66 / 88
GB Auto and its subsidiaries (S.A.E.)
Notes to the consolidated financial statements For the financial Year ended December 31, 2014
(In the notes all amounts are shown in Thousand Egyptian Pounds unless otherwise stated)
691 (EGP 3 006 853 as at December 31, 2013) and the loans and borrowings with fixed interest rate are amounted to zero
(EGP 305 122 as at December 31, 2013). The fair value for borrowings with fixed interest rate is approximately near its
fair value at the balance sheet date.
Financial assets that carry fixed interest rates are amounted to EGP 324 374 as at December 31, 2014 (EGP 306
822 as at December 31, 2013).
December
31, 2014
December
31, 2013
Time deposits
US $
322 032
300 738
Time deposits
EGP
1 607
4 653
Treasury bills
EGP
736
1 431
324 375
306 822
(iv) Credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, and deposits with banks
and financial institutions, as well as credit exposures to wholesalers and retail customers, including outstanding re-
ceivables and committed transactions.
For banks and financial institutions, the Group is dealing with the banks which have a high independent rating and
banks and financial institutions with a good reputation.
For the wholesalers, the Credit Controllers assess the credit quality of the wholesale customer, taking into account
their financial position, their market reputation, past experience and other factors.
For individuals the legal arrangements and documents accepted by the customer are minimizing the credit risk. Pro-
visions are accounted for doubtful debts on an individual basis.
The ratio of allowance for impairment of accounts and notes receivables to the total debts is as following:
December
31, 2014
December
31, 2013
Notes and accounts receivables
2 014 749
1 371 556
Allowance for impairment of accounts and
notes receivable balances
(267 005)
(264 137)
The ratio of the allowance to total debts
13%
19%
(v) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an ad-
equate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group’s
management aims at maintaining flexibility in funding by keeping committed credit lines available. Financial risk
management (continued)
2. Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, re-
turn capital to shareholders, issue new shares or sell assets to reduce debt.
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 loans and borrowings and notes payables, less cash and cash equivalents. Total capital is
calculated as equity, as shown in the consolidated balance sheet, plus net debt.
Ghabbour Auto | 2014 ANNUAL REPORT
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