Page 21 - Q4-2024-EN

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)

Equity investments at FVTOCI are subsequently measured at fair value. Changes in fair values
including foreign exchange component are recognized in other comprehensive income and
presented in the cumulative changes in fair values as part of equity. Cumulative gains and losses
previously recognized in other comprehensive income are transferred to retained earnings on
derecognition. Gains and losses on these equity instruments are never recycled to consolidated
statement of profit or loss. Dividends are recognized in consolidated statement of profit or loss when
the right of the payment has been established, except when the Group benefits from such proceeds
as a recovery of part of the cost of the instrument, in which case, such gains are recorded in OCI.
Equity instruments at FVTOCI are not subject to an impairment assessment. Upon disposal,
cumulative gains or losses are reclassified from cumulative changes in fair value to retained
earnings in the statement of changes in equity.

Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortized cost or FVTOCI (see
above) are measured at FVTPL. Specifically:

• Investments in equity instruments are classified as at FVTPL, unless the Group designates an
equity investment as at FVTOCI on initial recognition (see above).
• Debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria (see above)
are classified as at FVTPL. In addition, debt instruments that meet either the amortized cost
criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such
designation eliminates or significantly reduces a measurement or recognition inconsistency
('accounting mismatch') that would arise from measuring assets or liabilities or recognizing the
gains and losses on them on different bases. The Group has not designated any debt
instruments as at FVTPL.

Changes in fair value, gain on disposal, interest income and dividends are recorded in consolidated
statement of profit or loss according to the terms of the contract, or when the right to payment has
been established.

d – 1/2) Impairment of financial assets
The Group recognizes an allowance for expected credit losses (ECL) for all debt instruments not
held at fair value through profit or loss.

ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at
an approximation to the asset’s original effective interest rate. The expected cash flows will include
cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.

For trade and other receivables, the Group has applied the standard’s simplified approach and has
calculated ECLs based on lifetime expected credit losses. Accordingly, the Group does not track
changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix that is based on the Group’s historical
credit loss experience, adjusted for forward-looking factors specific to the customers and the
economic environment. Exposures were segmented based on common credit characteristics such
as credit risk grade, geographic region and industry, delinquency status and age of relationship,
where applicable.

18