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GB Auto and its Subsidiaries (S.A.E)
Notes to the Consolidated Financial Statements
For the year ended 31 December 2012
(In the notes all amounts are shown in thousand Egyptian pounds unless otherwise stated)
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GB Auto
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2012 ANNUAL REPORT
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised
directly in the income statement
Inter-Company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised
losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the Group.
(b) Transactions and minority interests
The Group recognize transactions with minority interests as transactions with non related parties to the Group. Gains and losses
resulted from selling equity to minority interest are recorded in the income statement. Purchases from minority interests result in
goodwill, being the difference between the consideration paid and carrying value of the share acquired of net assets of the subsidi-
ary.
If the losses applicable to the minority in a consolidated subsidiary exceed the minority interest in the subsidiary’s equity, the excess,
and any future losses applicable to the minority, are allocated against the majority interest except to the extent that the minority has
a binding obligation and is able to make an additional investment to cover the losses. If the subsidiary subsequently reports profits,
such profits are allocated to the majority interest until the minority’s share of losses previously absorbed by the majority has been
recovered.
(c) Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding
of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost.
The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-
acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the as-
sociate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset trans-
ferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by
the Group.
C. Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Egyp-
tian Pounds which is the Group’s functional and presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.