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AL-MAZAYA HOLDING COMPANY - K.S.C. (PUBLIC)
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(All amounts are in Kuwaiti Dinar)

The Group reclassifies when and only when its business model for managing those assets
changes. The reclassification takes place from the start of the first reporting period following the
change. Such changes are expected to be very infrequent and none occurred during the year.

Initial recognition
Purchases and sales of those financial assets are recognized on settlement date – the date on
which an asset is delivered to or by the Group. Financial assets are initially recognized at fair
value plus transaction costs for all financial assets not carried at FVTPL.

Derecognition
A financial asset (in whole or in part) is derecognized either when: the contractual rights to receive
the cash flows from the financial asset have expired; or the Group has transferred its rights to
receive cash flows from the financial asset and either
a) Has transferred substantially all the risks and rewards of ownership of the financial asset, or
b) Has neither transferred nor retained substantially all the risks and rewards of the financial
asset, but has transferred control of the financial asset. Where the Group has retained
control, it shall continue to recognize the financial asset to the extent of its continuing
involvement in the financial asset.

Measurement categories of financial assets
The Group classifies its financial assets upon initial recognition into the following categories:
• Debt instruments at amortized cost.
• Debt instruments at fair value through other comprehensive income, with gains or losses
recycled to the statement of profit or loss on derecognition.
• Equity instruments at FVOCI, with no recycling of gains or losses to statement of profit or loss
on derecognition.
• Financial assets at fair value through profit or loss (FVTPL).

Debt instruments at amortized cost
A financial asset is measured at amortized cost if it meets both of the following conditions:
- The asset is held within a business model whose objective is to hold assets to collect
contractual cash flows; and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount outstanding.

Debt instruments measured at amortized cost are subsequently measured at amortized cost using
the effective yield method adjusted for impairment losses if any. Gain and losses are recognized
in consolidated statement of profit and loss when the asset is derecognized, modified or impaired.

Amortized cost and effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument
and of allocating interest income over the relevant period. In general, effective interest rate is the
rate that exactly discounts estimated future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other
premiums or discounts) excluding expected credit losses, through the expected life of the debt
instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt
instrument on initial recognition. For purchased or originated credit-impaired financial assets, a
credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows,
including expected credit losses, to the amortized cost of the debt instrument on initial recognition.

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