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The below table shows the exposures of foreign currencies at the consolidated balance sheet date, presented in EGP,
as follows
December 31, 2017
December 31,
2016
Assets
Liabilities
Net
Net
US Dollars
1 095 371
(678 174)
417 197
(2 453 531)
Euros
23 067
(3 724)
19 343
22 019
Other currencies
139 790
(48 317)
91 473
99 064
2. Price risk
TheGrouphas no investments inaquotedequity security so it’s not exposed to the fair value riskdue tochanges inprices.
3. Cash flows 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. Long-termborrowings issued at fixed rates expose theGroup to fair value interest rate risk.
Loans, borrowings and overdrafts at the balance sheet date with variable interest rates are amounted to EGP 9 485
296 as at December 31, 2017 (EGP 8 732 109 as at December 31, 2016).
Financial assets that carry fixed interest rates are amounted to EGP 100 670 as at December 31, 2017 (EGP 144 270 as
at December 31, 2016).
December 31,
2017
December 31,
2016
Time deposits
USD
64 628
139 980
Time deposits
EGP
36 042
4 290
100 670
144 270
B. Credit risk
Credit risk ismanagedona groupbasis. Credit risk arises fromcashandcashequivalents, anddepositswithbanks, as
well as credit exposures to wholesalers and retail customers, including outstanding accounts and notes receivables.
For banks, theGroup is dealingwith the bankswhich have a high independent rating and bankswith a good solvency
in the absence of an independent credit rating.
For suppliers and wholesalers, the Credit Controllers assess the credit quality of the wholesale customer, taking into
account their financial position, past experience and other factors.
For individuals the legal arrangements anddocuments acceptedby the customer areminimizing the credit risk to its
lowest level. Provisions are accounted for doubtful debts on an individual basis.
The ratio of allowance for impairment of accounts and notes receivables to the total debts is as following:
December 31,
2017
December 31,
2016
Notes and accounts receivables
9 678 810
4 021 697
Impairment of accounts and notes receivable balances
(415 808)
(379 729)
The ratio of the allowance to total accounts and notes receivable
4.29%
9.44%
C. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an ad-
equate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group’s
management aims at maintaining flexibility in funding by keeping committed credit lines available.
2. Fair value estimation
The fair value of financial assets or liabilities withmaturity dates less than one year is assumed to approximate their
carrying value less any estimated credit adjustments. The fair value of financial liabilities – for disclosure purposes
– is estimated by discounting the future contractual cash flows at the currentmarket interest rate that is available to
the Group for similar financial instruments.
For the fair value of financial instruments that are not traded in an active market, The Group uses a variety of meth-
ods andmakes assumptions that are basedonmarket conditions existing at eachbalance sheet date. Quotedmarket
prices or dealer quotes for the financial instruments or similar instruments are used for long-termdebt.
Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining finan-
cial instruments. At the balance sheet date, the fair value of non-current liabilities does not significantly differ from
their carrying amount, as the interest rates do not significantly differ.
92 • 2017 ANNUAL REPORT
2017 ANNUAL REPORT • 93
GB Auto (S.A.E.)
Notes to the consolidated financial statements for the financial year ended December 31, 2017
(In the notes all amounts are shown in Thousand Egyptian Pounds unless otherwise stated)