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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)
64
GB Auto
•
2012 ANNUAL REPORT
3. Financial risk management
(1) Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency exchange rates risk, price risk
and cash flow and fair value interest rate risk), credit risk and liquidity risk. The Group’s efforts are addressed to minimize potential
adverse effects of such risks on the Group’s financial performance.
Market risk
i.
Foreign currency exchange rate risk
The Group is exposed to foreign exchange rate risk arising from various currency exposures, primarily with respect to
the US Dollar, Euro and other currencies. Foreign exchange rate risk arises from future commercial transaction, rec-
ognised assets and liabilities and net investments in foreign operations where its functional and presentation currency
differ from that used by the Group
The below table shows the foreign currency positions, presented in EGP:
2012
2011
Net Assets Net Liabilities
Net Assets Net Liabilities
United States Dollars
354,078
(709,796)
(355,718)
382,812
Euros
283
(956)
(673)
(542)
Other currencies
93,130
(841)
92,289
(13,130)
ii.
Price risk
The Group has no investments in a quoted equity securities so it’s not exposed to the fair value risk due to changes in
prices.
iii.
Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from long-term loans. Long-term loans issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
Loans and borrowings at the balance sheet date with variable interest rates amounted to EGP 1,907,412 and the loans
and borrowings with fixed interest rate amounted to
EGP 615,384. 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 734,688 as of 31 December 2012 (31 December
2011: EGP 609,775).
2012
2011
Time deposit
US $
607,202
311,884
Treasury bills
EGP
91,202
280,519
Time deposit
EGP
36,284
17,372
734,688
609,775
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 receivables
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.