Amal Ltd | Annual Report 2024-25 Amal Ltd 130 Note 27.6 Fair value measurements (continued) There were no transfers between any levels during the year. Level 1: This hierarchy includes financial instruments measured using quoted prices. The fair value of all equity instruments that are traded on the stock exchanges is valued using the closing price as at the reporting period. Level 2: The fair value of financial instruments that are not traded in an active market (for example overthe-counter derivatives) is determined using valuation techniques, which maximise the use of observable market data and rely as little as possible on entity-specific estimates. The mutual fund units are valued using the closing net assets value. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. b) Valuation techniques used to determine fair value Specific valuation techniques used to value financial instruments include: i) the use of quoted market prices or dealer quotes for similar instruments ii) the fair value of the remaining financial instruments is determined using discounted cash flow analysis c) Valuation processes The Finance department of the Company includes a team that performs the valuations of financial assets and liabilities with assistance from independent external experts when required, for financial reporting purposes, including level 3 fair values. Note 27.7 Financial risk management The business activities of the Company are exposed to a variety of financial risks, namely liquidity risk, market risk and credit risk. Responsibility for the establishment and oversight of the risk management framework lies with the Senior Management of the Company. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the risk management policies of the Company. The key risks and mitigating actions are also placed before the Board of the Company. The risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the activities of the Company. This note explains the risks which the Company is exposed to and how the Company manages the risks in the Standalone Financial Statements. Risk Exposure arising from Measurement Management Credit risk Trade receivables, financial assets measured at amortised cost Aging analysis and credit rating Diversification of investments in mutual fund and credit limits Liquidity risk Cash and cash equivalents, borrowings and other liabilities Rolling cash flow forecasts Availability of committed credit lines and borrowing facilities Market risk Investments in mutual funds Analysis of returns Portfolio management in accordance with risk management policy
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