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as two- and three-wheelers and commercial vehicles, in a
difficult FX environment. This is an operational hedge that
we wouldn’t have achieved had we not had access to this
excess liquidity by the end of 2015. As a result, the group
returned to a negative FFO front, albeit in a much better
situation than at the end of 2014.
The group’s net debt stood at LE 4.0 billion, an increase of
LE 1.2 billion compared to 3Q15, and LE 300 million above
the final figure at the end of 2014. Net debt/equity dropped
to 1.0x as of 31 December, 2015 from 1.3x at the end of 2014.
Meanwhile, net debt/ EBITDA from continuing operations
stood at 3.1x vs. 3.5x as at 31 December 2014. Total debt
climbed to LE 5.2 billion at the end of 2015, and includes
LE 1.3 billion of financing business debt, as we continue to
expand and grow our operations. The figure also includes
an FX exposure equivalent to LE 668.8 million. GB Auto is
working to settle its FX debt promptly and has already taken
steps to reduce it.
As we enter 2016 with replenished inventory, a solid pric-
ing strategy, and a rather healthy market demand (despite
natural inflation), we are in a better position to reap the
benefits from our high-growth markets.
We continue to operate a relatively lean company, with CA-
PEX for the full year standing at LE 290.3million (compared
to a depreciation expense of LE 255 million), leaving ample
room for GB Auto’s planned expansion in the Tire and the
Two- and Three-Wheeler businesses, which we expect to
report solid developments on very soon.
Latest Corporate Developments
1. Successful Close of LE 960 mn Capital Increase
via Rights Issue
GB Auto concluded a LE 960 million capital increase in
2015 that saw the company’s issued and paid-in capital rise
to LE 1,094,009,733 through the issuance of 958,672,188
new shares, which became eligible to trade on the Egyptian
Exchange (EGX) on 22 June. Proceeds from the capital in-
crease will be used to support GB Auto’s expansion plans,
which involve the establishment of a plant that assembles
CKD Bajaj motorcycles and three-wheelers in Egypt, as well
as a new tire manufacturing facility. By becoming a local
manufacturer rather than importer of tires, GB Auto will
be able to simultaneously lock-in supplies of products that
match its local demand, while also catering to markets in
the GCC and MENA region, where nearly 99% of tires sold
are imported.
2. GB Auto Launches Fifth Financing Venture
In August, GB Auto announced the launch of its fifth non-
banking financial venture, Tasaheel Microfinance Company,
which offersmuch-needed financing solutions tomicro-entre-
preneurs—anunderserviced segment of the Egyptianpopula-
tion. The newcompany, which is 90%owned by GBAuto and
10% by microfinance veteran EQI, aims to support national
socioeconomic development by helping individuals with
potential realize their goals, becoming agents of growth. The
deployment of capital to the microfinance industry will help
increase household income and improve overall standards of
living within Tasaheel’s target segment. Tasaheel is expected
to grow into a thriving business and plans to establish over
100 branches across the country and employ more than 2,000
people within a five-year timeframe, empowering a new gen-
eration of entrepreneurs to shape the face of the newEgypt.
3. GB Auto Adds Chery Vehicles to its Brand
Portfolio in Tripartite Cooperation Agreement
In October 2015, GB Auto entered into a tripartite coopera-
tion agreement with China’s Chery International and Egypt’s
AF Automotive that will see GB Auto exclusively distribute
Chery vehicles through its nationwide network in Egypt. The
agreement covers CKD and CBU models produced by Chery
International, including sub-compacts, compacts, sedans,
and small SUVs, all with engines in the 1.0L to 2.4L range.
Together, GB Auto and AF Automotive’s combined capacity
could reach up to 90,000 vehicles per annum.
Outlook
The Egyptian economy rests on a number of pillars, includ-
ing a swelling population figure, a key geographic position,
and the existence of multiple free-trade agreements, which
Y-o-Y Increase in Group Net
Profit
34.4
%
9 | GB Auto |
2015