AnnualReport

ANNUAL REPORT

2016

otes To The Consolidated Financial Statements

AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES

As At 31 December 2016

Valuation of unquoted equity investments

Valuation of unquoted equity investments is normally based on one of the following:

• Recent arm’s length market transactions;

• Current fair value of another instrument that is substantially the same;

• The expected cash flows discounted at current rates applicable for items with similar terms and risk

characteristics; or

• Other valuation models.

The determination of the cash flows and discount factors for unquoted equity investments requires significant

estimation. Where this estimation cannot be reliably determined these investments are carried at cost less

impairment.

Impairment of trade receivable

An estimate of the collectible amount of trade accounts receivable is made when collection of the full amount

is no longer probable. For individually significant amounts, this estimation is performed on an individual

basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a

provision applied according to the length of time past due, based on historical recovery rates. Any difference

between the actual amounts collected in future periods and the amounts expected will be recognised in the

consolidated statement of income.

Impairment of goodwill

The Group tests whether goodwill is impaired at least on an annual basis. This requires an estimation of

the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use

requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and

also to choose a suitable discount rate in order to calculate the present value of those cash flows.

Fair values of assets and liabilities including intangibles

Considerable judgement by management is required in the estimation of the fair value of the assets including

intangibles with definite and indefinite useful life, liabilities and contingent liabilities acquired as a result of

business combination.

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