IIG Prospectus - London Stock Exchange

International Investment Group Company (K.S.C.C.)Notes to the Financial StatementFor the year ended 31 December 2006(All amounts are in Kuwaiti Dinars unless otherwise stated)21. Financial risk managementIn the ordinary course of business, the Company is exposed to several risks as follows:Credit riskCredit risk is the risk that one party to a financial instrument may fail to discharge an obligation onmaturity date and cause the other party to incur a financial loss. Murabaha and Mudaraba receivables areconsidered the most of the assets exposed to credit risk. The Company mitigate this risk by dealing withhigh credit quality financial institutions and banks.Liquidity riskLiquidity risk is the risk that the Company may be unable to meet commitments associated with financialinstruments when they fall due. The Company manages this risk by dealing with reputed counterparties,diversifying its investments and matching the maturities of financial assets and financial liabilities.The maturity analysis of financial assets and liabilities as of 31 December 2006 is as follows:Within3 monthsFrom3 monthsto 1 yearFrom 1to 5 yearsMore than5 yearsTotalAssetsCash and cash equivalents 12,532,027 - - - 12,532,027Murabaha and Wakala investments - 12,500,000 3,921,120 - 16,421,120Mudaraba investments - - 3,793,582 - 3,793,582Investments at fair valuethrough profit and loss 2,534,780 - - - 2,534,780Accounts receivables 198,004 10,456,831 - - 10,654,835Available for sale investments - - 32,018,694 - 32,018,694Investments in associates - - - 65,234,249 65,234,249Investments in unconsolidated subsidiaries - 10,994,823 - - 10,994,823Property and equipment - - - 26,940 26,940Total assets 15,264,811 33,951,654 39,733,396 65,261,189 154,211,050LiabilitiesAccounts payables 9,577,316 10,791,757 8,587,774 - 28,956,847Islamic debt instruments 30,163,272 6,110,594 6,352,437 - 42,626,303Employees’ end of service indemnity - - - 207,497 207,497Total liabilities 39,740,588 16,902,351 14,940,211 207,497 71,790,647Net liquidity gap (24,475,777) 17,049,303 24,793,185 65,053,692 82,420,40316F-31