Annual Report 2008

1Bahrain Association of Banks

2 Bahrain Association of Banks

ContentChairman’s Message 5

Board Members 7

CEO’s Review 9

Member Banks 10

Summary of Activities 11

Committees & Participants 11-12

List of Events 13

Media Briefings 14

Financial Statements 15 - 27


H.H Shaikh KhalifaBin Salman Al Khalifa

The Prime Minister

H.M King HamadBin Isa Al Khalifa

The King ofThe Kingdom of Bahrain

H.H Shaikh SalmanBin Hamad Al Khalifa

Crown Prince andDeputy Supreme Commander



Dear Members:

2008 was in many respects a landmark and transformational year for us when the erstwhile

Bankers’ Society became the Bahrain Association of Banks (BAB) – and changed not just in name

but also got a new structure, board, strategy, focus and financing. Upon my election as Chairman

of the Board of Trustees in the second half of last year, one of our key challenges has been

to substantially enhance the relevance and profile of BAB not just internally with its members

– but with our business partners, the Central Bank of Bahrain and the many other key players –

making us more externally focussed and business oriented. Our goal clearly is to meet the prime

objective in our constitution which is to professionally represent the banking industry in Bahrain.

To better serve our members the Association met a large number of CEOs to determine what

their priorities are, revamped the committee structure to focus on key issues and produced a

quarterly newsletter and new website to let you know what we’re doing.

We have also been actively engaged with the Central Bank, and the Board has been having

consultative meetings with the Governor and Executive Directors as we embark upon this new

direction. We have also begun to pace up our activity level with BAB holding ten external events

during the year, issuing 34 press releases and attending five events internationally and locally to

promote Bahrain’s banking sector. Some of the highlights of the year included our Annual Gala

Dinner with the Crown Prince, the Bahrain reception in Washington prior to the IMF / World Bank

Meetings in October and a Networking event for a visiting delegation from Singapore prior to the

WIBC.

We plan to considerably augment these improvements through 2009 among which will be the

recruitment of an expert in Statutory / Regulatory matters and taking over the setting of BHIBOR

so that you recognise value for your subscription fee and sponsorship of our events.

In closing, I would like to thank Shaikh Mohammed bin Essa Al Khalifa for joining BAB’s Board

of Directors and also to express our gratitude to Dr. Farid Al Mulla for the years of service he put

into the predecessor of the Association.

We look forward to your contribution to the working of the Association and wish you a

successful fiscal 2009.

Yours sincerely,

Mayank Malik

Chairman

Chairman’s Message


Board Members

Mr. Mayank MalikChairman

CEO Citibank

Sh. Moh’d Bin Essa Al-KhalifaChief Executive of EDB

Mr. Saleh Hussain Deputy Chairman

Senior Consultant of Gulf Banking Consultants

Mr. Mohammed Ebrahim Mohammed CEO of Bahrain Islamic Bank

Mr. Adel EllabbanCEO & Managing Director of

Ahli United Bank

Mr. Adnan Ahmed YousifPresident & CEO of Albaraka Banking Group

Mr. Abdulkareem BucheeryCEO of BBK

Mr. Gary LongCOO of Investcorp



Dear Members;

As I wrote in last year’s annual report, “I see 2008 as a year of transformation for the Bankers’

Society. We plan to rebrand it with a new name “Bahrain Association of Banks” or ‘BAB’ to bring

it in line with international practices, work under the governance of the new Board of Trustees,

create a new, fresh logo and website, produce a quarterly newsletter, provide a more well-

rounded service to you and be very proactive in promoting the financial industry in Bahrain and

internationally”

I believe that we accomplished those objectives and more. One of the more difficult challenges

was putting the accounting policies and procedures into proper shape. We retained the services

of KPMG-Fakhro to do all the accounting for the year including preparation of management

reports for the quarterly board meetings. We will continue that through 2009 to provide a solid

two years of credible accounting records.

Financial highlights in 2008 were a surplus for the year of BD 142,344 that erased an

accumulated deficit of BD 54,556 at the end of 2007 leaving a net surplus of BD 87,788. Pre-

payments of subscription fees were lower due to the extensive holidays in December, but by the

end of March 2009 the Association had received BD 227,000 in subscriptions for a good start

to the year with another BD 42,000 yet to be received. Other payables and accruals were lower

from cleaning up the accounts and paying what the old Bankers’ Society owed.

Staff costs were higher with the addition of a CEO, Events and PR Manager and another clerical

staff member. In addition, two pre-existing staff were never registered with GOSI or covered

by medical and life insurance. Advertising had a number of costs allocated to it that will be

segregated in the future. Professional fees represented outstanding legal fees not paid in 2007

for work drafting the new constitution and EGA resolution. Accounting and audit fees were

higher due to the reasons noted above. General and Administrative costs were reduced by

BD 74,362.

The financial affairs of the Association are now in proper shape, and all of us value your

contribution and support as we move forward.

Yours sincerely,

Robert Ainey

Chief Executive Officer

CEO’s Review


Bank BankABC Islamic Bank Housing Bank for Trade & FinanceAddax Bank HSBC Bank Middle East LimitedAhli United Bank ICICI Bank LtdArab Banking Corporation ING Bank Al Baraka Banking Group Bsc International Banking Corporation BscAl Salam Bank International Investment Bank BscAllied Banking Corporation Investcorp BankAmerican Express Bank Ltd. Investment Dar Bank Arab Bank Plc (Retail) Investors Bank EcArab Bank Plc (Wholesale) Ithmaar BankArab Financial Services JP Morgan Chase Bank Arab Investment Co Khaleeji Commercial BankArcapita Bank Korea Exchange BankAskari Commercial Bank Ltd Kuwait Finance HouseAwal Bank Kuwait Turkish Participation Bank IncBahrain Development Bank Liquidity Management CentreBahrain International Bank MaybankBahrain Islamic Bank Merrill Lynch International Bank LtdBahraini Saudi Bank Mizuho Corporate Bank Ltd.Bank Al Habib Limited National Bank of Abu DhabiBank Alfalah Limited National Bank of BahrainBank of Bahrain & Kuwait National Bank of Kuwait (Retail)Bank of Tokyo Mitsubishi, UFJ Ltd. National Bank of Kuwait (Wholesale)Bank Muscat International National Bank of PakistanBMB Investment Bank National Finance House BNP Paribas (Retail) Nomura Investment BankingBNP Paribas (Wholesale) Reef Real Estate Finance Company Calyon Robeco Institution Asset Management BVCapital Investment Holding Co Sakana Holistic Housing Solutions Capital Management House Saudi National Commercial BankCapital Union Bank Ec Securities & Investment CoCapivest Shamil Bank of BahrainCiti Islamic Investment Bank Standard Chartered BankCitibank (Retail) State Bank of India (Retail)Citibank (Wholesale) State Bank of India (Wholesale)Deutsche Bank Sumitomo Mitsui Banking CorporationElaf Bank Taib Bank BscEskan Bank UBS AgFinansbank As UBS Global Asset ManagementFirst Investment Bank Unicorn Investment BankFirst Leasing Bank United Bank LtdFuture Bank United Gulf Bank Bsc EcGulf Finance House Bsc United International BankGulf International Bank Venture Capital BankHabib Bank Ltd Woori Bank Hongkong And Shanghai Banking Corp. Ltd. Yapi Ve Kredi Bankasi

Member Banks of The Bahrain Association of Banks -2008

Conventional Banks (Retail) 19Conventional Banks (Wholesale) 44Investment Business Firms 1Islamic Banks (Retail) 5Islamic Banks (Wholesale) 14Representative Offices (Rep) 6Specialised: Financing Companies 3Total Banks 92

Member Banks


Summary of general issues handled on behalf of banks during 2008

Security Measures

Bank Charges

Bank Holidays

Cheque Clearing

BHIBOR

Business Continuity Plan

Consultation reviewed for CBB

Proposed Pre-funded Deposit Protection Scheme

Cooperation & Exchange of Information with Overseas Authorities

Developing a Capital Market Supervision Directorate Framework for Clearing, Settlement and Depository

Developing a Framework for the Prohibition of Market Abuse and Manipulation

Prohibition of Market Abuse & Manipulation Module

Summary of Activities

Consumer Banking Committee

Bank Member’s Name TitleCitibank Ashish Bhugra Country Business Manager

Bank Muscat International Kumaran Pather Head of Retail

BBK Mohammed Zainalabedin Retail Banking Division

Standard Chartered Bank B. Chandrasekar Regional Head, Consumer Banking

Future Bank Shahram Razavi Assistant to CEO

National Bank of Bahrain Subhodip Ghose Head of Marketing & Planning

HSBC Bank Shakofa Asghar Head of Personal Financial Services

Al Ahli United Bank Abdulla Al-Raeesi DGCEO - Retail Banking

Banking Operations Committee

Bank Member’s Name TitleAl Salam Bank Ahmed Sheikh EVP – COO

Bank Muscat International Marco Wolters COO

BBK Ali Haqiqi Senior Manager - Central Operations

Standard Chartered Bank Stefan Corera CIO

Investcorp Bank Stuart Marshall MD, Head of IT

BNP Paribas Fabien Ribette Regional Head of IT

Future Bank Abbas Fatemi Assistant to CEO

National Bank of Bahrain Jassim Hammadi AGM - Credit Operations

BBK Jamal Al Sabbagh IT Operations

HSBC Bank Hana Sarwani Head of Support Services

Committees & Participants


Professional Development Committee

Bank Member’s Name TitleAhli United Bank Neville Pearsall Group Head HR & Development

Bank Muscat International Mohammed Bushehri Head of Human Capital

BBK Ravi Mohanty Manager, Train& Dev.

Gulf International Bank Hassan Abdul Ghani MD Operations & Admin

Investcorp Bank Mufeed Rajab Principal, Head of Admin

BNP Paribas Abdelhakim Doukkali Regional HR Director

Robeco Douglas Hansen-Luke CEO ME

Oasis Capital Bank Malcolm Harris Partner – HR & TM

Statutory / Regulatory Committee

Bank Member’s Name TitleGulf Banking Consultants Saleh Hussain Senior Consultants

Ahli United Bank Sanjeev Baijal DGCEO, Finance, Operations & IT

Citibank Jairaj Nalamutt Compliance Officer

Bank Muscat Int’l El-Tahir Nimir Group Head of Compliance & AML

BBK Dr. Mukund Ballal Compliance Officer & MLRO

Gulf International Bank Georges Djandji Sr. VP & Head of Compliance

Investcorp Bank Stephanie Bess MD, Head of Compliance

BNP Paribas Erik Stroet Regional COO

National Bank of Bahrain Fatima Budhaish Sr. Manager, Head-Credit Review

Oasis Capital Bank Sudha Tilani Principal Compliance & MLRO

Risk Management Committee

Bank Member’s Name TitleAhli United Bank Charles Brody Group Head Risk

Bank Muscat International Huw Evans Risk Director

BBK C. V. Murthy Risk Management Dept

Investcorp Bank Hassan Chehime MD, Head of Risk Management

BNP Paribas Yves Jean Noyalet Head of Internal Audit

Al Salam Bank Ahmed Sheikh EVP - COO

HSBC Bank Arun Fernandes Sr. Manager Credit & Risk Mgmt

Corporate Banking Committee

Bank Member’s Name TitleAhli United Bank Christopher Wilmot Head of Treasury

Bank Muscat International Karl Stumke Wholesale Banking Director

BBK Yaser Sabt Corporate Banking Division

Standard Chartered Bank Vivek Uberoi Head, Orig. & Client Coverage

Investcorp Bank Jonathan Minor MD, Head of Treasury & Investor Relations

BNP Paribas Eric Jesserand Head, Fixed Income Middle East

State Bank of India P. K. Gupta Regional Head & CE

HSBC Bank Dudley Leelananda Senior Manager

Committees & Participants


Smart Card – Presentation

2nd GCC Regulators’ Summit

Middle East Association, London - Bahrain 2008

Seminar on Integrated Risk and Capital Management

5th World Islamic Funds and Capital Market Conference

Global Finance & Corporate Governance

UN Sanctions Delegation

Annual General Assembly

Annual BAB Gala Dinner

University of Bahrain - Fifth Mentoring Program

Middle East Association, London - City & GCC Conference

World Islamic Banking Conference, London

Personal Assistants Luncheon

IMF/World Bank, Washington

16th World Islamic Banking Conference

Vision 2030

Bahrain & Singapore Networking Event

Bahrain Bankers - UK Inward Visit

List of Events


Media Briefings

Mayank Briefing the Press Robert Discussing Our Mission

Singaporean Delegates with Reporters

Briefing and Q&A for Bahrain’s Media


Financial Statements



31 December 2008

Registration number : 36/6/M (According to the provisions of the Law of Social and

Cultural Societies and Clubs, Associations carrying on Youth and

Sports activities and Private Organisations promulgated by

Legislative Decree no. 21 of 1989)

Board of Trustees Chairman : Mr Mayank Malik

Office : PO Box 1034, Telephone 1782 3000

Fax 1782 0700

Principal bankers : Bank of Bahrain and Kuwait

National Bank of Bahrain

Auditors : KPMG


for the year ended 31 December 2008

Contents Page

Independent auditors’

report to the members 17

Financial statements

Balance sheet 18

Statement of income and expenses 19

Statement of cash flows 20

Notes to the 2008 Financial Statements 21-27


Independent Auditors’ Report To The Members of

The Bankers Society of Bahrain 4 March 2009

Manama, Kingdom of Bahrain

Report on the financial statements

We have audited the accompanying financial statements of The Bankers Society of Bahrain (the “Society”), which comprise the

balance sheet as at 31 December 2008, and the statement of income and expenses, statement of cash flows for the year then ended,

and a summary of significant accounting policies and other explanatory notes. On the financial statements for the year ended 31

December 2007, we did not express an opinion as we were unable to satisfy ourselves as to the fairness of the financial statements

due to the inadequacy of the society’s internal controls relevant to the preparation and fair presentation of the financial statements.

Responsibility of the Board of trustees for the financial statements

The Board of trustees of the Society are responsible for the preparation and fair presentation of these financial statements in

accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining

internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatements,

whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are

reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these 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 whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the

entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in 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 principles used and the reasonableness of accounting estimates made by

management, as well as evaluating the overall presentation of the 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 financial statements present fairly, in all material respects, the financial position of the Society as at 31 December

2008, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting

Standards.

Auditors’ Report


Balance Sheet

Bahraini Dinars

Note 2008 2007

Assets

Furniture and equipment 4 18,209 -

Total non-current assets 18,209 -

Receivables 5,297 4,157

Cash and cash equivalents 81,505 120,809

Total current assets 86,802 124,966

Total assets 105,011 124,966

Members fund and liabilities

Accumulated fund / (deficiency) 5 87,789 (54,556)

Provision for employees’ benefits 6 2,635 -

Total non-current liabilities 2,635 -

Accrued expenses and advances 7 14,587 179,522

Total current liabilities 14,587 179,522

Total liabilities 17,222 179,522

Total member fund and liabilities 105,011 124,966

Mayank Malik Robert Ainey

Chairman Chief Executive

Officer

The Board of trustees approved the financial statements consisting of pages 18 to 27 on 27 April 2009

as at 31 December 2008


Bahraini Dinars

Note 2008 2007

Income 8 358,499 190,847

Staff cost 9 102,895 58,890

General and administrative expenses 10 65,658 06,036

Functions and event expenses 11 47,601 50,081

Total expenses 216,154 215,007

Net surplus/(deficit) for the year 142,345 (24,160)

Mayank Malik Robert Ainey

Chairman Chief Executive Officer

The Board of trustees approved the financial statements consisting of pages 18 to 27 on 27 April 2009

Statement of Income and Expensesfor the year ended 31 December 2008


Bahraini Dinars

Note 2008 2007

Operating activities

Receipts from subscriptions 215,599 327,347

Payments for operating cost and overheads (234,734) (210,935)

Cash flows from operating activities (19,135) 116,412

Investing activities

Acquisition of furniture and equipment 4 (20,169) -

Cash flows from investing activities (20,169) -

Net (decrease)/increase in cash and cash equivalents (39,304) 116,412

Cash and cash equivalents at 1 January 120,809 4,397

Cash and cash equivalents at 31 December 81,505 120,809

The financial statements consist of pages 18 to 27.

Statement of Cash Flows for the year ended 31 December 2008


1 Status and Operations

The Bankers’ Society of Bahrain was established in the Kingdom of Bahrain in 1979 and re-registered on 27 January 1991 under regis-

tration no. 36/6/M according to the provisions of the Law of Social and Cultural Societies and Clubs, Associations carrying on Youth and

Sports activities and Private Organisations promulgated by Legislative Decree no 21 of 1989.

The principal activity of the Society is to promote the interests of the Bahrain banking community in Bahrain and abroad.

2 Basis of Preparation

a) Statement of compliance

The financial statements have been prepared in accordance with the International Financial Reporting Standards.

b) Basis of measurement

The financial statements are drawn up from the accounting records of the Society and are prepared under the historical cost conven-

tion. The accounting policies of the Society have been consistently applied and are consistent with those used in the previous year.

c) Functional and presentation currency

Items included in the financial statements of the Society are measured using the currency of the primary economic environment in

which the entity operates (‘the functional currency’). The financial statements are presented in Bahraini dinars, which is the Society’s

functional and presentation currency.

3 Significant Accounting Policies

a) Furniture and equipment

(i) Owned assets

Items of furniture and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost includes all costs

directly attributable to bringing the assets to their present location and condition for their intended use. An asset’s carrying amount is

written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

The residual value and useful life are reviewed at each financial year end and adjusted where appropriate.

(ii) Subsequent measurement

Expenditure incurred to replace a component of an item of furniture and equipment that are accounted for separately, is capitalised.

Other subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item of furniture and

equipment. All other expenditure is recognised in the income and expense statement as an expense as incurred.

(iii) Depreciation

Depreciation is provided on a straight-line method at annual rates which are intended to write off the cost of the assets over their esti-

mated useful lives of 4 years.

b) Receivables

Receivables are carried at the invoiced amount, being the fair value, less impairment allowances.

c) Cash and cash equivalents

Cash and cash equivalents represent cash on hand and bank balances

Bahraini Dinars

for the year ended 31 December 2008

Notes to the 2008 Financial Statements


Bahraini Dinars

3 Significant accounting policies (continued)

d) Impairment

The carrying amounts of the Society’s assets are reviewed at each balance sheet date to determine whether there is any indication of

impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the

carrying amount of an asset exceeds its recoverable amount. All impairment losses are recognised in the income statement.

e) Foreign currency transactions

Transactions in foreign currencies are translated to Bahraini dinars at the foreign exchange rates ruling at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Bahraini dinars at the

foreign exchange rate ruling at that date. All foreign exchange differences arising on conversion and translation are recognised in the

income statement.

f) Provision

A provision is recognised in the balance sheet when the Society has a legal or constructive obligation as a result of a past event, and it

is probable that an outflow of economic benefits will be required to settle the obligation.

g Employee benefits

Pensions and other social benefits for Bahraini employees are covered by the General Organisation for Social Insurance scheme to

which employees and employers contribute monthly on a fixed-percentage-of-salaries basis. The entity’s contribution to this scheme,

which represents a defined contribution scheme under International Accounting Standard 19 – Employee Benefits, is expensed as

incurred.

Expatriate employees are entitled to leaving indemnities payable under the Bahrain Labour Law for the Private Sector of 1976, based

on length of service and final remuneration. Provision for this unfunded commitment which represents a defined benefit plan under

International Accounting Standard 19 – Employee Benefits, has been made by calculating the notional liability had all employees left at

the balance sheet date.

h) Income

Membership subscriptions are accounted for on an accrual basis and subscription received in advance are included in current liabilities.

Income from event sponsorship is accounted for on an accrual basis when the event is conducted.

i) Operating lease

Operating lease is recognised in the statement of income and expenses on a straight-line basis over the term of the lease.



Bahraini Dinars

4 Furnitures and Equipment 2008 2007

Cost

At 1 January 39,590 41,545

Additions 20,169 -

Impairment - (1,955)

At 31 December 59,759 39,590

Depreciation

At 1 January 39,590 39,590

Charge for the year 1,960 -

At 31 December 41,550 39,590

Net carrying value at 31 December 18,209 -

5 Accumulated Fund/(Deficiency) 2008 2007

At 1 January (54,556) (30,396)

Net surplus/(deficit) for the year (page 18) 142,345 (24,160)

At 31 December 87,789 (54,556)

6 Provision for Employees’ Benefits 2008 2007

At 1 January - 24,257

Charge for the year 2,635 1,672

Indemnities paid during the year - (25,929)

At 31 December 2,635 -

7 Accrued Expenses and Advances 2008 2007

Accrued expenses 9,587 30,522

Subscriptions received in advance 5,000 149,000

14,587 179,522

8 Income 2008 2007

Membership subscription 272,875 67,178

Event income 65,519 103,380

Donations 20,000 20,000

Other 105 289

358,499 190,847



Bahraini Dinars

9 Staff Cost 2008 2007

Salaries 77,474 39,740

Bonus 5,610 6,225

Training 4,345 -

Social insurance 8,321 2,552

Leaving indemnity 2,635 1,672

Others 4,510 8,701

102,895 58,890

10 General and Administrative Expenses 2008 2007

Advertising 12,247 1,495

Repairs and maintenance 816 1,015

Utilities 5,714 6,809

Depreciation 1,960 -

Office expenses 4,801 4,114

Magazines and publications - 3,957

Business travel expenses 7,580 -

Office rent 3,600 -

Professional fees 24,247 10,688

Miscellaneous expenses 4,693 -

Impairment of furniture and equipment - 1,955

Other expenses - 76,003

65,658 106,036

Other expenses in 2007 relate to unauthorised expenses that were not part of the operations of the society due to the inadequacy of

the society’s internal controls. The board of trustees have concluded its review and satisfied itself as to the completeness of the pay-

ments and were charged off in the year in which they arose.

11 Functions and Event Expenses

These represents expenses incurred for conducting various functions and events in Bahrain and abroad by the Society during the year.

12 Critical Accounting Estimates and Judgement In Applying Accounting Policies

The Society makes estimates and assumptions that affect the reporting amounts of assets and liabilities within the next financial year.

Estimates and judgements are continually evaluated and are based on among other factors historical experience and other factors,

including expectation of the future events that are believed to be reasonable under the circumstances.

Impairment of receivables

The Society reviews the carrying amounts of the receivables at each reporting date to determine whether the receivables have been

impaired. The Society identifies the receivables, which have been impaired based on among other factors, the age of the receivables,

the receivables recoverable amount is estimated based on past experience and estimated cash flow.



Useful life and residual value of furniture and equipment

The Society reviews the useful life and residual value of the furniture and equipment at each reporting date to determine whether an

adjustment to the useful life and residual value is required. The useful life and residual value is estimated based on the similar assets of

the industry, and future economic benefit expectations of the management.

Bahraini Dinars

13 Financial Instruments and Risk Management

The table below sets out the Society’s classification of each class of financial assets and financial liabilities:

31 December 2008

Assets

Receivables 5,297 - 5,297

Cash and bank balances 81,505 - 81,505

86,802 - 86,802

Liabilities

Accrued expenses and advances - 14,587 14,587

- 14,587 14,587

31 December 2007

Assets

Receivables 4,157 - 4,157

Cash and bank balances 120,809 - 120,809

124,966 - 124,966

Liabilities

Accrued expenses and advances - 179,522 179,522

- 179,522 179,522

The Society has exposure to the following risks from its use of financial instruments:

Credit risk Liquidity risk Market risk

This note presents information about the Society’s exposure to each of the above risks, the Society’s objectives, policies and processes

for measuring and managing risk. The note also presents certain quantitative disclosures in addition to the disclosures throughout the

financial statements. The Board of trustees has overall responsibility for the establishment and oversight of the Society’s risk manage-

ment framework.

The Society’s risk management policies are established to identify and analyse the risks faced by the Society, to set appropriate risk

limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to

reflect changes in market conditions and the Society’s activities. The accounting policies for financial assets and liabilities are described

in note 3.

Loans and receivables

Others at amortised cost

Total carrying amount



Bahraini Dinars

Credit risk

Credit risk is the risk that one party to the financial instrument will fail to discharge an obligation and cause the other party to incur a

financial loss. The Society is exposed to credit risk on its receivables and bank balances.

a) Credit risk on receivable is minimised as these are mainly membership subscription fees receivable from the Society’s members.

Appropriate procedures for follow-up and recovery are in place to monitor credit risk.

b) The Society limits its exposure to credit risk on bank balances by maintaining balances with banks having high credit ratings. Given

these high credit ratings, the Society does not expect any bank to fail to meet its obligations.

The maximum exposure to credit risk at the reporting date was:

2008 2007

Subscription and sponsorship fees receivable 2,900 4,000

Bank balances 81,505 120,683

At 31 December 84,405 124,683

The Society is not exposed to significant credit risk based on geographic area as the Society has no exposure outside Bahrain.

Liquidity risk

Liquidity risk is the risk that the Society will encounter difficulty in raising funds to meet commitments associated with financial

instruments.

The Society’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its

liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the

Society’s reputation.

The Society does not have any significant financial liabilities other than accrued expenses and advances.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Society’s income

or the value of its holdings of financial instruments.

(a) Currency risk

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

The Society does not have any significant currency risk as majority of the transactions are in Bahraini dinars.

(b) Interest rate risk

Interest rate risk is the risk that the Society’s earnings will be affected as a result of fluctuations in the value of financial instruments

due to changes in market interest rates.

The Society is not exposed to significant interest rate risk.



Fair values of financial instruments

Fair value is the amount for which an asset could be exchanged or a liability settled, between knowledgeable willing parties in an arm’s

length transaction. Differences can therefore arise between book values under the historical cost method and fair value estimates.

Underlying the definition of fair value is a presumption that an enterprise is a going concern without any intention or need to liquidate,

curtail materially the scale of its operations or undertake a transaction on adverse terms.

The fair values of the financial assets and liabilities of the Society are not materially different from their carrying values.

14 New Standards and Interpretation Issued but not yet applied

During the year, the following new/amended IFRSs’ and interpretations relevant to the activities of the Society have been issued which

are not effective for early adoption by the Society.

IAS 1 – Presentation of Financial Statements (annual periods commencing on or after 1 January 2009).

The adoption of these standards and interpretations are not expected to have material impact on the financial statements.

Bahraini Dinars



Documents

Annual Report 2008