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) 50 Following are the unobservable inputs and sensitivity analysis for the assets measured under level 3: a) Financial assets: Fair value as of Valuation methods and main inputs Significant unobservable inputs Sensitivity of unobservable inputs to fair value 2020 2019 Financial assets at FVTPL 372,616 777,853 Price multiples Illiquidity discount from 40% to 45% The increase (decrease) of illiquidity discount by 5% would increase (decrease) fair value by KD 18,631 Financial assets at FVTOCI 9,880,250 - Adjusted book value Illiquidity discount from 20% to 25% The increase (decrease) of illiquidity discount by 5% would increase (decrease) fair value by KD 494,013 b) Non-financial assets: Fair value as of Valuation methods and main inputs Significant unobservable inputs Sensitivity of unobservable inputs to fair value 2020 2019 Investment properties 103,118,754 114,460,574 Income approach Capitalization rate from 5% to 9.5% according to the nature and property location and current rentals earned from the properties and the expected rentals for temporary vacancies The increase (decrease) in the capitalization rate the (decrease) increase in the property’s fair value, assuming all other factors remain constant. Investment properties 16,474,901 17,099,343 Discounted cash flows Discount rate from 7.5% to 9.5%, vacancy rates from 5% to 10% as per the property nature and its expected occupancy, and a growth rate from 3% to 5% The increase (decrease) in the discount and vacancy rates, the (decrease) increase in the properties’ fair value, assuming all other factors remain constant. The increase (decrease) in the growth rate, the increase (decrease) in the properties’ fair value, assuming all other factors remain constant. 30. Capital Risk Management The Group's objectives when managing capital resources are to safeguard the Group's ability to continue as a going concern in order to provide returns and benefits for shareholders and to maintain an optimal capital resources structure to reduce the cost of capital. In order to maintain or adjust the capital resources structure, the Group may adjust the amount of cash dividends paid to shareholders, return paid up capital to shareholders, issue new shares, sell assets to reduce debt, repay facilities or obtain additional facilities. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total debt facilities less cash and cash equivalents, and term deposits. Total capital is calculated as ‘equity’ as shown in the consolidated statement of financial position plus net debt.