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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)
65
GB Auto
•
2012 ANNUAL REPORT
For the wholesalers, the Credit Controllers assess the credit quality of the wholesale customer, taking into account their
financial position, their market reputation, past experience and other factors.
For individuals the legal arrangements and documents accepted by the customer are minimizing the credit risk. Provi-
sions are accounted for doubtful debts on an individual basis.
The ratio of allowance for impairment of accounts and notes receivables is as following:
2012
2011
Notes and accounts receivables
1,095,110
913,128
Allowance for impairment of accounts and notes receivable
(257,406)
(249,587)
Allowance receivables
24%
27%
v.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate
amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group’s manage-
ment aims at maintaining flexibility in funding by keeping committed credit lines available.
(2) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capi-
tal to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is
calculated as total loans and borrowings and notes payables, less cash and cash equivalents. Total capital is calculated as equity, as
shown in the consolidated balance sheet, plus net debt.
The gearing ratios at 31 December 2012 and 31 December 2011 were as follows:
Description
2012
2011
Total loans and borrowings and notes payable
Borrowings
2,517,654
2,053,557
Notes payable long-term suppliers
115,533
9,090
Notes payable short-term suppliers
73,234
43,373
Notes payable short-term – lease contract
-
633
Total loans and borrowings
2,706,421
2,106,653
Less: cash and cash equivalent
(1,262,755)
(1,158,759)
Net debt
1,443,666
947,894
Total shareholders’ equity
2,106,259
1,983,980
Total capital
3,549,925
2,931,874
Gearing ratio
41%
32%
(3) Fair value estimation
The fair value of financial assets or liabilities with maturity dates less than one year is assumed to approximate their carrying value.
The fair value of financial liabilities – for disclosure purposes – is estimated by discounting the future contractual 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