Basic HTML Version
2012 ANNUAL REPORT
12
Management Review and Financial Performance
GB Auto closed financial year 2012
with top-line growth despite challenges
presented by the shortage of supply from
its major OEM (Original Equipment
Manufacturer) in Egypt and Iraq, and soft-
ness in consumer demand in Egypt due
to economic and political instability. The
combined impact of these factors led to a
more challenging year than 2011, the year
of the 25th of January revolution.
Top-line growth in the 12% range thus
reflects sharp growth in the Motorcycles
and Three Wheelers business, a remark-
able increase in the Passenger Car business
in Iraq as well as standout performances by
the Tires and Financing Businesses.
The company’s FY12 GPM of 12.9% is
higher than FY11 by 1 percentage point.
As a result, the group has been in a posi-
tion to absorb higher SG&A spending
associated with the expansions and new
businesses achieving a net profit before
non-controlling interest for FY12 of LE
275.9 million, a 23.7 % increase over FY11.
Management continues to maintain a
strong emphasis on working capital drivers
and is paying careful attention to balancing
its working capital cycle despite the chal-
lenges associated with the growing nature
of our business.
Management is also focused on efficient-
ly monitoring inventory levels, and has de-
cided to secure a higher level of inventory
at a lower cost, due to the rapid devalua-
tion of the Egyptian pound. Accordingly
the level of inventory had increased by LE
492 million at year-end.
Despite the LE 143 million increase of
the accounts and notes receivable as a
result of the revenue increase, the close
monitoring and control of receivables
helped reduce the collection period from
32 days in 2011 to be 30 days in 2012.
The group generated positive cash flows
from operations in 2012 and continued
paying its obligations in a timely manner.
The year just ended, therefore, under-
scores that GB Auto is in a good position
to continue investing in its expansion plans
while ensuring efficient management of its
current operations. The business’ cash flow
generation puts it in a favorable position
to withstand variability in its supply situ-
ation while continuing to deliver strong
performance.
Latest Corporate Developments
1) Regional Expansion
Early in the first quarter of 2013, GB Auto
announced that it has made progress in its
strategy for regional expansion, entering
the Algerian and Libyan markets, with
new passenger car, commercial vehicles
and tires representations. The company is
actively investigating potential opportuni-
ties in additional regional markets.
2) Brand Representations
GB Auto has secured brand representa-
tions for YTO tractors in Egypt; Geely
passenger cars in Algeria and Libya; Great
Wall pickup trucks in Libya; Sino trucks in
Egypt; Diamond Back tires in Egypt, Iraq
and Jordan; Westlake tires in Iraq; Lassa,
Grandstone and Rotalla tires in Algeria;
and Triangle tires in Libya. The company
is in late-stage negotiations and testing on
a number of other brands that will serve to
round out its product portfolio.
3) Ignition
In early February 2013, GB Auto wel-
comed 25 young graduates to the first ses-
sion of our new annual Graduate Training
Program. The program, Ignition, combines
classroom and on-the-job training for
promising new graduates, providing them
with key theoretical and practical job skills.
Management fully expects that Ignition
will prove to be an important element of
our employee education and excellence
programs as we grow the business, both in
Egypt and regionally.
4) UN Global Compact
GB Auto is proud to be a signatory to the
UN Global Compact, which is an initiative
allowing enlightened global businesses to
align their operations and strategies to the
guiding principles of the United Nations.
The focus is on ensuring that markets,
commerce, technology and finance
advance in ways that benefit economies
and societies everywhere, through the
application of ten principles in the areas of