Page 94 - 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)

26. FINANCIAL RISK MANAGEMENT

In the normal course of business, the Group uses primary financial instruments such as 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, and as a result, is exposed to the risks
indicated below. The Group currently does not use derivative financial instruments to manage its
exposure to these risks.

a) Interest rate (finance cost) risk
Financial instruments are subject to the risk of changes in value due to changes in the level of
interest rates (finance cost rate) for its financial assets and liabilities carrying floating interest
rates (finance cost rates). The interest rates (finance cost rates) and the periods in which interest-
bearing financial assets and liabilities are repriced or matured are indicated in the respective
notes.
The Group’s term deposits are carrying fixed interest rates; accordingly, they are not exposed to
interest rate risk.
Term loans of the Group amounting to KD 9,147,816 (2024: KD 4,330,000) is carrying a fixed interest
rate; accordingly, it is not exposed to interest rate risk.
The following table demonstrates the sensitivity to a reasonably possible change in interest /
finance cost rates, with all other variables held constant, of the Group’s profit (through the impact
on floating rate borrowings).

Increase / Effect on consolidated
(decrease) in Balance as at statement of profit or
Year interest rate December 31, loss
2024

Murabaha payable ± 0.5% 4,980,030 ± 24,900

b) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation
causing the other party to incur a financial loss. Financial assets which potentially subject the
Group to credit risk consist principally of cash and cash equivalents and receivables. Receivables
are presented net of allowance for expected credit losses. Credit risk with respect to receivables
is limited due to the large number of customers and their dispersion across different industries.

Cash and cash equivalents
The Group’s cash and cash equivalents measured at amortized cost are considered to have a low
credit risk and the loss allowance is based on the 12 months expected loss. The Group’s cash and
cash equivalents are placed with high credit rating financial institutions with no recent history of
default. Based on management’s assessment, the expected credit loss impact arising from such

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