Financial Statements with Independent Auditor’s Report ar15... · Independent Auditor’s Report...

Empower / Tamkeen Annual Report 2015[page 37]

Contents

Board of Directors' Report 38

Independent Auditor's Report 39-40

Statement of Financial Position 41

Statement of Activities 42

Statement of Changes in Fund Balance 43

Statement of Cash Flows 44

Notes to the Financial Statements 45-60

Financial Statements withIndependent Auditor’s ReportFor the year ended December 31, 2015

Empower / Tamkeen Annual Report 2015 [page 38]

The Directors present their annual report and audited financial statements of Labor fund (“the Fund”) for the year ended December 31, 2015.

PRINCIPAL ACTIVITYThe Labor Fund aims to increase the efficiency and productivity of Bahraini Labor, strengthening the national economy, developing the private sector and creating new suitable job opportunities for Bahrainis in the Kingdom of Bahrain.

REVIEW OF BUSINESSThe results for the year are set out on page 42 of these financial statements.

CHANGES IN DIRECTORSDr. Ebrahim Janahi has been appointed as Chief Executive Officer effective December 30, 2015.

On behalf of the Board

Mohammed Bin Essa Al KhalifaChairmanJuly 31, 2016

Board ofDirectors’ Report


The Board of DirectorsLabor The Fund Manama - Kingdom of Bahrain

Report on the Financial Statements We have audited the accompanying financial statements of Labor Fund, (the “Fund”) which comprise the statement of financial position as at December 31, 2015, and the statement of activities, statement of changes in fund balance and the statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur 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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 the auditor’s 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, the auditor considers internal control 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 policies 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.

IndependentAuditor's Report


IndependentAuditor's Report continued

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of Labor Fund as at December 31, 2015, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report on Other Legal and Regulatory RequirementsAs required by Law number 57 issued on August 12, 2006 to establish the Fund, we report that:(1) we have obtained all the information we considered necessary for the purpose of our audit; (2) the Fund has maintained proper books of account and the financial statements are in agreement therewith; and(3) the financial information included in the Directors’ report is consistent with the books of account of the Fund.

In addition, we report that, based on the information and explanations given to us, we are not aware of significant violations of the Law number 57 issued on August 12, 2006 in connection with the establishment of the Fund, having occurred during the year ended December 31, 2015 that might have had a material effect on the activities of the Fund or on its financial position.

Deloitte & Touche – Middle EastPartner Registration No. 135

July 31, 2016Manama - Kingdom of Bahrain


Notes 2015 2014

ASSETS

Non-current asset:

Furniture and equipment 5 903,475 670,132

-------------- --------------

Current assets:

Due from related parties 6 (a) 7,200,000 6,676,388

Other receivables 7 2,209,154 3,409,514

Cash and cash equivalents 8 34,234,471 14,686,279

Total current assets 43,643,625 24,772,181

Total assets 44,547,100 25,442,313

FUND BALANCE AND LIABILITIES

Fund balance:

General reserve 9 12,258,314 10,552,274

Projects’ fund balance 23,035,989 7,681,623

Available funds 35,294,303 18,233,897

--------------

Liabilities:

Current liabilities:

Due to related parties 6 (b) 2,094,346 1,886,241

Accounts payable and accruals 10 7,158,451 5,322,175

Total current liabilities 9,252,797 7,208,416

Total fund balance and liabilities 44,547,100 25,442,313

These financial statements were approved by the Directors and authorised for issue on July 31, 2016 and signed on their behalf by:

Mohammed Bin Essa Al KhalifaChairman

Dr. Ebrahim JanahiChief Executive

The accompanying notes 1 to 19 form an integral part of these financial statements.

Statement ofFinancial Position as at December 31, 2015

BAHRAINI DINAR


Statement ofActivities

Notes 2015 2014

Revenues:

Fee income 11 77,792,554 75,652,644

Other income 12 293,109 209,900

Total revenue 78,085,663 75,862,544

Expenditures:

Projects costs 13 33,114,376 54,376,015

Unemployment insurance subscriptions 14 17,840,821 16,574,425

Salaries, benefits and other remunerations 15 5,877,281 4,426,974

General and administrative expenses 16 3,054,287 2,706,266

Advertising and marketing cost 851,070 563,069

Depreciation expense 5 233,790 174,602

Training expense 53,632 166,517

Finance cost 18 - 147,145

Total expenditures 61,025,257 79,135,013

Excess of revenues over expenditures / (expenditures over revenues) during the year

17,060,406 (3,272,469)

Mohammed Bin Essa Al KhalifaChairman

Dr. Ebrahim JanahiChief Executive


for the year ended December 31, 2015 BAHRAINI DINAR

Empower / Tamkeen Annual Report 2015[page 43] Empower / Tamkeen Annual Report 2014

General reserveFunds available

for projects Total

Balance as at December 31, 2013 10,552,274 10,954,092 21,506,366

Deficit of income over expenditures for the year - (3,272,469) (3,272,469)


Excess of income over expenditures for the year - 17,060,406 17,060,406

Transfer to general reserve 1,706,040 (1,706,040) -



Statement ofChanges in Funds Balance for the year ended December 31, 2015

BAHRAINI DINAR


Statement ofCash Flows

2015 2014

Cash flows from operating activities:

Surplus / (deficit) of income over expenditures for the year 17,060,406 (3,272,469)

Adjustments for:

Depreciation expense 233,790 174,602

Profit income (288,259) (203,885)

Gain on disposal of furniture and equipment (505) (405)

17,005,432 (3,302,157)

Changes in operating assets and liabilities:

Decrease / (increase) in other receivables 1,218,669 (51(51,877)

(Increase) / decrease in due from related parties (523,612) 873,241

Increase in due to related parties 208,105 2,975,788

Increase / (decrease) in accounts payable and accruals 1,836,276 (96,807)

Net cash from operating activities 19,744,870 398,188

Cash flows from investing activities:

Purchase of furniture and equipment (467,133) (396(396,538)

Proceeds from sale of furniture and equipment 505 405

Profit income received 269,950 200,621

Net cash used in investing activities (196,678) (195,512)

Net increase in cash and cash equivalents 19,548,192 202,676

Cash and cash equivalents at the beginning of the year 14,686,279 14,483,603

Cash and cash equivalents at the end of the year (Note 8) 34,234,471 14,686,279

Cash and cash equivalents consist of:

Cash in hand 500 500

Bank balances 34,233,971 14,685,779

34,234,471 14,686,279




1 GENERAL INFORMATION: The Labor The Fund (“The Fund”) was established, in accordance with law number 57 (2006) issued on August 12, 2006,

as a judicial entity having an independent financial and administrative support and entitled to all the privileges given to other ministries, government entities and public institutions in the Kingdom of Bahrain.

The operations of the Labor Fund was wholly managed by the Economic Development Board (“EDB”) until December 31, 2006. All the costs were being incurred by the EDB on behalf of the Fund from the budget allocated to the Fund until this date. With effect from January 1, 2007, the Fund operationally separated from the EDB and commenced its operations independently.

The Fund aims to increase the efficiency and productivity of Bahraini Labor, strengthening the national economy, developing the private sector and creating new suitable job opportunities for Bahrainis in the Kingdom of Bahrain.

On October 7, 2015, Royal Decree No. 33 for 2015 was issued to discontinue the High Council for Vocational Training and transfer its assets, liabilities and activities to the Fund. As at December 31, 2015, this transfer was not yet effected and management expects completion by March 31, 2016.

2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs): 2.1 Standards and Interpretations effective for the current period

• The following new and revised IFRSs, which became effective for annual periods beginning on or after 1 January 2015, have been adopted in these financial statements. The application of these revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements.

• Annual Improvements to IFRSs 2010 - 2012 Cycle that includes amendments to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38.

• Annual Improvements to IFRSs 2011 - 2013 Cycle that includes amendments to IFRS 1, IFRS 3, IFRS 13 and IAS 40.• Amendments to IAS 19 Employee Benefits to clarify the requirements that relate to how contributions from employees

or third parties that are linked to service should be attributed to periods of service.

2.2 New and revised IFRS in issue but not yet effective The Fund has not yet applied the following new and revised IFRSs that have been issued but are not yet effective:

New and revised IFRSs

Effective for annual periods beginning on or after

IFRS 14 Regulatory Deferral Accounts. January 1, 2016

Amendments to IAS 1 Presentation of Financial Statements relating to Disclosure initiative. January 1, 2016

Amendments to IFRS 11 Joint arrangements relating to accounting for acquisitions of interests in joint operations.

January 1, 2016

Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets relating to clarification of acceptable methods of depreciation and amortization.

January 1, 2016

Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture relating to bearer plants.

January 1, 2016

Amendments to IAS 27 Separate Financial Statements relating to accounting investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate financial statements.

January 1, 2016

Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investment in Associates and Joint Ventures relating to applying the consolidation exception for investment entities.

January 1, 2016

Annual Improvements to IFRSs 2012 - 2014 Cycle covering amendments to IFRS 5, IFRS 7, IAS 19 and IAS 34.

January 1, 2016

Notes to theFinancial Statements for the year ended December 31, 2015

BAHRAINI DINAR


2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs): (CONTINUED)

2.2 New and revised IFRS in issue but not yet effective

Effective for annual periods beginning on or after

IFRS 9 Financial Instruments

A finalized version of IFRS 9 was issued in July 2014 and contains accounting requirements for financial instruments, replacing IAS 39 Financial Instruments: Recognition and Measurement. The standard contains requirements in the following areas:

• Classification and measurement: Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a ‘fair value through other comprehensive income’ category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39, however there are differences in the requirements applying to the measurement of an entity’s own credit risk.

• Impairment: The 2014 version of IFRS 9 introduces an ‘expected credit loss’ model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognized.

• Hedge accounting: Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures.

• Derecognition: The requirements for the derecognition of financial assets and liabilities are carried forward from IAS 39.

January 1, 2018

Amendments to IFRS 7 Financial Instruments: Disclosures relating to disclosures about the initial application of IFRS 9.

When IFRS 9 is first applied

IFRS 7 Financial Instruments: Disclosures relating to the additional hedge accounting disclosures (and consequential amendments) resulting from the introduction of the hedge accounting chapter in IFRS 9.

When IFRS 9 is first applied

IFRS 15 Revenue from Contracts with Customer

In May 2014, IFRS 15 was issued which established a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations when it becomes effective.

The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition.

January 1, 2018


Notes to theFinancial Statements continued


2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (CONTINUED):

2.2 New and revised IFRS in issue but not yet effective Effective for annual periods beginning on or after

IFRS 16 Leases January 1, 2019 (or when IFRS 15 is adopted)

IFRS 16 specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.

Amendments to IAS 7 Statement of Cash Flows requiring disclosure of changes in liabilities arising from financing activities.

January 1, 2017

Amendments to IAS 12 Income Taxes regarding recognition of deferred tax assets for unrealized losses.

January 1, 2017

The management anticipates that all of the above Standards and Interpretations, as applicable, will be adopted in the Fund’s financial statements in future periods and that the adoption of those Standards and Interpretations will have no material impact on the financial statements of the Fund in the period of initial application, except for the requirements in relation to IFRS 9. The Fund’s management has not yet performed a detailed review to quantify the effect of the application of this standard and therefore it is not practicable at present to provide a reasonable estimate of its effect.

3. SIGNIFICANT ACCOUNTING POLICIES:Statement of ComplianceThe financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and law number 57 issued on August 12, 2006.

Basis of PreparationThe financial statements are prepared under the historical cost convention. These policies have been consistently applied to all the years presented, unless otherwise stated.

The financial statements have been presented in Bahraini Dinars (“BD”), being the functional currency of the Fund.

The significant accounting policies are set out below.

3.1 Furniture and EquipmentFurniture and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost of furniture and equipment is depreciated by equal annual installments over the estimated useful lives of the assets. The estimated useful lives of the assets for the calculation of depreciation are as follows:

Furniture & Fixtures 5 yearsComputers 3 years

The gain or losses arising on the disposal or retirement of an item of furniture and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognized in profit or loss.

Capital work-in-progress is not depreciated until the asset under construction is complete and transferred to its relevant category in the furniture and equipment.




3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

3.2 Impairment of Tangible AssetsAt each reporting date, the Fund reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss previously been recognized. The reversal of the loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

3.3 Financial AssetsFinancial assets are classified based on the nature and purpose of the financial assets and determined at the time of initial recognition.

3.3.1 ReceivablesReceivables are initially recognized at fair value and subsequently measured at amortized cost, less any impairment.

3.3.2 Impairment of financial assetsFinancial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been affected.

For all the financial assets, objective evidence of impairment could include:• significant financial difficulty of the issuer or counterparty; or• default or delinquency in payments; or• it becoming probable that the borrower will enter bankruptcy or financial re - organization.

3.3.3 Derecognition of financial assetsThe Fund derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Fund neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Fund recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Fund retains substantially all the risks and rewards of ownership of a transferred financial asset, the Fund continues to recognize the financial asset and also recognizes a collateralised borrowing for the proceeds received.

The difference between the carrying amount of the financial asset derecognized and the sum of the consideration received and receivable is recognized in profit or loss.





3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

3.4 Financial Liabilities Financial liabilities are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost.

The Fund derecognizes financial liabilities when, and only when, the Fund’s obligations are discharged, cancelled or they expire.

The difference between the carrying amount of the financial liability derecognized and the sum of the consideration paid and payable is recognized in profit or loss.

3.5 ProvisionsProvisions are recognized when the Fund has a present obligation (legal or constructive) arising from a past event and the costs to settle the obligation are both probable and able to be reliably measured.

3.6 Employees’ BenefitsFor Bahraini employees, the Fund makes contributions to the Social Insurance Organisation calculated as a percentage of the employees’ salaries. The Fund’s obligations are limited to these contributions, which are expensed when due.

The entitlement to leave pay is based upon the terms of employment contracts with the employees and length of service. The expected costs of these benefits are accrued at the end of each reporting date period and carried forward until they are utilised.

3.7 Revenue RecognitionRevenue is measured at the fair value of the consideration received or receivable.

Fees and other incomeFees and other income are recognized when the Fund’s right to receive such income is established.

Profit incomeProfit income is accrued on a time basis, by reference to the principal outstanding and at the effective profit rate applicable.

3.8 Contingent Liabilities and AssetsContingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognized in the financial statements but disclosed when an inflow of economic benefits is probable.

3.9 Foreign Currencies The functional currency of the Fund is the Bahraini Dinar. Transactions in foreign currencies are recognized in functional currencies at the rate ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

3.10 LeasesThe Fund as a lesseeLeases where the lessor retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.





4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY:In the application of the Fund’s accounting policies, which are described in Note 3, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

4.1 Critical judgements in applying the Fund’s accounting policiesIn the process of applying the Fund’s accounting policies, which are described in Note 3, management has not made any judgement that may have significant effect on the amounts recognized in the financial statements.

4.2 Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

4.2.1 Useful lives of tangible assetsThe Fund’s management determines the useful lives of tangible assets and the related depreciation charge. The depreciation charge for the year will change significantly if the actual life is different from the estimated useful life of the asset.

The review carried out by the management in the current year did not indicate any necessity for changes in the useful lives of the tangible assets.


5. FURNITURE AND EQUIPMENT:

Furniture and

fixtures Computers

Capital work-

in-progress Total

Cost:

Balance as at December 31, 2013 777,747 558,283 4,429 1,340,459

Additions 17,013 120,689 258,836 396,538

Transfers 263,265 - (263,265) -

Disposals - (11,954) - (11,954)

Balance as at December 31, 2014 1,058,025 667,018 - 1,725,043

Additions 111,126 130,938 225,069 467,133

Transfers 40,777 3,675 (44,452) -

Disposals - (14,679) - (14,679)

Balance as at December 31, 2015 1,209,928 786,952 180,617 2,177,497

Accumulated Depreciation:

Balance as at December 31, 2013 453,571 438,692 - 892,263

Depreciation expense 112,611 61,991 - 174,602

Eliminated on disposal - (11,954) - (11,954)

Balance as at December 31, 2014 566,182 488,729 - 1,054,911

Depreciation expense 147,206 86,584 - 233,790

Eliminated on disposal - (14,679) - (14,679)

Balance as at December 31, 2015 713,388 560,634 - 1,274,022

Carrying Amounts:

Balance as at December 31, 2015 496,540 226,318 180,617 903,475

Balance as at December 31, 2014 491,843 178,289 - 670,132

6. RELATED PARTIES: Government related entities are disclosed under related parties because the same government has control or joint control of,

or significant influence over, both the Fund and the other entity.

(a) Balances due from related parties consist of:

2015 2014

Ministry of Finance 831,000 831,000

Ministry of Labor 600,700 600,700

1,431,700 1,431,700

Allowance for doubtful receivables (1,431,700) (1,431,700)

Labor Market Regulatory Authority (LMRA) 7,200,000 6,676,388

7,200,000 6,676,388

Due from LMRA represents the outstanding balance of fee income receivable (Note 6c).




6. RELATED PARTIES: (CONTINUED)(b) Balances due to related parties consist of:

2015 2014

Social Insurance Organisation (Note 14) 1,501,040 1,413,373

Labor Market Regulatory Authority (LMRA) 554,214 -

Information Affairs Authority 30,020 -

Ministry of Municipalities Affairs and Urban Planning 5,438 75,000

Bahrain Telecommunications Company (Batelco) 3,335 -

Electricity and Water Authority 299 1,820

Bahrain Development Bank - 196,305

Quality Assurance Authority for Education - 175,843

Gulf Air - 22,400

University of Bahrain - 1,500

2,094,346 1,886,241

(c) The Fund had the following major transactions with related parties:

2015 2014 Nature of transaction

LMRA 77,792,554 75,652,644 Share of fee income

Social Insurance Organization (Note 14)

(17,840,821) (16,574,425) Payment of unemployment insurance on behalf of the private sector

Bahrain Development Bank (3,014,425) (2,424,408) Project cost (SME Financing Scheme)

Quality Assurance Authority for Education

(1,673) (1,072,926) Project cost (National Skills Standard Program)

Ministry of Municipalities Affairs and Urban Planning

- (250,000) Project cost (Farmer’s Market at Hawret Aali)

King Hamad University Hospital

(909,885) (167,292) Project cost (Healthcare Professions & Healthcare Assistants)

Bahrain Polytechnic (52,433) (382,833) Project cost (Bahrain Polytechnic)

LMRA (1,088,138) (903,469) LMRA credit card and online collection fee

(d) Salaries and allowances to management personnel during the year are as follows:

2015 2014

Salaries 158,253 307,923

Allowances for attendance of board and committee meetings 74,000 76,000

232,253 383,923

7. OTHER RECEIVABLES:

2015 2014

Prepayments 83,071 56,565

Accrued profit income 30,215 11,906

Deposits with the projects implementers 2,089,536 3,331,136

Other receivables 6,332 9,907

2,209,154 3,409,514

Deposits with projects implementers represent amounts given to Projects implementers (KPMG, BDO, Ebdaa Bank and Bahrain Development Bank) for the payment of some project outsourced to them.





8. CASH AND CASH EQUIVALENTS:

2015 2014

Cash on hand 500 500

Current accounts with banks 1,869,607 553,979

Call accounts with banks 13,661,084 8,523,837

Murabaha and Wakala contracts 18,703,280 5,607,963

Cash and bank balances 34,234,471 14,686,279

Call accounts with banks earn profit at market rate of 1.45% (2014: 1.45%) per annum. Murabaha and Wakala contracts are placed with local Islamic banks, have original maturity periods of up to three months and

earn profit at market rate of 1.69% (2014: 1.65%) per annum.

9. GENERAL RESERVE:

The Directors decided to transfer 10% of the excess of revenues over expenditures for each year to a general reserve. There are no restrictions over the utilization of the general reserve.

10. ACCOUNTS PAYABLE AND ACCRUALS:

2015 2014

Accounts payable 705,477 3,239,604

Accrued expenses 5,524,726 1,282,474

Accruals for employee benefits 854,248 724,097Accruals for Board of Directors’ remuneration and Committee meetings (Note 6-d) 74,000 76,000

7,158,451 5,322,175

Accounts payable represents amounts payable for various projects in progress as at the reporting date.

11. FEE INCOME:

Fee income represents the Fund’s eligibility to an 80% (2014: 80%) share of fees collected by LMRA for the following:• From private sector employers for the issue of work permits and their renewal;• Agencies and recruitment offices permits; • Monthly fees of BD 10 for each foreign employee working in the Kingdom of Bahrain. In 2013, the monthly fee income

changed by Law to reflect BD 5 for the first five employees and BD 10 for each additional employee.

12. OTHER INCOME:

2015 2014

Profit income 288,259 203,885

Revenue from tender documents 4,345 5,610

Gain on disposal of furniture and equipment 505 405

293,109 209,900

*Profit income related to call accounts with banks and Murabaha and Wakala contracts.





13. PROJECT COSTS:

2015 2014

Enterprise Support Program 4,763,820 -

Enterprise Support Fund Program 18,256 435,770

Enterprise Growth Management 5,466,227 29,975,568

Bahrain Noor El Ain 2,454,553 1,271,150

National Skills Standardization Program 1,673 1,072,926

Finance and Accounting Program 82,556 46,008

Finance Support Scheme 5,731,713 5,590,320

Mohasaba Scheme 536,150 823,700

Accounting & Finance Professional – E&Y - 355,790

Professional Certification Scheme 3,276,209 3,080,140

Marketing Professionals CIM – BIBF - 12,305

Human Resource Certification Program - (21,000)

Warehouse Management Certificates 29,081 101,477

Training in Islamic Finance (CIMA) 8,880 -

Training and Education Performance Support - 182,254

Basic Skills Training 17,664 42,200

Alosra Retail Professionals Employment & Training - 1,580

Retail Training Program - 18,408

Alba Training Program 59,222 255,470

Asry Employment & Training Program 71,465 116,407

Tatweer Petroleum Training & Employment Program (46,582) 453,198

Silah – Call Centre Training – Employment Program 111,677 72,806

Bahrain Centre for Excellence Training Program - 75,800

Red Tag Retail Professionals Training & Employment - 30,200

Yokogawa Bahrain Graduates Engineers Training Program 21,760 57,800

Batelco Internship Program 23,192 16,400

Career Progression Schemes 2,171,841 1,722,176

Employment Support Scheme 297,643 144,995

Online Job Vacancy Postings Subsidy Scheme - 55,550

Career Publications 11,450 -

Apprenticeship Scheme in Retailing BIRD - 189,283

Medical Financing Scheme 873,136 -

Occupational Health & Safety 54,124 -

Health Care Training Program 1,202,000 -

King Hamad University Hospital Healthcare Training 921,585 132,192

King Hamad University Hospital - Healthcare Assistants (11,700) 35,100

Undergraduate Nursing Education – RCS12 115,999 743,995

BSc General Nursing Program with BDF 44,000 -

Pilot Financing Scheme – BDB/GAA - 353,711

AB-Initio Training Program – GAA 127,500 1,690



13. PROJECT COSTS: (CONTINUED)

2015 2014

Type Rating Program for 65 Pilots with GAA 65,975 229,970

Special Type Rating with GAA - 227,708

Special Type Rating Training with Air Arabia 13,620 428,597

Training and Employment of Aircraft Maintenance Engineers 398,983 467,750

Line Training Program with Gulf Air 1,022,089 356,442

Graduate Training Prog. with Bahrain Airport Co. 73,968 -

Bahrain Polytechnic 52,433 382,833

HR Workshops Scheme - 97,367

HR Management Certificate Program 81,900 135,548

Leadership Workshops Scheme - 129,821

Leadership Certification Program 11,700 79,875

Public Relations Professionals - 41,172

Graphic Design Professionals 242,736 244,567

Quantity Surveyors (BTI) 120,458 (74,113)

IT Administrator (BTI) / IT security and IT webgae (BTI) 11,365 (26,770)

Grooming Bahraini Hospitality Talent – Kempinski 12,685 108,870

Grooming Bahraini Hospitality Talent – The Western & Le Meridian 95,137 -

Grooming Bahraini Hospitality Talent – Sofitel 81,973 -

Travel & Tourism 11,684 (11,176)

Fishermen Support Program - 357,470

Farmers Support Program 151,955 38,487

Farmer’s Market @ Hawrat A’li - 250,000

Al Basta Market 50,000 90,000

Mantoojati for Productive Families 8,250 16,890

GOYS Youth City IV 2030 (2013) - 9,271

GOYS Youth City 2030 (2015) 300,000 -

MOI Summer Program – Police Academy 2013 - 54,362

MOI Summer Program – Police Academy 2014 - 283,910

MOI Summer Program – Police Academy 2015 193,934 -

Business Plan Competition for Youth (Mashroo3i 2&3) 44,482 64,616

Company Program – Injaz - 138,694

Injaz Program - 20,066

AIESEC Training Support 46,200 60,000

Information and Communication Technology Program 12,082 55,095

Bahrain Legal Internship Program for Lawyers 69,023 41,546Multi–Track Technicians Program (National Institute for Industrial Training)

18,014 -

Invita Customer Service Program 43,750 25,750

A9eel in School2 – Work Attitude Development Program 33,211 95,786





13. PROJECT COSTS: (CONTINUED)2015 2014

Supply Chain Management Program - 51,700

Azadea Group Retail Program 26,550 26,550

NIIT Automotive Industry – Company Specific Diploma 114,218 156,326

Business Incubator 213,544 294,535

Supporting BCCI Roadshow & Int’l Exhibitions - 89,497

Exhibition Management Workshops - 61,745

Next Door Entrepreneurs - 92,996

Entrepreneur Workshops - 10,231

Las Vegas Jewelry Exhibition - 48,490

Plus 973 / Al Tajer Al Mubde 3 79,000 164,560

Supporting Conferences Attendance - 414,744

Marketing for Business Women Society - 76,600

Intelaaq Student Business Consultancy 21,556 29,784

Mega Enterprise Support – Nass Corporation 235,492 764,535

Provide Funding and Advice - eMarket Place - 512

Al Mohemah 2 - 203,800

Tamkeen Support for Bahrain Pavilion 233,941 -

Labor Law for Trade Unions 82,500 -

Aeronautics 253,674 1,053

Bell Racing Helmets International 101,652 -

Citibank Employment Support 44,547 -

Other projects 5,000 22,584

33,114,376 54,376,015

Commitments on projects are disclosed in Note 17.



14. UNEMPLOYMENT INSURANCE SUBSCRIPTIONS:

2015 2014

Unemployment insurance subscriptions 17,840,821 16,574,425

As stipulated in the Unemployment Law promulgated in Decree 87 of 2006, the Fund should contribute 1% unemployment subscriptions to the Social Insurance Organization on behalf of the private sectors employers. The amount payable as at December 31, 2015 of BD 1,501,040 (2014: BD 1,413,373) represents the subscription amount due for the month of December 2015 (2014: amount due for the month of December 2014) (Note 6 - b).

15. SALARIES, BENEFITS AND OTHER REMUNERATIONS:

2015 2014

Salaries 3,617,032 2,600,769

Staff allowances 581,845 585,496

Social insurance contributions 687,813 502,502

Transport allowances 234,374 151,672

Social allowances 203,715 134,625

Life and medical insurance 328,440 244,603

Telephone and communications 111,879 74,334

Interest on employees’ loans 38,183 56,973Board of Directors’ remuneration and Committee meetings (Note 6-d)

74,000 76,000

5,877,281 4,426,974

16. GENERAL AND ADMINISTRATIVE EXPENSES:

2015 2014

Business consulting, legal and professional fees 409,282 446,065

Communication expenses 192,940 257,228

Feasibility studies and research - P&D 112,128 154,337

IT System 105,550 -

LMRA credit cards collection fees (Note 6 - c) 1,088,138 903,469

Rentals and utilities 628,190 517,892

Training partner monitoring agency 44,774 111,698

Miscellaneous 473,285 315,577

3,054,287 2,706,266





17. COMMITMENTS AND CONTINGENT LIABILITY:

17.1 Commitment for expenditures:

2015 2014

Human capital development projects 10,297,498 30,907,215

Private sector support projects 34,080,239 48,693,464

44,377,737 79,600,679

The above commitments are due as follows:

Within one year 28,180,114 36,532,353

From one to 5 years 16,197,623 43,068,326

44,377,737 79,600,679

The above commitments were calculated based on the management’s best estimates, considering the expected expenditures on various projects.

17.2 Contingent liability:

2015 2014

Financing guarantees 210,000,000 165,000,000

Pursuant to the memorandum of understanding dated July 18, 2007, Ithmaar Bank of Bahrain B.S.C. agreed to grant financing facilities to the companies supported by the Fund to the extent of BD 12.5 million, of which the Fund agreed to guarantee up to 80% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 10 million and will automatically be reduced by any amount paid under this guarantee.

According to the agreement dated July 28, 2015, the Ithmaar Bank of Bahrain B.S.C agreed to grant financing facilities to the companies supported by the Fund to the extent of up to BD 10 million, of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 5 million and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.

According to the agreement dated May 28, 2008 and subsequent amendment on December 1, 2015, the Bahrain Development Bank B.S.C. agreed to grant financing facilities to the small and medium sized companies supported by the Fund to the extent of BD 202 million (December 31, 2014: BD 150 million), of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 101 million (December 31, 2014: BD 75 million) and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.

According to the agreement dated January 19, 2010 and subsequent amendment on July 15, 2015 the Bahrain Islamic Bank B.S.C. agreed to grant financing facilities to the companies supported by the Fund to the extent of BD 60 million (December 31, 2014: BD 50 million), of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 30 million (December 31, 2014: BD 25 million) and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.

According to the agreement dated July 4, 2010 and subsequent amendment on June 19, 2014, the Bank Muscat International B.S.C. agreed to grant financing facilities to the companies supported by the Fund to the extent of BD 40 million (December 31, 2014: BD 40 million), of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 20 million (December 31, 2014: BD 20 million) and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.



17. COMMITMENTS AND CONTINGENT LIABILITY: (CONTINUED)17.2 Contingent liability: (Continued)According to the agreement dated November 28, 2011, the Standard Chartered Bank B.S.C. agreed to grant financing facilities to the companies supported by the Fund to the extent of up to BD 15 million, of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 7.5 million and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.

According to the agreement dated October 18, 2011, and the subsequent amendment on March 1, 2015, the Khaleeji Commercial Bank B.S.C agreed to grant financing facilities to the companies supported by the Fund to the extent of BD 35 million (December 31, 2014: BD 25 million), out of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 17.5 million (December 31, 2014: BD 12.5 million) and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.

According to the agreement dated July 13, 2011, and subsequent amendment on November 11, 2015 the Al Salam Bank B.S.C agreed to grant financing facilities to the companies supported by the Fund for to the extent of BD 8 million (December 31, 2014: BD 20 million) of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 4 million (December 31, 2014: BD 10 million) and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.

According to the agreement dated August 28, 2011, the Kuwait Finance House B.S.C agreed to grant financing facilities to the companies supported by the Fund to the extent of BD 10 million, of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 5 million and will be reduced by 50% of any amounts paid by the beneficiary in accordance with this guarantee.

According to the agreement dated February 9, 2015, and subsequent amendment on December 27, 2015, Al Barka Islamic Bank agreed to grant financing facilities, to the companies supported by the Fund to the extent of BD 20 million, of which the Fund agreed to guarantee up to 50% of the value of all outstanding amounts due to the Bank under the above facilities. The Fund’s liability under this guarantee is limited to BD 10 million and will be reduced by 50% of any amount paid by the beneficiary in accordance with this guarantee.

18. FINANCE COST: The Fund has an Islamic facility from a local Islamic bank at a limit of BD 15 Million. The average finance cost on the Islamic facility is 3.75% per annum. During 2014, the Fund has settled this facility.

19. FINANCIAL INSTRUMENTS: 19.1 Capital risk managementThe Fund’s objectives when managing capital are to safeguard the Fund’s ability to continue as a going concern in order to provide benefits for stakeholders.

The capital structure of the Fund consists of available funds. The Fund is debt free at the reporting date.

19.2 Significant accounting policiesSignificant accounting policies and methods adopted, including the criteria for recognition, basis of measurement, and the basis on which income and expenses are recognized in respect of each class of financial assets and financial liabilities are set out in Note 3.

19.3 Categories of financial instrumentsFinancial instruments consist of financial assets and financial liabilities.Financial assets of the Fund include cash, bank balances, other receivables and due from related parties.Financial liabilities of the Fund include payables and accrued liabilities and due to related parties.





19. FINANCIAL INSTRUMENTS: (CONTINUED)2015 2014

Financial assets:

Receivables at amortized cost (including cash and bank balances) 41,471,018 21,384,480

Financial liabilities:

Amortized cost 9,252,797 7,208,416

19.4 Financial risk management objectives The Fund’s expose to market risk, credit risk and liquidity risk are described below:

19.5 Market riskMarket risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market prices. Market risks arise from open positions in foreign currency, profit margin rate and equity products, all of which are exposed to general and specific market movements and changes in the level of volatility of market rates or prices such as foreign exchange rates, and profit margin rates and equity prices.

19.5.1 Currency riskCurrency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates.

The Fund’s financial assets and financial liabilities are denominated in Bahraini Dinars and United States Dollars. As the Bahraini Dinar is pegged to the United States Dollar, balances in the US Dollar are not considered to represent a significant currency risk.

19.5.2 Profit margin rate risk Profit margin risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market profit share rates.

The Fund’s Murabaha and Wakala contracts carry fixed profit margin rates and mature within three months.

The Fund’s exposure to profit margin rates on financial assets is detailed in Note 8.

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

The concentration of credit risk is disclosed in Note 6.

In addition, the fund is exposed to credit risk in relation to financial guarantees to financial institutions participating in the Finance scheme. The fund’s maximum exposure in this respect is the maximum amount the fund could have to pay if the guarantee is called on (see note 17).

The credit risk on liquid funds is limited because the counterparties are banks with good credit-ratings assigned by international rating agencies. The carrying values of financial assets at the reporting date represent the Fund’s maximum exposure to credit risk.

19.7 Liquidity riskLiquidity risk, also referred to as funding risk, is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial liabilities.

The Fund’s remaining contractual maturity for its non-profit bearing financial liabilities at amortized cost as at December 31, 2015 amounting to BD 9,252,797 (2014: BD 7,208,416).

The Fund’s expected maturity for its non-profit earning financial assets and profit earning financial assets as at December 31, 2015 amounting to BD 9,106,654 and BD 32,437,433 respectively (2014: BD 7,252,680 and BD 14,150,634 respectively).

19.8 Fair value of financial instrumentsThe Directors consider that the carrying amounts of financial assets and financial liabilities approximate their fair values at the reporting dates.

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