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ANNUAL REPORT
2016
N
otes To The Consolidated Financial Statements
AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES
As At 31 December 2016
Within
1 year KD
12- years
KD
Tawarruq and ijara payable
Accounts payable and other credit balances
Total undiscounted liabilities
Capital commitments
Over 2
years KD
Total
KD
11,172,259
11,467,525
22,639,784
2,646,977
12,346,328
3,035,569
15,381,897
3,308,721
70,738,144
1,397,142
72,135,286
14,529,856
94,256,731
15,900,236
110,156,967
20,485,554
31 December 2015
30.3 Market risk
Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such as
interest rates, foreign exchange rates and equity prices, whether those changes are caused by factors specific to the
individual investment or its issuer or factors affecting all investments traded in the market.
Market risk is managed on the basis of pre-determined asset allocations across various asset categories,
diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of
market conditions and trends and management’s estimate of long and short term changes in fair value.
30.3.1 Interest/profit rate risk
Interest/profit rate risk arises from the possibility that changes in interest/profit rates will affect future profitability
or the fair values of financial instruments. Interest rate risk is managed by the finance department of the Parent
Company. The Group is exposed to interest/profit rate risk on its interest bearing assets and liabilities (bank deposits
and facilities) as a result of mismatches of interest rate repricing of assets and liabilities. It is the Group›s policy
to manage its interest/profit cost using a mix of fixed and variable rate debts. The Group›s policy is to keep a
substantial portion of its borrowings at variable rates of interest.
The sensitivity of the consolidated statement of income is the effect of the assumed changes in interest/profit rates
on the Group’s profit before directors’ remuneration and taxation, based on floating rate financial assets and
financial liabilities held at 31 December 2016. There is no impact on equity.
The following table demonstrates the sensitivity of the consolidated statement of income to a reasonable charge in
interest /profit rates of 50 basis points, with all other variables held constant.
Kuwait Dinars
433,181
401,832
2016
KD
2015
KD
50 basis points increase
Effect in profit for the year
30.2 Liquidity risk (continued)
124