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M. Financial instruments
The Group classifies non‑derivative financial assets into the following categories: financial assets at fair value
through profit or loss, held‑to‑maturity financial assets, loans and receivables and available‑for‑sale financial assets.
The Group classifies non‑derivative financial liabilities into the following categories: financial liabilities at fair value
through profit or loss and other financial liabilities category.
1. Non-derivative financial assets and financial liabilities – Recognition and de-recognition
The Group initially recognises loans and receivables and debt securities issued on the date when they are originated.
All other financial assets and financial liabilities are initially recognised on the trade date when the entity becomes a
party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the
risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecog-
nised financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial posi-
tionwhen, and onlywhen, theGroup currently has a legally enforceable right to offset the amounts and intends either
to settle themon a net basis or to realise the asset and settle the liability simultaneously.
2. Non-derivative financial assets – Measurement
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held- for-trading or is designated
as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred.
Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any
interest or dividend income, are recognised in profit or loss.
Held-to-maturity financial assets
These assets are initiallymeasured at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost using the effective interest method.
Loans and receivables
These assets are initiallymeasured at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost using the effective interest method.
Available-for-sale financial assets
These assets are initiallymeasured at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they aremeasured at fair value and changes therein, other than impairment losses and foreign currency
differences on debt instrument are recognised in OCI and accumulated in the fair value reserve. When these assets
are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
3. Non-derivative financial liabilities – Measurement
Afinancial liability is classified as at fair value through profit or loss if it is classified as held‑for‑trading or is designat-
ed as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred.
Financial liabilities at fair value through profit or loss are measured at fair value and changes therein, including any
interest expense, are recognised in profit or loss.
Othernon‑derivativefinancial liabilities are initiallymeasuredat fair value less anydirectlyattributable transactioncosts.
Subsequent to initial recognition, these liabilities aremeasuredat amortisedcost using the effective interestmethod.
N. Share capital
1. Ordinary Shares
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.
Income tax relating to transaction costs of an equity transaction are accounted for in accordance with EAS No. (24)
“Income Tax”.
2. Repurchase and reissue of ordinary shares (treasury shares)
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly
attributable costs is recognised as a deduction from equity. Repurchased shares are classified as treasury shares
and are presented as a deduction from equity. When treasury shares are sold or reissued subsequently, the amount
received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented
within share premium.
O. Impairment
1. Non-derivative financial assets
Financial assets not classified as at fair value through profit or loss, including an interest in an equity‑ accounted
investee, are assessed at each reporting date to determine whether there is objective evidence of impairment.
Objective evidence that financial assets are impaired includes:
•
default or delinquency by a debtor;
•
restructuring of an amount due to the Group on terms that the Group would not consider otherwise;
•
indications that a debtor or issuer will enter bankruptcy;
•
adverse changes in the payment status of borrowers or issuers;
•
the disappearance of an active market for a security because of financial difficulties; or
•
observable data indicating that there is a measurable decrease in the expected cash flows from a group of finan-
cial assets.
For an investment in an equity security, objective evidence of impairment includes a significant or prolonged decline
in its fair value below its cost.
Financial assets measured at amortised cost
The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All
individually significant assets are individually assessed for impairment.Those found not to be impaired are then col-
lectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not
individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping
together assets with similar risk characteristics.
104 • 2017 ANNUAL REPORT
2017 ANNUAL REPORT • 105
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)