Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES
31 December 2014
Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES
31 December 2014
30.2 Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its liabilities when they fall due. To limit this risk, management
has arranged diversified funding sources, manages assets with liquidity in mind, and monitors liquidity on a daily basis.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
deposits and loans.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
repayment obligations. The liquidity profile of financial liabilities reflects the projected cash flows which includes future
interest payments over the life of these financial liabilities.
31 December 2014
5,675,501
4,564,688
4,920,620
15,160,809
14,493,956
8,115,000
2,604,087
25,213,043
76,623,435
12,679,688
9,131,686
98,434,809
56,453,978
-
1,606,979
58,060,957
Tawarruq and ijara payable
Term loans
Accounts payable and other credit balances
Total undiscounted liabilities
Within 1 year
KD
1 - 2 years
KD
Over 2 years
KD
Total
KD
4,619,672
6,316,485
26,416,763
15,435,606
Capital commitments
Within 1 year
KD
1 - 2 years
KD
Total
KD
Commitments
31 December 2013
3,408,300
2,688,438
7,566,055
3,021,238
16,684,031
4,219,837
7,547,813
2,554,012
-
14,321,662
26,380,112
26,377,189
12,523,867
3,021,238
68,302,406
18,751,975
16,140,938
2,403,800
-
37,296,713
Tawarruq payables
Term loans
Accounts payable and other credit balances
Bank overdraft
Total undiscounted liabilities
Within 1 year
KD
1 - 2 years
KD
Total
KD
3,555,492
4,444,365
17,777,462
9,777,605
Capital commitments
Within 1 year
KD
1 - 2 years
KD
Total
KD
Commitments
Over 2 years
KD
Over 2 years
KD
Over 2 years
KD
84
30.3.2 Equity price risk
Equity price risk arises from changes in the fair values of equity investments. The Group manages this through diversification
of investments in terms of geographical distribution and industry concentration. The majority of the Group’s quoted
investments are quoted on the regional Stock Exchanges.
The effect on other comprehensive income (OCI) as a result of a change in the fair value of equity instruments held as
available for sale financial assets at 31 December 2014 due to 5% increase in the following market indices with all other
variables held constant is as follows:
The effect on the profit before directors’ remuneration and taxation represents increase in fair value of impaired available
for sale investments which will be recorded in the consolidated income statement.
50 basis points increase
Increase (decrease) in profit
2014
KD
2013
KD
Kuwaiti Dinars
323,793
246,938
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 rate risk
Interest rate risk arises from the possibility that changes in interest 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 rate risk on its interest bearing assets and liabilities (bank deposits, loans and borrowings and bonds)
as a result of mismatches of interest rate repricing of assets and liabilities. It is the Group's policy to manage its interest
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 rates on the
Group’s profit before directors’ remuneration and taxation, based on floating rate financial assets and financial liabilities
held at 31 December 2014. There is no impact on equity.
The following table demonstrates the sensitivity of the consolidated statement of income to a reasonable charge in
interest rates of 50 basis points, with all other variables held constant.
Effect on OCI
2014
KD
2013
KD
KSE ( 5%)
Others
1,468
4,903
11,177
80
±
Market indices
85
