67 / 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)
The gearing ratio at December 31, 2014 and December 31, 2013 were as follows:
December
31, 2014
December
31, 2013
Total loans and borrowings and notes payable
Loans, borrowings and overdrafts
4 825 691
3 311 975
Notes payable (short-term)- suppliers
143 458
132 431
Notes payable (long-term) and creditors
-
150
Total loans and borrowings and notes payables
4 969 149
3 444 556
Less: cash and cash equivalent
(1 177 577)
(1 085 105)
Net debt
3 791 572
2 359 451
Shareholders’ equity
2 136 141
2 011 302
Total Shareholders’ equity
5 927 713
4 370 753
Gearing ratio
64%
54%
3. Fair value estimation
The fair value of financial assets or liabilities with maturity dates less than one year is assumed to approximate their carry-
ing value. The fair value of financial liabilities – for disclosure purposes – is estimated by discounting the future contrac-
tual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques.
The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance
sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt.
Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining finan-
cial instruments. At the balance sheet date, the fair value of non-current liabilities do not significantly differ from their
carrying amount.
4. Critical accounting estimates and judgments
1. Critical accounting estimates and assumptions
Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are outlined below.
(a) Impairment of accounts and notes receivables
The evaluation of the impairment value in accounts and notes receivables is made through monitoring aging of the re-
ceivable. The Group management is studying the credit position and the customers’ ability to pay their debts falling due
within the credit limits granted to them. Impairment is recorded at values of the due amounts on the customers where
the Group management determine that their credit position does not allow them to settle their liabilities.
(b) Warranty provision
The Group provides warranty for the manufacturing defaults concerning the local manufactured products.
The warranty provision is estimated based on the expected cost for providing the warranty service. These costs include
the value of spare parts, labour cost and a share of indirect costs. This estimation is based on management experience
resulting from the actual warranty costs for the 3 preceding years. Management does not take into consideration the
present value of the expected warrant cost when estimating the warranty provision, and also the inflation rate is not
considered for this purpose.
Ghabbour Auto | 2014 ANNUAL REPORT
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