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

Financial assets available-for-sale

For financial assets available-for-sale, the Group assess at each reporting date whether there is objective

evidence that a financial asset available-for-sale or a group of financial assets available-for-sale is impaired. In

the case of equity investments classified as available-for-sale, objective evidence would include a significant

or prolonged decline in the fair value of the equity investment below its cost. ‘Significant’ is evaluated against

the original cost of investment and ‘prolonged’ against the period in which fair value has been below its

cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the

acquisition cost and the current fair value, less any impairment loss on those financial assets available-for-sale

previously recognised in the consolidated statement of income is removed from other comprehensive income

and recognised in the consolidated statement of income.

Impairment losses in equity investments are not reversed through consolidated statement of income;

subsequent increase in their fair value after impairment is recognized directly in other comprehensive income.

Impairment of receivable

An estimate of the collectible amount of 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.

iii) Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as “financial liabilities at fair value through profit

or loss”, “loans and borrowings”. The Group determines the classification of its financial liabilities at initial

recognition.

Financial liabilities are recognised initially at fair value and in the case of loans and borrowings, including

directly attributable transaction costs.

The Group’s financial liabilities include tawarruq and ijara payable and accounts payable and other credit

balances.

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

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 derecognized 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.

Term loans 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.

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 by taking account of the profit rate attributable and the balance outstanding.