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During the full year of 2014, GB Auto
revenues increased 35% over FY13,
while total gross profits increased 35.2%
resulting in stable gross profit margins
at 12.8%. EBITDA margins improved by
50 basis points in the same period, as
EBITDA reached LE 1.1 billion.
The improvement in operating margins
did not trickle down to the bottom line for
twomain reasons: a) the impact of FOREX
expenses totaling LE 157 million during
the year; b) the impact of an income tax
expense in FY14 of LE 90 million as the
company paid an effective tax rate of
27.7% because of the increase in tax rates,
and the improved profitability of the ma-
jority of its primary business lines.
GB Auto’s total debt climbed to LE 4.8
billion, a figure that included the Financ-
ing Business’s debt, which represented
c.20% of the total group debt reaching
LE 907 million, as well as a shareholder
loan approved at a general assembly of
shareholders held on 2 June 2014.
GB Auto has concluded two loan
agreements with its main shareholder
(including a USD tranche and another
in Egyptian pounds). The balance of the
shareholder loan at 31 December 2014,
including accrued interest, stood at LE
516
million; the loan carries an annual
interest rate of 10.5% on the LE tranche
(against the company’s current average
borrowing rate of 11.92%) and of 3.25% on
the USD portion (compared with 4.21% as
the current average rate). The shareholder
loan is expected to be settled upon the
completion of the capital increase process.
While the Passenger Car division was
able to decrease its excess inventory
during 2014, the demand growth for the
Commercial Vehicles & Construction
Equipment line of business required
higher inventory levels leading to an
overall increase in the inventory bal-
ance. This, together with the increase
in receivables from sales to government
entities, resulted in pressure on the op-
erating cash flow.
Looking
ahead, as the economy con-
tinues to improve and demand contin-
ues to grow, management expects to see
continued improvement of key financial
indicators. GB Auto is continuously
working on growing its product port-
folio while enhancing profitability by
going up the value chain in its most
Management
Review and
Financial
Performance
“As the company continues to invest in higher-
margin activities, management foresees an
improvement in net profit margins.”
Ghabbour Auto | 2014 ANNUAL REPORT
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