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TAKAFUL INTERNATIONAL COMPANY BSC
CONDENSED INTERIM
FINANCIAL INFORMATION
30 JUNE 2006
Takaful International Company BSC
CONDENSED INTERIM FINANCIAL INFORMATION for the six months ended 30 June 2006
CONTENTS Page
General information 1
Accountants‟ review report 2
Condensed Interim Financial Information
Balance sheet 3
Statement of participant‟s revenues and expenses 4-5
Statement of income 6
Statement of changes in participants‟ funds 7
Statement of changes in shareholders‟ equity 8
Statement of cash flows 9
Notes to the condensed interim financial information 10-14
GENERAL INFORMATION
Board of Directors
Adel Abdulla Al-Mannai - Chairman
Hasan Ebrahim Kamal - Vice Chairman
Isa Abdulla Al-Mannai - Managing Director
Yousif Saleh Khalaf - Director
Bara‟a Abdulaziz Al-Qenaei - Director
____________________________________________________________________________________________________
Executive Management
Younis A. Jamal - General Manager
Abdulaziz Al-Othman - Assistant General Manager
Mohammed Al-Khashab - Senior Manager – Internal Audit & Legal Affairs
Jehad B. Rahima - Senior Manager – Family Takaful & Health
Ahmed A. Qudoos - Senior Manager – Expansion Research & Development
Atef Ahmed - Senior Manager – Technical & Reinsurance
Tareq Al-Maqatish - Manager – Finance
Haider Shehabi - Senior Manager – Motor
Ahmed Swailem - Manager – Sales & Customer Services
Jyoti Bhardwaj - Manager – Information system
Abdul Majeed Nawab - Consultant
____________________________________________________________________________________________________
Registered office Auditors and registrars to the Company
P.O. Box 3230, Manama, KPMG, P.O.Box 710, Bahrain
KINGDOM OF BAHRAIN
Telephone: 17 298298
Fax: 17 293344 Bankers to the Company
e-mail: takaful@takafulweb.com National Bank of Bahrain
website: www.takafulweb.com Bank of Bahrain and Kuwait
Shamil Bank
Listing Bahrain Islamic Bank
Bahrain Stock Exchange AL Baraka Islamic Bank
1
ACCOUNTANTS' REVIEW REPORT
on the 30 June 2006 condensed interim financial information
To
The Directors
Takaful International Company BSC
Manama
Kingdom of Bahrain
15 August 2006
We have reviewed the accompanying balance sheet of Takaful International Company BSC (the „Company‟) as
of 30 June 2006, and the related statements of income, participants‟ revenue and expenses, changes in equity,
cash flows and changes in participants funds for the six month period then ended (the condensed interim
financial information). This condensed interim financial information set out on pages 3 to 14 is the responsibility
of the directors of the Company. Our responsibility is to issue a report on this condensed interim financial
information based on our review.
We conducted our review in accordance with the International Standard on Review Engagements 2400. A review
is limited primarily to enquiries of the Company‟s personnel and analytical procedures applied to financial data
and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not
express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
condensed interim financial information is not prepared, in all material respects, in accordance with IAS 34,
Interim Financial Reporting.
2
Takaful International Company B.S.C.
BALANCE SHEET
as at 30 June 2006 Bahraini dinars
30 June 31 December
2006 2005
(reviewed) (audited)
(restated)
ASSETS
Cash and investments:
Statutory deposits 125,000 125,000
Deposits and cash 3,830,010 3,317,042
Available for sale investments 2,940,440 2,988,033
6,895,450 6,430,075
Retakaful and takaful balances receivable 2,150,346 2,152,989
Due from retakaful companies in connections with outstanding
claims 997,049 673,084
Property and equipment 1,902,999 1,803,303
Other receivables and prepayments 185,495 162,607
Due from a related party (note 7) 192,432 901,309
TOTAL ASSETS 12,323,771 12,123,367
EQUITY, PARTICIPANTS’ FUNDS AND LIABILITIES
EQUITY
Share capital 5,000,000 5,000,000
Statutory reserve 368,781 368,781
General reserve 200,000 130,000
Retained earnings 379,765 969,349
Investment fair value reserve (246,370) (237,868)
5,702,176 6,230,262
DEFICIENCY IN PARTICIPANTS‟ FUNDS (263,333) (436,598)
Takaful funds:
Unearned contributions – General takaful 1,122,540 1,021,959
Gross outstanding claims – General takaful & Family takaful 2,082,943 1,764,716
Family takaful technical reserves 264,897 376,095
3,470,380 3,162,770
Retakaful and takaful balances payable 1,406,598 1,389,195
Other liabilities and provisions 1,144,010 835,238
Ijara Muntahia bitamleek 863,940 942,500
TOTAL LIABILITIES 3,414,548 3,166,933
TOTAL EQUITY, PARTICIPANTS’ FUNDS AND LIABILITIES 12,323,771 12,123,367
____________________________ ___________________________
Adel Abdulla Al-Mannai Hasan Ebrahim Kamal
Chairman Vice Chairman
The Board of Directors approved the condensed interim financial information consisting of pages 3 to 14 on
15 August 2006
3
Takaful International Company B.S.C.
STATEMENT OF PARTICIPANTS’ REVENUES AND EXPENSES – GENERAL TAKAFUL
for the six months ended 30 June 2006 Bahraini dinars
3 months to 3 months to 6 months to 6 months to
30 June 2006 30 June 2005 30 June 2006 30 June 2005
(reviewed) (reviewed) (reviewed) (reviewed)
Gross contributions 1,084,192 875,485 2,244,671 1,832,950
Retakaful share (340,413) (233,148) (788,103) (649,059)
Retained contributions 743,779 642,337 1,456,568 1,183,891
Movement in unearned contributions (40,320) (39,146) (109,258) (34,170)
Net retained contributions 703,459 603,191 1,347,310 1,149,721
Retakaful commission and other takaful income 129,905 98,284 243,422 210,603
TOTAL TAKAFUL REVENUES 833,364 701,475 1,590,732 1,360,324
Claims settled 749,205 636,029 1,463,831 1,232,334
Recovered from retakaful and other parties (366,791) (289,323) (757,456) (547,722)
Net claims settled 382,414 346,706 706,375 684,612
Movement in outstanding claims (47,533) (11,192) (9,976) 16,856
Net claims incurred 334,881 335,514 696,399 701,468
Commission and other takaful expenses 83,946 77,810 154,533 140,655
Wakala fee 306,903 224,998 577,078 445,215
TOTAL TAKAFUL EXPENSES 725,730 638,322 1,428,010 1,287,338
SURPLUS FROM TAKAFUL OPERATIONS 107,634 63,153 162,722 72,986
Investment income 7,188 2,759 15,702 7,303
Mudarib share (1,798) (689) (3,926) (1,825)
Net investment income 5,390 2,070 11,776 5,478
SURPLUS FOR THE PERIOD TRANSFERRED
TO PARTICIPANT’S FUNDS
113,024 65,223 174,498 78,464
The condensed interim financial information consists of pages 3 to 14.
4
Takaful International Company B.S.C.
STATEMENT OF PARTICIPANTS’ REVENUES AND EXPENSES – FAMILY TAKAFUL
for the six months ended 30 June 2006 Bahraini dinars
3 months to 3 months to 6 months to 6 months to
30 June 2006 30 June 2005 30 June 2006 30 June 2005
(reviewed) (reviewed) (reviewed) (reviewed)
(restated) (restated)
Gross contributions 180,470 397,613 397,159 646,419
Retakaful share (155,819) (333,287) (325,655) (524,831)
Retained contributions 24,651 64,326 71,504 121,588
Movement in unearned contributions 7,243 (7,074) 8,677 (7,686)
Prior period adjustment - - - 27,036
Net retained contributions 31,894 57,252 80,181 140,938
Retakaful commission and other takaful income 72,959 107,688 116,044 176,121
TOTAL TAKAFUL REVENUES 104,853 164,940 196,225 317,059
Claims settled 255,497 367,864 671,028 655,065
Recovered from retakaful and other parties (207,817) (327,353) (569,884) (584,662)
Net claims settled 47,680 40,511 101,144 70,403
Movement in outstanding claims 671 120 4,238 2,808
Net claims incurred 48,351 40,631 105,382 73,211
Commission and other takaful expenses 9,547 57,250 25,461 94,247
Transfer to family takaful technical reserves 10,000 - 25,000 -
Wakala fee 28,210 73,303 59,574 129,284
TOTAL TAKAFUL EXPENSES 96,108 171,184 215,417 296,742
(DEFICIT) SURPLUS FROM TAKAFUL 8,745 (6,244) (19,192) 20,317
OPERATIONS
Investment income 10,580 6,693 19,170 12,522
Mudarib share (899) (1,674) (1,211) (3,131)
Net investment income 9,681 5,019 17,959 9,391
(DEFICIT) SURPLUS FOR THE PERIOD
TRANSFERRED TO PARTICIPANT’S FUNDS
18,426 (1,225) (1,233) 29,708
The condensed interim financial information consists of pages 3 to 14.
5
Takaful International Company B.S.C.
STATEMENT OF INCOME
For the six months ended 30 June 2006 Bahraini dinars
3 months to 3 months to 6 months to 6 months to
30 June 2006 30 June 2005 30 June 2006 30 June 2005
(reviewed) (reviewed) (reviewed) (reviewed)
Investment income 39,144 24,781 69,958 75,416
Wakala fees 335,113 298,300 636,652 574,499
Mudarib share 2,695 2,363 5,136 4,956
Other income 583 7,271 895 9,490
377,535 332,715 712,641 664,361
OTHER EXPENSES
Staff costs (207,677) (186,711) (396,089) (380,428)
Depreciation (19,476) (8,373) (39,113) (16,645)
Other management expenses (135,039) (118,749) (258,023) (205,818)
NET PROFIT FOR THE PERIOD 15,343 18,882 19,416 61,470
EARNINGS PER SHARE (fils) (note 4) 0.31 0.38 0.39 1.23
The condensed interim financial information consists of pages 3 to 14.
6
Takaful International Company B.S.C.
STATEMENT OF CHANGES IN PARTICIPANTS’ FUNDS
for the six months ended 30 June 2006 Bahraini dinars
General Family Total
Takaful Takaful
Balance at 31 December 2005 (440,333) (23,301) (463,634)
Prior period adjustment (note 5) - 27,036 27,036
Balance as at 31 December 2005 (restated) (440,333) 3,735 (436,598)
Surplus for the period 174,498 (1,233) 173,265
Balance at 30 June 2006 (265,835) 2,502 (263,333)
Balance at 31 December 2004 (730,747) (50,119) (780,866)
Prior period adjustment (note 5) - 27,036 27,036
Surplus for the period 78,464 2,672 81,136
Balance at 30 June 2005 (652,283) (20411) (672,694)
The condensed interim financial information consists of pages 3 to 14.
7
Takaful International Company B.S.C.
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
for the six months ended 30 June 2006 Bahraini dinars
2006 Reviewed Share capital Statutory General Retained Investment Total
reserve reserve earnings fair value
reserve
Balance at 31 December 2005 5,000,000 368,781 130,000 969,349 (237,868) 6,230,262
Net profit for the period - - - 19,416 - 19,416
Dividends paid (2005) - - - (500,000) - (500,000)
Directors‟ remuneration (2005) - - - (32,000) - (32,000)
Charity (2005) - - - (7,000) - (7,000)
Transfer to general reserve - - 70,000 (70,000) - -
Net movement in cumulative change in fair values - - - - (8,502) (8,502)
Balance at 30 June 2006 5,000,000 368,781 200,000 379,765 (246,370) 5,702,176
2005 Reviewed Share capital Statutory General Retained Investment Total
reserve reserve earnings fair value
reserve
Balance at 31 December 2004 5,000,000 299,869 130,000 349,139 68,891 5,847,899
Net profit for the period - - - 61,470 - 61,470
Dividends paid - - - - - -
Directors‟ remuneration - - - - - -
Net movement in cumulative change in fair values - - - - 224,215 224,215
Balance at 30 June 2005 5,000,000 299,869 130,000 410,609 293,106 6,133,584
The condensed interim financial information consists of pages 3 to 14.
8
Takaful International Company B.S.C.
STATEMENT OF CASH FLOWS
for the six months ended 30 June 2006 Bahraini dinars
30 June 2006 30 June 2005
(reviewed) (reviewed)
(restated)
OPERATING ACTIVITIES
Net profit for the period 19,416 61,470
Surplus from participants‟ operations 155,128 108,172
174,544 169,642
Adjustments for:
Movement in unearned contributions 99,733 14,821
Investment income (69,958) (95,242)
Depreciation 39,113 16,645
Operating profit before changes in operating assets and liabilities 243,432 105,866
Retakaful and takaful balances receivable 21,628 (62,812)
Due from retakaful companies in connection with outstanding claims (323,965) (48,378)
Other receivables and prepayments (22,888) (141,473)
Gross outstanding claims 318,227 68,042
Retakaful and takaful balances payable 17,403 200,483
Transfer to family takaful technical reserve (111,198) -
Other liabilities and provisions 54,556 (97,944)
NET CASH FLOW FROM OPERATING ACTIVITIES 197,195 23,784
INVESTING ACTIVITIES
Investment income 69,958 95,242
Purchases of property and equipment (138,809) (14,749)
Sale of investments 1,010,547 521,700
Purchase of investments (262,579) (1,273,554)
Net movement on demand deposits with maturity in excess of three months (1,242,936) 362,163
NET FLOW (CASH USED) IN INVESTING ACTIVITIES (563,819) (309,198)
FINANCING ACTIVITIES
Dividends paid (252,785) -
Directors remuneration (32,000) -
Ijara re-payment (78,560) -
NET CASH FLOW (USED IN) FINANCING ACTIVITIES (363,345) -
(DECREASE) IN CASH AND CASH EQUIVALENTS (729,969) (285,414)
Cash and cash equivalents at 1 January 2,661,393 1,775,785
CASH AND CASH EQUIVALENTS AT 30 JUNE (Note 6) 1,931,424 1,490,371
The condensed interim financial information consists of pages 3 to 14.
9
Takaful International Company B.S.C.
NOTES to the 2006 condensed interim financial information Bahraini dinars
1 ACTIVITIES
Takaful International Company B.S.C. (“the Company”) is a Bahraini joint stock company incorporated in the
Kingdom of Bahrain in 1989 and registered with the Ministry of Industry and Commerce under commercial
registration (CR) number 21100.
The Company carries out takaful and retakaful activities in the Kingdom of Bahrain in accordance with the
teachings of Islamic Sharia‟a. The Company‟s registered office is at 6 Gudaibiya Road, Manama, Kingdom of
Bahrain.
2 ACCOUNTING POLICIES
The condensed interim financial information have been prepared in accordance with International Accounting
Standard 34 - Interim Financial Reporting which allows the condensed interim financial information to be in
summarised form.
These condensed interim financial information have been prepared using the same accounting policies and
computation methods adopted in the 2005 annual financial statements.
The interim results may not represent a proportionate share of the annual profits due to cyclical variability in
contributions and investment income and uncertainty of claims occurrences.
Actuarial estimation of Family Takaful, for future benefit obligations is conducted annually at the end of the year.
3 SURPLUS (DEFICIT) FROM GENERAL TAKAFUL OPERATIONS
For management purposes, the Company is organised into three business segments, motor and general
accident, fire and marine. These segments are the basis on which the Company reports its primary
segment information, Family takaful being disclosed separately. An analysis of the gross participants‟
contribution, net retained contributions and the net results for its main classes of general business is
disclosed on page 11:
10
Takaful International Company B.S.C.
NOTES to the 2006 condensed interim financial information Bahraini dinars
3 SURPLUS (DEFICIT) FROM GENERAL TAKAFUL OPERATIONS (CONTINUED)
2006 Motor and general Fire Marine Total
accident
6 months 3 months 6 months 3 months 6 months 3 months 6 months 3 months
Gross contributions 1,761,975 866,528 396,174 170,560 86,522 47,104 2,244,671 1,084,192
Retakaful share (350,058) (146,972) (367,268) (156,699) (70,777) (36,742) (788,103) (340,413)
Retained contributions 1,411,917 719,556 28,906 13,861 15,745 10,362 1,456,568 743,779
Movement in unearned contributions (107,475) (39,154) (1,285) 53 (498) (1,219) (109,258) (40,320)
Net retained contributions 1,304,442 680,402 27,621 13,914 15,247 9,143 1,347,310 703,459
Retakaful commissions and other takaful income 104,791 57,971 115,209 58,206 23,422 13,728 243,422 129,905
Commissions and other takaful expenses (135,664) (73,056) (15,437) (8,326) (3,432) (2,564) (154,533) (83,946)
Net claims incurred (682,957) (325,613) (4,349) (2,691) (9,093) (6,577) (696,399) (334,881)
590,612 339,704 123,044 61,103 26,144 13,730 739,800 414,537
Wakala fees (466,923) (257,971) (91,120) (39,003) (19,035) (9,929) (577,078) (306,903)
123,689 81,733 31,924 22,100 7,109 3,801 162,722 107,634
11
Takaful International Company B.S.C.
NOTES to the 2006 condensed interim financial information Bahraini dinars
3 SURPLUS (DEFICIT) FROM GENERAL TAKAFUL OPERATIONS (CONTINUED)
2005 Motor and general Fire Marine Total
accident
6 months 3 months 6 months 3 months 6 months 3 months 6 months 3 months
Gross Contributions 1,416,296 704,747 317,349 130,181 99,305 40,557 1,832,950 875,485
Retakaful share (273,065) (83,070) (291,656) (116,187) (84,338) (33,891) (649,059) (233,148)
Retained contributions 1,143,231 621,677 25,693 13,994 14,967 6,666 1,183,891 642,337
Movement in unearned contributions (34,607) (40,894) 2,412 2,727 (1,975) (979) (34,170) (39,146)
Net retained contributions 1,108,624 580,783 28,105 16,721 12,992 5,687 1,149,721 603,191
Retakaful commissions and other takaful
income 79,952 32,899 103,973 53,506 26,678 11,879 210,603 98,284
Commissions and other takaful expenses (97,809) (56,609) (37,590) (17,676) (5,256) (3,525) (140,655) (77,810)
Net claims incurred (691,005) (328,783) (5,678) (2,748) (4,785) (3,983) (701,468) (335,514)
399,762 228,290 88,810 49,803 29,629 10,058 518,201 288,151
Wakala fees (348,551) (184,895) (73,625) (30,576) (23,039) (9,527) (445,215) (224,998)
51,211 43,395 15,185 19,227 6,590 531 72,986 63,153
As the Company‟s activities are performed on an integrated basis, a segmental analysis of assets and liabilities between these segments would not be meaningful.
12
Takaful International Company B.S.C.
NOTES to the 2006 condensed interim financial information Bahraini dinars
4 EARNINGS PER SHARE
Earnings per share are calculated by dividing the net profit for the period by the weighted average number of
shares outstanding during the period as follows:
30 June 2006 30 June 2005
(reviewed) (reviewed)
Net profit for the period (BD) 19,416 61,472
Weighted average number of shares outstanding during the period (in 000) 50,000 50,000
Earnings per share attributable to shareholders – fils 0.39 1.23
No figure for diluted earnings per share has been presented as the Company has issued no financial instruments
which may have a dilutive effect.
5 PRIOR PERIOD ADJUSTMENT
In 2005, the Company had not accounted for the reversal of unearned contribution – family takaful. The amount
of unearned contribution remaining to be reversed amounting to BD 27,036 has been rectified by reducing the
unearned contribution and increasing retained contribution of participants‟ revenue and expenses for the 6
months period ended 30 June 2005, being the earliest reported period and by restating the related balance sheet
items and equity in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors.
6 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and at bank and deposits that have an original maturity
of three months or less.
30 June 31 December
2006 2005
(reviewed) (audited)
Cash in hand and at bank 1,126,812 417,827
Deposits with maturities of less than three months 804,612 2,243,566
Cash and cash equivalents 1,931,424 2,661,393
Deposits with maturities in excess of three months 1,898,586 655,649
3,830,010 3,317,042
13
Takaful International Company B.S.C.
NOTES to the 2006 condensed interim financial information Bahraini dinars
7 RELATED PARTY TRANSACTIONS
Related party transactions represent transactions with shareholders, directors and senior management of
the Company and companies if which they are the principal owners. Pricing policies and terms of these
transactions are approved by the Company‟s management and the Executive Committee of the Company‟s
Board of Directors.
Transactions with related parties included in the balance sheet, statement of participants‟ revenues and
expenses and statement of income are as follows:
30 June 2006 31 December
(reviewed) 2005
(audited)
Demand deposits 1,628,276 2,327,318
Available for sale investments 373,388 451,500
Gross contributions 187,704 246,737
Investment income 44,388 811,642
Other expenses of management 56,083 110,548
Consultancy income from a shareholder 129,000 129,000
Sale of investment to a shareholder 48,538 772,309
Due from related party 192,432 901,309
Ijara Muntahia bitamleek 863,940 942,500
8 COMMITMENTS AND CONTINGENT LIABILITIES
Commitments comprise the following:
30 June 2006 31 December
(reviewed) 2005
(audited)
Purchase of computers and software 84,955 -
Capital commitments 84,703 -
169,658 -
9 COMPARATIVE FIGURES
The comparative figures for the previous period have been reclassified, where necessary, in order to
conform to the current period‟s presentation. Such reclassifications do not affect the previously reported
net profit, net assets or equity. Certain figures have been restated as a result of the prior period adjustment
stated in note 5.
14
