of Connecticut. Due to losses incurred for the years ended December 31, 2011 and 2010, no income tax provision for federal taxes has been recorded in the accompanying financial statements.
The Company complies with the provisions of GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.
The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of uncertain tax positions being sustained upon examination by the applicable taxing authority. The benefits of uncertain tax positions are recorded in the Company's financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component of income tax expense.
In accordance with GAAP, the Company is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company is subject to income tax examinations by major taxing authorities for all tax years since inception. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces member's equity. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax payable, if assessed. No interest expense or penalties have been recorded as of and for the year ended December 31, 2011. The Company may be subject to potential examinations by U.S. federal, U.S. state or foreign jurisdictions in the areas of income taxes. These potential examinations may include questioning the timing and amounts of deductions, the nexus of income among various jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Fair Value - Definition and Hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., "the exit price") in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. A fair value hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to
Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in active market, valuation of these securities does not entail a significant degree of judgment.
Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Fair Value - Valuation Techniques
The Company values investments in mutual funds, which are included in cash and cash equivalents, based on the quoted market price of the net asset value of shares held at year end. Certificates of deposits are based on a market value pricing model.
Loss Per Share
Loss per share is based on the weighted average number of common shares outstanding. The Company complies with GAAP, which requires dual presentation of basic and diluted earnings per share on the face of the statement of operations. Basic loss per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding for the year.
The unvested weighted average of the restricted stock granted to employees of 1,400,000 for the years ended December 31, 2011 and 2010, respectively, are antidilutive and have been excluded from the computation of loss per share.
Treasury Stock
During 2011 the Company received 250,000 shares of common stock in satisfaction of a loan receivable in the amount of approximately $53,500. During 2011, the Company also received 44,400 shares of common stock from a stockholder who returned the shares to the company for no consideration. There was no treasury stock acquired during 2010.
3. Property and equipment
Property and equipment consists of the following at December 31, 2011 and 2010:
2011 2010 Computer Equipment $ 13,701 $ 12,896 Less Accumulated Depreciation $ 8,059 $ 6,084 5,642 6,812
Depreciation expense amounted to approximately $2,000 and $2,600 for the years ended December 31, 2011 and 2010, respectively.
4. Fair value measurements
The Company's assets recorded at fair value have been categorized based upon a fair value hierarchy as described in the Company's significant accounting policies in Note 2.
The following table presents information about the Company's assets measured at fair value as of December 31, 2011 and 2010:
2011 2010 (Level 1) (Level 1)
Assets (at fair value)
Investment in money market funds $ 910,056 $ 3,259,318 5. Stock-based compensation
The Company granted 2,700,000 shares of restricted stock on December 7, 2006 to several employees which vest over three years. The fair value of the shares on the grant date was $2,700,000. In December 2007, the Company amended the terms of the granted restricted stock awards. The amendment increased the December 7, 2006 shares for certain employees by 5% or 47,500 shares, and extended the vesting period from December 7, 2007 to March 31, 2008, subject to earlier acceleration at the option of the Company. In December 2008, the Company amended the terms of the granted restricted stock awards for two of its employees. The amendment extended the vesting date for 600,000 shares of common stock from December 7, 2008 to December 7, 2009.
In December 2009, the Company amended the terms of the granted restricted stock awards for two of its employees. The amendment extended the vesting date for 1,400,000 shares of common stock from December 7, 2009 to December 7, 2010. During 2010, the Company further amended the terms of the granted restricted stock awards for the same two employees, extending the vesting date for 1,400,000 shares of common stock from December 7, 2010 to August 31, 2011.
The fair value of each restricted stock award was estimated on the date of grant or the date of modification, if there was an additional incremental compensation cost, based on the market price of the Company's stock at that date.
The employees for whom restricted stock was awarded either relinquished their right to such stock or were terminated before the award vested. As such, all remaining restricted stock that had not previously vested (1,400,000 shares) is no longer subject to vesting and is treated as authorized but unissued shares.
Stock-based compensation expense amounted to approximately $64 and $4,000 for the years ended December 31, 2011 and 2010, respectively.
6. Income taxes
The Company has an available net operating loss carry forward of approximately $6,533,000 to offset future taxable income expiring at various dates through 2030.
The Company has a deferred tax asset of approximately $2,700,000 and $2,600,000 at December 31, 2011 and 2010, respectively. In recognition of the uncertainty regarding the ultimate amount of income tax benefit to be derived, the Company has recorded a valuation allowance at December 31, 2011 and 2010 for the full amount of the deferred tax asset.
7. Commitments and contingencies
Operating Leases
In February 2010, the Company entered into an operating lease for its corporate office in Connecticut, which expired in January 2011, with an optional one year extension. The Company is currently renting its corporate office on a month to month basis. Rent expense amounted to approximately $74,000 for the years ended December 31, 2011 and 2010, respectively.
Employment Agreements
The Company had one employment agreement, with the Chairman and Chief Executive Officer of the Company, in effect as at December 31, 2011. That agreement provides for termination upon 12 months notice and a $650,000 termination fee.
Annual base salaries of approximately $585,000 and $796,000 were paid to management employees for the years ended December 31, 2011 and 2010, respectively.
Non-Executive Director Service Agreement
A non-executive director for the Company received compensation of approximately $15,000 for serving as a member on the Board of Directors of the Company for each of the years ended December 31, 2011 and 2010, respectively.
8. Related party transactions
During 2008, the Company, in collaboration with various professional organizations, formed the Al Safi Trust, a Cayman Islands trust with related sub-trusts ("Al Safi"). Al Safi is a Shariah-compliant alternative investment platform, and the first known platform to provide an infrastructure for long and short-term Shariah-compliant investments. The Company is the Shariah adviser and receives a Shariah advisory fee based on the net asset value of all Al Safi sub-trusts. In September 2008, three sub-trusts were formed on Al Safi, each of which was seeded with $50,000,000 by the Dubai Multi Commodities Centre Authority ("DMCCA"). In November 2008, a fourth sub-trust was seeded by DMCCA in the amount of $50,000,000, for an aggregate total of $200,000,000 in invested capital. As of December 31, 2011, assets under management in Al Safi Trust were approximately $88,630,000. Advisory fee income from Al Safi amounted to approximately $736,000 and $ 1,028,000 for the years ended December 31, 2011 and 2010, respectively. The reduction in advisory fee income resulted from a redemption of seed capital by the DMCCA from Al Safi Trust. Consulting fee income from Al Safi amounted to approximately $20,000 for the years ended December 31, 2011 and 2010.
In connection with forming the Al Safi Trust, the Company announced a joint venture with DMCCA. The joint venture entity, Dubai Shariah Asset Management Company, Ltd. ("DSAM") is owned 51 percent by Dubai Commodity Asset Management ("DCAM"), which is wholly owned by DMCCA, and 49 percent by the Company. The investment is accounted for under the equity method of accounting for long-term investments. In conjunction with the joint venture, DMCCA purchased a 4.99% equity share of the Company.
DSAM develops and manages Shariah-compliant investment products focused on commodities. DSAM has the right to assess a fee based on a percentage of the net asset value of the sub-trusts seeded by the DMCCA (exclusive of capital invested by the DMCCA).
Consulting fee income from DSAM amounted to approximately $325,000 and $162,000 for the years ended December 31, 2011 and 2010, respectively and is included in consulting fee income on the statements of operations. In addition, the Company is the Shariah adviser to DMCCA for related Shariah-compliant investments.
The Company's income (loss) attributable to DSAM amounted to approximately $(118,000) and $20,000 for the years ended December 31, 2011 and 2010, respectively and is included in the accompanying statements of operations.
The Company had a receivable from DSAM in the amount of approximately $83,000 and $161,000 at December 31, 2011 and 2010, respectively, representing reimbursement of expenses from DSAM and is reported as a component of due from related parties in the accompanying balance sheets.
9. Major customers
The Company had advisory fee income from one related party that accounted for 100% of the Company's total advisory fee income for the years ended December 31, 2011 and 2010.
The Company has two related parties that account for 100% of its fees receivable and consulting fee income as of and for the years ended December 31, 2011 and 2010.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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