Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES
31 December 2013
Description of significant unobservable inputs to valuation of financial assets:
Unquoted equity securities are valued based on book value method using latest financial statement available of the
investee entities and adjusted for lack of marketability discount in the range of (15% to 20%). The Group has determined
that market participants would take into account these discounts when pricing the investments.
Funds and managed portfolio have been valued based on Net Asset Value (NAV) of the fund provided by the custodian of
the fund or portfolio.
Non-financial instruments
Investment properties are fair valued at 30 November 2013 and are classified under level 3 fair value hierarchy and
reconciliation is provided in note 8.
Description of significant unobservable inputs to valuation of non-financial assets:
Fair value of investment properties were determined using Mark to Market method, conducted by valuators considering
transaction prices of the property and similar properties. The significant unobservable valuation input used for the purpose
of valuation is the market price per square foot and varies from property to property. A reasonable change in this input
would result in an equivalent amount of change in fair value.
Certain investment properties owned by the Group on Build Operate and Transfer (BOT) basis are valued using discounted
cashflow and capitalization of rental income.
30. RISK MANAGEMENT
Introduction
Risk is inherent in the Group’s activities but it is managed through a process of ongoing identification, measurement and
monitoring, subject to risk limits and other controls. This process of risk management is critical to the Group’s continuing
profitability.
Risk management structure
The Board of Directors of the Parent Company are ultimately responsible for the overall risk management approach and for
approving the risk strategies and principles.
The major risks to which the Group is exposed in conducting its business and operations, and the means and organisational
structure it employs in seeking to manage them strategically in building shareholder value are outlined below.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same
geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be
similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of
the Group’s performance to developments affecting a particular industry or geographical location.
In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines to focus
on country and counter party limits and maintaining a diversified portfolio. Identified concentrations of credit risks are
controlled and managed accordingly.
30.1Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party
to incur a financial loss. The Group manages credit risk by setting limits for individual counter-parties, monitors credit
exposures, and continually assesses the creditworthiness of counterparties, with the result that the Group’s exposure to
bad debts is not significant.
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