Mazaya_FS_E Q4. 20

AL-MAZAYA HOLDING COMPANY - K.S.C. (PUBLIC) AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020 (All amounts are in Kuwaiti Dinars) 51 For the purpose of capital risk management, the total capital resources consist of the following components: 2020 2019 Term loans - 7,364,745 Islamic bank facilities 98,018,232 97,182,991 Total borrowings 98,018,232 104,547,736 Less: cash and cash equivalents (7,078,529) (9,902,507) Net debt 90,939,703 94,645,229 Total equity 79,906,335 92,975,650 Total capital resources 170,846,038 187,620,879 Gearing Ratio 53.23% 50.44% 31. Impact of COVID-19 The recent outbreak of the coronavirus (“COVID-19”) across various geographies globally, which was declared a pandemic by the World Health Organization, has caused disruption to business and economic activities. The fiscal and monetary authorities around the world, including Kuwait, have announced various support measures across the globe to counter the possible adverse implications of COVID-19. This note describes the impact of the outbreak on the Group's operations and the significant estimates and judgements applied by management in assessing the values of assets and liabilities as at December 31, 2020. (i) Credit risk management The Group has taken several measures to manage its risk associated with the pandemic, including identification of the most vulnerable sectors primarily affected and placing added measures to ensure a high level of scrutiny. The uncertainties caused by COVID-19 required the Group to consider the impact of volatility in the forward-looking macro-economic factors considered for the determination of expected credit losses (“ECLs”) as at December 31, 2020. For its international operations, the Group updated the relevant forward-looking information relating to the macroeconomic environment used to determine the likelihood of credit losses, relative to the economic climate of the respective market in which they operate. Accordingly, the group had recognized an impact of KD 777,384 as additional allowance of Expected Credit Losses of trade receivables for the year ended December 31, 2020. (ii) Liquidity risk management The Group has taken several measures to manage its liquidity risk associated with the pandemic. In response to the COVID 19 outbreak, the Group (as a lessor) had granted rental waivers to its tenants in order to support its tenants in an aim to secure their continuity to preserve liquidity. As a lessee, the Group is currently negotiating with the owners of its leased properties to obtain lease waivers in response to COVID 19 outbreaks, where it will account for such waivers once approved by the related property owners. The Group is closely evaluating its liquidity and funding position and taking appropriate actions. The Group will continue to assess its liquidity position by closely monitoring its cash flows and forecasts. (iii) Fair value measurement of financial instruments The Group has considered potential impacts of the current market volatility in determination of the reported amounts of the Group’s unquoted financial assets, which represents management's best assessment based on observable available information as at the reporting date. Given the impact of COVID 19, the Group has assessed whether the fair values of the financial assets and liabilities represents the price that would be achieved for transactions between market participants in the current scenario. Accordingly, the group had recognized an impact of KD 116,703 as unrealized loss from change in fair value on financial assets at FVTPL and KD 1,711,305 arising from FVTOCI for the year ended December 31, 2020. Further information on the Group’s policy in relation to fair value measurements is disclosed in Note 29.