Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES
31 December 2013
Subsequent measurement
The subsequent measurement of financial assets and liabilities depends on their classification as described below:
Financial assets
Cash and cash equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash in hand, bank
balances and short term deposits with an original maturity of three months or less, net of outstanding bank overdrafts.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial recognition loans and receivables are carried at amortised cost using the effective interest rate
method, less impairment losses, if any. Amortised cost is calculated by taking into account any discount or premium arising
on acquisition and fees or costs that are an integral part of the interest rate method.
The effective interest rate method amortisation is included in the consolidated statement of income. The losses arising from
impairment are recognised in the consolidated statement of income.
Bank deposit and accounts receivable are classified as “Loan and advances”.
Financial assets available for sale
Financial assets available for sale are those non-derivative financial assets that are designated as available for sale or are
not classified as loans and receivables. After initial recognition at cost including transaction costs associated with the
acquisition, financial assets whose fair value cannot be reliably measured are carried at cost less impairment losses, if any.
Changes in fair value of available for sale investments are reported as a separate component of other comprehensive
income until the investment is derecognised or the investment is determined to be impaired, at which time, the cumulative
gain or loss previously reported in other comprehensive income is included in the consolidated statement of income.
Financial liabilities
The Group’s financial liabilities include Term loans, bank overdrafts, Wakala, Murabaha and Tawarruq payables and
accounts payable and other credit balances.
Term loans and bank borrowings
After initial recognition, interest bearing term loans and bank overdraft are subsequently measured at amortised cost using
the EIR method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well
as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in
the consolidated statement of income. Unpaid amounts of term loan are included in ‘accounts payable and other credit
balances’.
Term loans and bank overdraft are carried on the consolidated statement of financial position at their principal amounts
less any repayment. Installments due within one year from the reporting date are shown as current liabilities.
Wakala and murabaha payables
Wakala and murabaha payables represent the amount payable on a deferred settlement basis for assets purchased under
murabaha arrangements. Installments due within one year from the reporting date are shown as current liability. Wakala
and murabaha payables are stated at gross amount of the payable, net of deferred profit payable. Profit payable is expensed
on a time apportionment basis taking into account of the profit rate attributable and the balance outstanding.
Tawarruq payables
Tawarruq payable represent amounts due to financial institutions arising from an Islamic financing arrangement where the
liability is settled on a deferred settlement basis for assets purchased. Tawarruq payable are stated at the gross amount of
the payables, net of deferred profit payable. Tawarruq cost is expensed on a time apportionment basis taking account of
the profit rate attributable and the balance outstanding.
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