Page 56 - JTC-Annual Report-2025-Eng

JTC Logistics Transportation & Stevedoring Company K.S.C.P
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As at December 31, 2025
(All amounts are in Kuwaiti Dinars)

Financial instruments are classified as liabilities or equity in accordance with the substance
of the contractual arrangement. Interest, dividends, gains, and losses relating to a financial
instrument classified as a liability are reported as expense or income. Distributions to holders of
financial instruments classified as equity are charged directly to equity. Financial instruments
are offset when the Group has a legally enforceable right to offset and intends to settle either
on a net basis or to realize the asset and settle the liability simultaneously.

Financial assets and financial liabilities carried on the consolidated statement of financial
position include cash and cash equivalents, accounts receivable and other debit balances
(except advance payments), financial assets at FVOCI, loans and borrowings, accounts payable
and other credit balances (except advances from customers) and lease liabilities.

A) Financial assets
I. Initial recognition

Purchases and sales of those financial assets are recognized on settlement date – the date
on which an asset is delivered to or by the Group. Financial assets are initially recognized
at fair value plus transaction costs for all financial assets not carried at FVTPL.

II. Classification of financial assets
To determine their classification and measurement category, IFRS 9 requires all financial
assets, except equity instruments and derivatives, to be assessed based on a combination
of the entity’s business model for managing the assets and the instruments’ contractual
cash flow characteristics.

Business model assessment
The Group determines its business model at the level that best reflects how it manages
groups of financial assets to achieve its business objectives and in order to generate
contractual cash flows. That is, whether the Group’s objective is solely to collect the
contractual cash flows from the assets or is to collect both the contractual cash flows and
cash flows arising from the sale of assets. If neither of these is applicable (e.g. financial
assets are held for trading purposes), then the financial assets are classified as part of
‘Sell’ business model and measured at FVTPL. The Group’s business model is not assessed
on an instrument-by-instrument basis, but at a higher level of aggregated portfolios.

Assessment of whether contractual cash flows are solely payments of principal and
interest (SPPI test)
Where the business model is to hold assets to collect contractual cash flows or to collect
contractual cash flows and sell, the Group assesses whether the financial instrument’s
cash flows represent Solely Payments of Principal and Interest (the ‘SPPI test’). ‘Principal’
for the purpose of this test is defined as the fair value of the financial asset at initial
recognition that may change over the life of the financial asset (for example, if there are
repayments of principal or amortization of the premium/discount).
The most significant elements of interest within a lending arrangement are typically the
consideration for the time value of money and credit risk.

54 JTC LogisTiCs TransporTaTion & sTevedoring Company K.s.C.p.