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AL-MAZAYA HOLDING COMPANY - K.S.C. (PUBLIC)
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
(All amounts are in Kuwaiti Dinars)

Financial assets and financial liabilities carried on the consolidated statement of financial position include cash and
cash equivalents, accounts receivable, financial assets at fair value through profit or loss, financial assets at fair
value through other comprehensive income, Islamic bank facilities, lease liabilities and accounts payable.

d – 1) Financial assets:

d - 1/1) Classification of financial assets
To determine their classification and measurement category, IFRS 9 requires all financial assets,
except equity instruments and derivatives, to be assessed based on a combination of the entity’s
business model for managing the assets and the instruments’ contractual cash flow characteristics.

Business model assessment
The Group determines its business model at the level that best reflects how it manages groups of
financial assets to achieve its business objectives and in order to generate contractual cash flows.
That is, whether the Group’s objective is solely to collect the contractual cash flows from the assets
or is to collect both the contractual cash flows and cash flows arising from the sale of assets. If
neither of these is applicable (e.g. financial assets are held for trading purposes), then the financial
assets are classified as part of ‘Sell’ business model and measured at FVTPL. The Group’s business
model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated
portfolios.

Assessment of whether contractual cash flows are solely payments of principal and interest (SPPI
test)
Where the business model is to hold assets to collect contractual cash flows or to collect contractual
cash flows and sell, the Group assesses whether the financial instruments’ cash flows represent
Solely Payments of Principal and Interest (the ‘SPPI test’). ‘Principal’ for the purpose of this test is
defined as the fair value of the financial asset at initial recognition that may change over the life of
the financial asset (for example, if there are repayments of principal or amortization of the
premium/discount). The most significant elements of interest within a lending arrangement are
typically the consideration for the time value of money and credit risk.

The Group reclassifies when and only when its business model for managing those assets changes.
The reclassification takes place from the start of the first reporting period following the change. Such
changes are expected to be very infrequent and none occurred during the year.

Initial recognition
Purchases and sales of those financial assets are recognized on settlement date – the date on
which an asset is delivered to or by the Group. Financial assets are initially recognized at fair value
plus transaction costs for all financial assets not carried at FVTPL.

Derecognition
A financial asset (in whole or in part) is derecognized either when: the contractual rights to receive
the cash flows from the financial asset have expired; or the Group has transferred its rights to receive
cash flows from the financial asset and either
a) Has transferred substantially all the risks and rewards of ownership of the financial asset, or
b) Has neither transferred nor retained substantially all the risks and rewards of the financial asset,
but has transferred control of the financial asset. Where the Group has retained control, it shall
continue to recognize the financial asset to the extent of its continuing involvement in the
financial asset.

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