IIG Prospectus - London Stock Exchange

in Kuwait. IIG’s insurance business is intended to be significantly restructured during 2007, see‘‘Description of IIG – Businesses – Insurance’’.Critical Accounting PoliciesIIG’s accounts are prepared on an unconsolidated basis in accordance with IFRS. Note 22 tothe IIG 2006 Accounts identifies areas in which management of IIG makes judgments which canhave a significant effect on the amounts of recorded assets and liabilities. These relate to theclassification of financial instruments, determining evidence of impairment, valuing unquotedsecurities and estimating the amount and timing of future cash flows when determining the level ofprovisions required.Revenue RecognitionRevenue from the sale of financial assets is recognised on the date of sale of the asset.Unrealised gains on financial assets are recognised on the balance sheet date.Management fees are recognised when earned. Income from murabaha, mudaraba and wakalainvestments is recognised on a time proportion basis using the effective rate of return and dividendincome is recognised when the right to receive the payment is established.Results of Operations for the three months ended 31 March 2007 compared with the three monthsended 31 March 2006RevenuesIIG’s total revenues in the three month period ended 31 March 2007 amounted to KD 8,336.5thousand compared to KD 6,804.5 thousand in the equivalent period of 2006.Investment income and gain on sale of shares in associated companiesIIG recorded a net loss on its investments of KD 107.2 thousand in the three month periodended 31 March 2007 compared to a gain of KD 3,863.1 thousand in the equivalent period of2006. IIG’s gain on sale of shares in associated companies amounted to KD 3,597.4 thousand in thethree month period ended 31 March 2007 whilst in the equivalent period of 2006 it experiencedneither a gain nor a loss. Together, these amounts comprised 41.9 per cent. of IIG’s total revenuein the three month period ended 31 March 2007 and 56.8 per cent. in the equivalent period of2006. In the first three months of 2007, a stock market downturn adversely affected results fromIIG’s trading portfolio and although there were significant mark to market losses in the equivalentperiod of 2006, these were more than offset by a substantial gain on the sale of shares in itsassociated company, Gulf Monetary Group (GMG) in the first three months of 2006.Company’s share of income from associated companies’ resultsIIG’s share of income from associated companies’ results amounted to KD 3,251.7 thousand inthe three month period ended 31 March 2007 compared to KD 2,833.6 thousand in the equivalentperiod of 2006. These amounts comprised 39.0 per cent. of IIG’s total revenue in the three monthperiod ended 31 March 2007 and 41.6 per cent. in the equivalent period of 2006. The principalcontributors to these amounts were GPI and Grand in the first three months of 2007 and Ajal inthe equivalent period of 2006.Management and consulting feesIIG earns fees from its asset management business and from certain corporate financeactivities carried on by it, including acting as placement agent in relation to the placement ofshares in associated companies. These fees amounted to KD 1,327,8 thousand in the three monthperiod ended 31 March 2007 and KD 69.4 thousand in the equivalent period of 2006. The mostsignificant fee in the 2007 period related to services provided by IIG to its related company Grandin connection with the sale of shares in its subsidiary, Grand Real Estate & Touristic DevelopmentCompany Co. (KSCC) (Grand Touristic).ExpensesIIG’s total expenses in the three month period ended 31 March 2007 amounted to KD 1,876.7thousand compared to KD 495.1 thousand in the equivalent period of 2006. IIG’s total expenses asa percentage of its total revenues were 22.5 per cent. in the three month period ended 31 March2007 and 7.3 per cent. in the equivalent period of 2006, respectively.75