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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)

In applying this forward-looking approach, the Group applies a three stage assessment to
measuring ECL as follows:
• Stage 1 - financial instruments that have not deteriorated significantly in credit quality since initial
recognition or that have low credit risk and
• Stage 2 (not credit impaired) - financial instruments that have deteriorated significantly in credit
quality since initial recognition and whose credit risk is not low
• ‘Stage 3’ (credit impaired) - financial assets that have objective evidence of impairment at the
reporting date and assessed as credit impaired when one or more events have a detrimental
impact on the estimated future cash flows have occurred.

In assessing whether the credit quality on a financial instrument has deteriorated significantly since
initial recognition, the Group compares the risk of a default occurring on the financial instrument at
the reporting date with the risk of a default occurring on the financial instrument at the date of initial
recognition. In making this assessment, the Group considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward-looking
information that is available without undue cost or effort. Forward-looking information considered
includes the future prospects of the industries in which the Group's debtors operate, obtained from
economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other
similar organizations, as well as consideration of various external sources of actual and forecast
economic information that relate to the Group's core operations.

‘12-months expected credit losses’ are recognized for Stage 1 while ‘lifetime expected credit losses’
are recognized for Stage 2 and 3. Lifetime ECL represents the expected credit losses that will result
from all possible default events over the expected life of a financial instrument. 12-months ECL
represents the portion of lifetime ECL that is expected to result from default events on a financial
instrument that are possible within 12 months after the reporting date.

Measurement of the expected credit losses is determined by a probability-weighted estimate of
credit losses over the expected life of the financial instrument. ECLs for financial assets measured
at amortized cost are deducted from the gross carrying amount of the assets and charged to
consolidated statement of profit or loss. For debt instruments at FVOCI, the loss allowance is
charged to consolidated statement of profit or loss and is recognized in OCI.

The Group considers a financial asset in default when contractual payments are 30 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when
internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts in full. A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows.

d – 2) Financial liabilities:
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs. All financial liabilities are subsequently measured at
FVTPL or at amortized cost using effective interest rate method.

Financial liabilities at amortized cost
Financial liabilities that are not at FVTPL as above are measured subsequently at amortized cost using the
effective interest method.

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