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) 34 a) The effective annual profit rate on short term bank deposits is 0.875% (2019 - 2.94%) per annum. Those deposits have contractual maturity of less than 30 days (2019 – 90 days). b) Restricted bank balances represent escrow accounts restricted for receiving and making payments for specific construction activities and as collateral for some bank facilities of the Group (Note 13), which may not be available for use within 90 days. 4. Financial assets at fair value through profit or loss 2020 2019 Quoted equity securities - 48,147 Unquoted equity securities 372,616 777,853 372,616 826,000 The financial assets above are denominated in the following currencies: 2020 2019 Kuwaiti Dinar 105,497 480,735 Omani Riyal 257,466 298,480 US Dollar 9,653 46,785 372,616 826,000 5. Accounts receivable and other debit balances 2020 2019 Trade receivables (a) 11,077,074 13,137,809 Advance payments and other receivables 12,026,045 11,945,668 23,103,119 25,083,477 Allowance for expected credit losses (b) (12,255,245) (10,475,540) 10,847,874 14,607,937 a- Trade receivables: Trade receivables are non-interest bearing and are generally due within 30 days. The Group applies the IFRS 9 simplified model of recognizing lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring the expected credit losses, trade receivables have been assessed on a collective basis respectively and grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profile for transactions over the prior 48 months period as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and forwarding looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding. However, given the short period exposed to credit risk, the impact of these macroeconomic factors has not been considered significant within the reporting period. In response to COVID 19 outbreak during the year, had considered the impact of this outbreak on the forward- looking macroeconomic factors considered necessary in the estimation techniques and assumptions for the determination of expected credit losses as of the reporting date (Note 31 – i) Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangement amongst other is considered indicators of no reasonable expectation of recovery and therefore is considered as credit impaired.