Page 37 - 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)

- Significant influence assessment
When determining significant influence over an investee, management considers whether the Group has
the power to participate in the financial and operating policy decisions of the investee if it holds less than
20% of the investee’s voting rights. The assessment, which requires significant judgment, involves
consideration of the Group’s representation on the investee’s board of directors, participation in policy
making decisions and material transactions between the entities.

- Leases
Critical judgements required in the application of IFRS 16 include, among others, the following:
• Identifying whether a contract (or part of a contract) includes a lease;
• Determining whether it is reasonably certain that an extension or termination option will be exercised;
• Classification of lease agreements (when the entity is a lessor);
• Determination of whether variable payments are in-substance fixed;
• Establishing whether there are multiple leases in an arrangement,
• Determining the stand-alone selling prices of lease and non-lease components.

b) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimating uncertainty at the end of the
reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below:

- Fair value of unquoted financial assets
If the market for a financial asset is not active or not available, the Group establishes fair value by using
valuation techniques which include the use of recent arm’s length transactions, reference to other
instruments that are substantially the same, discounted cash flow analysis, and option pricing models
refined to reflect the issuer’s specific circumstances. This valuation requires the Group to make estimates
about expected future cash flows and discount rates that are subject to uncertainty.

- Useful lives of depreciable assets
The Group reviews its estimate of useful lives of depreciable assets at each reporting date based on the
expected utility of assets. Uncertainties in these estimates mainly relate to obsolescence and changes in
operations.

- Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the “value in use” of the asset or the cash-generating unit to which the goodwill is allocated.

Estimating a value in use requires the Group to make an estimate of the expected future cash-flows from
the asset or the cash-generating unit and also choose an appropriate discount rate in order to calculate
the present-value of the cash-flows.

- Allowance for expected credit losses:
The extent of allowance for expected credit losses involves estimation process. Allowance for expected
credit losses is based on a forward looking ECL approach as explained in Note (4). Bad debts are written
off when identified. The ECL allowance and write-down of accounts receivable are subject to management
approval.

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