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Financing Businesses
HaramTourismTransport (HTT, also known as Haram
Limousine) operates as a car rental/quasi-operational
lease company. It is the premier vehicle fleet leasing
company in Egypt, and serves top-tier multinationals,
financial institutions, as well as private sector com-
panies, with its average tenor standing at three years.
HTT supports its clients by enabling them to focus on
their core competencies and strengths while directing
scarce funding resources to mainstream operations;
leaving vehicle sourcing and management to HTT. The
company’s service agreements entail acquisition, reg-
istration, and maintenance of the vehicle, in addition
to insurance that extends to third-party damage and
passengers within the vehicle.
Tasaheel is themost recent addition toGBAuto’sportfolio
of financing businesses, launched in August 2015 to pro-
vide direct microfinance lending to eligible clients, with
a specific focus on group lending to women. Through
Tasaheel, GB Auto aims to help low-income earners gen-
erate higher returns to improve their living standards,
which in turn supports overall community development
and economic growth. At the end of 2017, the company
had 102 operational branches serving 247,000 customers
withmore than 2,500 employees, and aims to add at least
an additional 100 branches and have over 4,500 people in
employment by 2020. Like Drive and GB Lease, Tasaheel
operates under the auspices of the FRA.
2017 Business Review
GB Capital has continued to show phenomenal perfor-
mance over 2017 as the business grows into a full-fledged
financial operation. Overall revenues came inatLE3,381.1
million in FY17, up 36.7% y-o-y. Total gross profit rose to
LE 638.2 million in 2017 from LE 365.4 million the year
before, showing an increase of 74.7%y-o-y.
GB Capital’s ROAE stood at 34.2% and ROAA of 21.2%,
ahead of cost capital. The business continued to main-
tain a healthy loan portfolio quality throughout the year,
with non-performing loans (NPLs) at 1.9% and an NPL
coverage ratio of 129.6%. The high ratio reflects the com-
pany’s prudent risk policies andprovisions taken against
its growing portfolio, with varying provisioning levels
taken through each risk bucket. While the NPL ratio
remains well under market norms, it grew throughout
2017 due to conservative risk rating policies as the year
saw interest rates and inflation mount. GB Capital’s
loans/receivables portfolio rose c.51.0% in FY17, with
portfolio health and quality remaining solid and intact.
The company’s provision levels commensurately grew in
line with loan portfolio growth as a matter of prudent
riskmanagement. GBCapital’s loans/receivables portfo-
lio health is supported by a number of factors, key being:
1) net financed assets are typically a percentage of total
financed assets as clients provide an initial down pay-
ment and make further repayments over the financing
term, 2) all financing businesses companies maintain
sufficient collateral and/or title against the financed
portfolio, and 3) there is an inherent incremental cush-
ion embedded in the value of the financed assets, which
has increased on account of the prevailing high inflation
rates and the devaluation of the Egyptian pound.
Exposure related to GB Auto & Auto Related accounts
for less than c.11.0% of GB Capital ’s loans/receivables
portfolio. Its model is built on the companies’ ability to
obtain leverage against their lending portfolios, which
differs from the trading or manufacturing business
model in terms of the amount of debt incurred and the
tenor of such debt by any company. GB Capital com-
panies remain strongly under-leveraged compared to
industry norms and regulatory caps which, in light
of the nature of the business, allow the companies to
borrow up to 8x shareholders’ equity for GB Lease and
Drive, and up to 10x shareholders’ equity for Tasaheel.
Standard total leverage for GB Capital stood at 4.51x at
the end of the year, compared to 3.55x as per the regula-
tor’s definition (calculated as non-current bank debt to
equity for the leasing and factoring business, while all
other activities are calculated based on the total bank
debt, as FRA requirements). GB Capital related compa-
nies’ debt stood at LE 4.4 billion at the end of 2017, with
debt levels expected to continue rising as the company
funds its growing operations.
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2017 ANNUAL REPORT
2017 ANNUAL REPORT
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