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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)

Right of use assets that meet the definition of property, plant and equipment are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities.
Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term,
the recognized right of use assets are depreciated on a straight-line basis over the shorter of its estimated
useful life and the lease term. Rights to use assets that meet the definition of investment properties are
recorded as investment properties for the Group and are measured at fair value which reflects the expected
cash flows during the lease term that excludes the lease payments to be made over the lease term which is
measured and included in the Group’s liabilities within the consolidated statement of financial position.

(ii) Lease liabilities:
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments (including in-
substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The
variable lease payments that do not depend on an index or a rate are recognized as expense in the period on
which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of related finance cost
and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a
change in the assessment to purchase the underlying asset.

(iii) Short-term leases and leases of low-value assets:
The Group applies the short-term lease recognition exemption to its short-term leases of property and
equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases
that are considered of low value. Lease payments on short-term leases and leases of low-value assets are
recognized as expense on a straight-line basis over the lease term.

(iv) Significant judgment in determining the lease term of contracts with renewal options:
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by
an option to terminate the lease, if it is reasonably certain not to be exercise.

In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercises an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated). The assessment is reviewed if a significant event of significant change in circumstance
occurs which affects this assessment and that is within the control of the lessee.

x) National Labor Support Tax (NLST):
National Labor Support Tax (NLST) is calculated at 2.5% of the profit attributable to the shareholders of the Parent
Company before contribution to KFAS, NLST, Zakat, and Board of Directors’ remuneration, and after deducting
the Parent Company’s share of profit from associates listed in Boursa Kuwait, share of NLST paid by subsidiaries
listed in Boursa Kuwait, and cash dividends received from companies listed in Boursa Kuwait in accordance with
Law No. 19 of 2000 and Ministerial resolution No. 24 of 2006 and their Executive Regulations. No NLST has been
provided for since there was no taxable profit on which NLST could be calculated for the year ended December 31,
2023.

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