Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C. AND ITS SUBSIDIARIES
31 December 2012
28.3.3 Foreign currency risk
Currency risk is the risk that the value of the financial instrument on monetary items will fluctuate due to changes in the
foreign exchange rates. The Group incurs foreign currency risk on transactions denominated in a currency other than the
Kuwaiti Dinar. The Group ensures that the net exposure is kept to an acceptable level, by dealing in currencies that do not
fluctuate significantly against the Kuwaiti Dinar.
If the Kuwaiti Dinar had strengthened or weakened against the foreign currencies assuming a change of 5%, this would
have the following impact on the consolidated statement of income:
Effect on profit (loss)
for the year
2012
KD
2011
KD
UAE Dirhams
118,016
459,678
28.3.2 Equity price risk
Equity price risk arises from changes in the fair values of equity investments. The Group manages this through diversification
of investments in terms of geographical distribution and industry concentration. The majority of the Group’s quoted
investments are quoted on the regional Stock Exchanges.
The effect on other comprehensive income (OCI) as a result of a change in the fair value of equity instruments held as
available for sale financial assets at 31 December 2012 due to 5% change in the following market indices with all other
variables held constant is as follows:
Effect on OCI
2012
KD
2011
KD
KSE ( 5%)
Others
136,381
80
96,429
-
±
Market indices
50 basis points increase
Increase (decrease) in profit
2012
KD
2011
KD
Kuwaiti Dinars
247,359
269,859
The sensitivity of the consolidated statement of income is the effect of the assumed changes in interest rates on the Group’s
profit before directors’ remuneration and taxation, based on floating rate financial assets and financial liabilities held at 31
December 2012. There is no impact on equity.
The following table demonstrates the sensitivity of the consolidated statement of income to a reasonable charge in interest
rates of 50 basis points, with all other variables held constant.
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