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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
Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liabil-
ity for more than 12 months after the balance sheet date.
R. Employee benefits
(1)Defined contribution plan
The Group pays contributions to the Public Authority for Social Insurance retirement plans on a mandatory basis based on the rules
of the social insurance law. Once contributions have been paid, the Group has no further payment obligations. The regular contri-
butions constitute net year costs for the year in which they are due and as such are included in staff costs.
(2)Profit sharing
When the Group pays cash dividends, the employees are entitled to 10% of those dividends as profit sharing. This is normally paid
in installments during the year. Profit sharing is recognized as a dividend distribution through equity and as a liability when ap-
proved by the Group’s shareholders. No liability is recognized for profit sharing related to undistributed profits.
S. Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that
an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.
T. Trade payables
Trade payables are recognized initially at the value of goods or services received from others, and subsequently measured at amor-
tized cost using the effective interest rate.
U. Derivative financial instruments
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured
at their fair value. Fair values are obtained from quoted market prices in active markets, including recent market transactions, and
valuation techniques, including discounted cash flow models and options pricing models, as appropriate.
All derivatives are presented as assets when it’s fair value is positive and as liabilities when it’s fair value is negative.
V. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary
course of the Group’s activities. Revenue is shown net of sales tax, returns, rebates and discounts and after eliminating sales within
the Group.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits
will flow to the Group and when specific criteria have been met for each of the Group’s activities as described below. The amount of
revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases
its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each
arrangement.
(a)Sales of goods – wholesale
Sales of goods are recognised when a Group entity has delivered products to the wholesaler, the wholesaler has full discretion over
the price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products.
Delivery does not occur until the products have been delivered either in the Group entity warehouse or in the wholesalers locations
depending on the agreements. Accordingly, the risks and benefits have been transferred to the wholesaler, and either the wholesaler
has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective
evidence that all criteria for acceptance have been satisfied.
No element of financing is deemed present as the sales are made on a short credit term basis.
(b)Sales of goods – retail
The Group operates a chain of showrooms for selling. The retail sales are usually made in instalments.