15 / 38
AL MAZAYA HOLDING COMPANY K.S.C. (CLOSED) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
(All amounts are in Kuwaiti Dinars)
e) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks with original
maturities of three months or less that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
n
Investments
The Group classifies its investments in the following categories: investments at fair value through
income statement and investments available for sale. The classification depends on the purpose for
which the investments were acquired and is determined at initial recognition by the management.
(i)
Investments at fair value through income statement
This category has two sub-categories: investments held for trading, and those designated at fair
value through statement of income at inception.
An investment is classified as held for trading if acquired principally for the purpose of selling in the
short term or if it forms part of an identified portfolio of investments that are managed together and
has a recent actual pattern of short-term profit making or it is a derivative that is not designated and
effective as a hedging instrument.
An investment is designated by the management on initial recognition if such designation eliminates
or significantly reduces a measurement or recognition inconsistency that would otherwise arise or; if
they are managed and their performance is evaluated and reported internally on a fair value basis in
accordance with a documented risk management or investment strategy.
Investments in this category are classified as current assets if they are either held for trading or are
expected to be realized within 12 months of the balance sheet date.
(ii)
Investments available for sale
Investments available for sale are non-derivative financial assets that are either designated in this
category or not classified in any of the other categories. They are included in non-current assets
unless management intends to dispose of the investment within 12 months of the balance sheet date.
Purchases and sales of investments are recognized on trade date - the date on which the Group
commits to purchase or sell the asset. Investments are initially recognized at fair value plus
transaction costs for all financial assets not carried at fair value through income statement.
After initial recognition, investments at fair value through income statement and investments available
for sale are subsequently carried at fair value. The fair values of quoted investments are based on
current bid prices. If the market for an investment is not active (and for unlisted securities), the Group
establishes fair value by using valuation techniques. These include the use of recent arm's length
transactions, reference to other instruments that are substantially the same, discounted cash flow
analysis, and option pricing models refined to reflect the issuer's specific circumstances.
13