Consolidated Financial Statements 2023 · Page 37

Public Investment Fund and its subsidiaries 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 
(All amounts in million SAR unless otherwise stated) 
Classification: External Confidential 
34 
 
4. 
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 
 
4.14 
Impairment on other financial assets (continued) 
 
For individually significant assets in Stage 3, impairment allowances are calculated on an individual basis 
and all relevant considerations that have a bearing on the expected future cash flows across a range of 
economic scenarios are taken into account. These considerations can be particularly subjective and can 
include the business prospects for the customer, the realizable value of collateral, the Group’s position 
relative to other claimants, the reliability of customer information and the likely cost and duration of the 
work-out process.  Furthermore, judgements change with time as new information becomes available or 
as work-out strategies evolve, resulting in revisions to the impairment allowance as individual decisions are 
taken. Changes in these estimates would result in a change in the allowances and have a direct impact on 
the impairment charge. 
 
Financial assets which have been renegotiated or modified are no longer considered to be past due and 
are replaced on performing status when all principal and interest payments are up to date and future 
payments are reasonably assured. Financial assets subject to individual impairment assessment and whose 
terms have been renegotiated, are subject to ongoing review to determine whether they remain impaired 
or should be considered past due. All renegotiated or modified facilities are classified as stage 2 or stage 3 
for a minimum period of 12 months from the date of renegotiation. The ECL on renegotiated financial 
instruments is measured based on whether the terms of renegotiation resulted in the derecognition of an 
existing asset. Also refer to note 41. 
 
4.15 
Identification of Cash Generating Units (CGUs)  
 
The classification of assets into CGUs requires significant judgement and interpretations with respect to the 
integration between assets, generation of independent cash flows by the assets, the existence of active 
markets and external users. Significant judgement is involved in determination of the CGUs. 
 
4.16 
Classification of property  
 
The Group determines whether a property is classified as investment property, owner-occupied property or 
inventory property: 
• 
investment property comprises land and buildings (principally offices, retail and residential property) 
that are not occupied substantially for use by, or in the operations of, the Group, nor for sale in the 
ordinary course of business, but are held primarily to earn rental income and capital appreciation. These 
buildings are substantially rented to tenants and not intended to be sold in the ordinary course of 
business. 
• 
property being developed for the Group’s own use and hotels under-development for which the 
operational model is to outsource the day-to-day functions to an operator and risks or exposure over 
cash flows is with the Group, are classified as owner-occupied property. 
• 
inventory property comprises property that is held for sale in the ordinary course of business and is 
classified as inventory property. 
 
The Group determines whether a property qualifies as an investment property. In doing so, the Group 
considers whether the property