ZaraAnnual-English2013

Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other
party to incur a financial loss. The Group is exposed to credit risk on its bank balances, receivables and certain other
assets as reflected in the consolidated statement of financial position.
The Group seeks to limit its credit risk with respect to banks by only dealing with reputable banks and with respect to
customers by setting credit limits for individual customers and monitoring outstanding receivables.
The Group provides services to large number of customers. No single customer accounts for more than 10% of
outstanding accounts receivable at 31 December 2012.
31. Fair Value of Financial Instruments
Financial instruments comprise of financial assets and financial liabilities.
Financial assets consist of cash and bank balances, accounts receivable and some other current assets. Financial liabilities
consist of due to banks, loans, accounts payable, and some other current liabilities.
The fair values of financial instruments are not materially different from their carrying values.
Liquidity risk
The Group limits its liquidity risk by ensuring bank facilities are available.
The table below summarises the maturities of the Group’s undiscounted financial liabilities based on contractual payment
dates and market interest rate.
On demand
Less than 3
months
3 to 12
months
1 to 5 years Total
At 31 December 2013 JD JD JD JD
Accounts payable and other
liabilities
- 8,940,276 409,328 - 9,349,604
Due to banks 2,549,486 - - - 2,549,486
32. Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains capital ratios in order to support its
business and maximize shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in business conditions. No changes
were made in the objectives, policies or processes during the current and previous year.
Capital comprises of paid-on capital, advance payment on capital increases, statutory reserve, voluntary reserve, cumulative
change in fair value and retained earnings (accumulated losses), and is measured at JD 167,198,311 as at 31 December 2013
(2012: JD 169,435,715).
Long and short-term loans - - 15,574,786 52,506,880 68,081,666
Total 2,549,486 8,940,276 15,984,114 52,506,880 79,980,756
At 31 December 2012
Accounts payable and other
liabilities
- 10,409,820 557,993 - 10,967,813
Due to banks 1,145,603 - - - 1,145,603
Long and short-term loans - - 18,026,098 65,499,912 83,526,010
Total 1,145,603 10,409,820 18,584,091 65,499,912 95,639,426
Currency risk
Most of the Group’s transactions are in Jordanian Dinars and US Dollars. The Jordanian Dinar exchange rate is fixed against USD
(US$ 1.41 for JD 1). Accordingly, the Group is not exposed to risk significant currency risk.
96 Consolidated Financial Statements Annual Report 2013 97