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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)
61
GB Auto
•
2012 ANNUAL REPORT
and other changes in the carrying amount of the security. The translation differences on monetary securities are recognised in the
income statement, while translation differences on non-monetary securities are recognised in equity. Changes in the fair value of
monetary and non-monetary securities classified as available-for-sale are recognised in equity.
Interest on available-for-sale securities (bonds, treasury bills) calculated using the effective interest method is recognised in the
income statement as part of financial income. Dividends on available-for-sale equity instruments are recognised in the income state-
ment as part of other income when the Group has the right to receive these dividends.
The Group assesses at balance sheet date whether there is objective evidence that a financial asset or a Group of financial assets are
impaired.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are
included in the income statement as ‘gains or losses from investment securities’.
M. Trade receivables and notes receivable
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest meth-
od, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency
in payments (more than granted credit limits) are considered indicators that the trade receivable is impaired. The amount of the
provision is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted
at the original effective interest rate used to determine the amortized cost. The carrying amount of the asset is reduced through the
use of an allowance account, and the amount of the loss is recognised in the income statement. When a trade receivable is uncollect-
ible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are
credited against ‘selling and marketing costs’ in the income statement.
N. Cash and cash equivalent
In the consolidated balance sheet, bank overdrafts are shown within borrowings in current liabilities.
For the purposes of the consolidated cash flow statement presentation, cash and cash equivalents comprise cash on hand, banks
deposits held at call, banks deposits and treasury bills with original maturities of year or less.
O. Share capital
Ordinary shares are classified as equity. Share premiums, if any, are taken to statutory reserve. The costs of issuing capital and
amounts collected from shareholders to recover such costs are taken to the statutory reserve initially, and if it exceeded the share
premium for the same shares the excess amount is posted to special reserve in equity.
Where the Company or it’s subsidiaries purchases share capital of the parent company, the consideration paid including any attribut-
able incremental external costs is deducted from total shareholders’ equity of the parent company as treasury shares until they are
cancelled, sold, or reissued within one year from the date of purchase. Where such shares are subsequently sold or reissued, any
consideration received is included in shareholders’ equity of the parent company.
P. Share based payments
The Company has equity settled share based compensation plan. Equity settled share based payments are measured at fair value
determined at the grant of the equity settled share based payments. The fair value of the share based payment is charged over the
vesting period based on the Company’s estimate of awards that will eventually vest.
Q. Loans and borrowings
Loans are recognised initially at the amount of the proceeds received, net of transaction costs incurred. Loans are subsequently car-
ried at amortised cost using the effective interest method; any difference between proceeds (net of transaction costs) and the redemp-
tion value is recognised in the income statement over the borrowings periods.
The fair value of the liability portion of a convertible loan is determined using a market interest rate for an equivalent non-convert-
ible bond. This amount is recorded as a liability at the initial recognition and subsequently carried at an amortised cost until the
nearest of conversion or maturity of the bonds. The difference between the proceeds and the fair value of the liability portion is
recognised in shareholders’ equity.