auto.ca gb auto 4q & fy15 results: on the egyptian...

14Q / FY 2015 Earnings Newsletter

GB Auto (AUTO.CA)Earnings Release: 4Q / FY 2015

Full Year 2015 Financial Highlights

• GBAutorevenueforthefullyearof2015decreasedby0.5%toLE12,264.7millioncomparedtoLE12,322.1millioninFY14.

• NetincomewasLE233.1millioninFY15,risingby34%fromLE174.0mil-lionin2014.Netprofitmarginimprovedby0.5percentagepoints,comingto1.9%attheendoftheyear.

• PassengerCarsrevenuewitnesseda15.9%dropyear-on-yearinFY15toLE7,489.9millionfromLE8,909.9millioninFY14.

• MotorcyclesandThree-Wheelersrevenuerose49.7%inFY15toLE1,997.2millionfromLE1,334.0millionintheyearprior.

• Commercial Vehicles and Construction Equipment revenue climbed up45.5%duringFY15toLE1,327.9millionfromLE912.9millioninFY14.

• TirespostedrevenueofLE324.4million,a21.9%dropfromLE415.2mil-lioninFY14.

• FinancingBusinessesrevenuesstoodatLE1,046.2millioninFY15,a44.8%increaseoverLE722.7millionthepreviousyear.

• Others revenue reachedLE79.0million,up188.6% fromLE27.4millioninFY14forPre-OwnedVehicles,legacyfleettransportationcontracts,andLubricants.

Fourth Quarter 2015 Financial Highlights

• GBAuto revenue in 4Q15 dropped 23% to LE 2,689.3million from LE3,491.5millionin4Q14.

• NetincomecameinatLE28.1millionin4Q15,a12.3%dropfrom4Q14figures;netprofitmarginclimbed0.1percentagepointsto1.0%.

• PassengerCarsrevenuedipped34.9%year-on-yeartoLE1,498.8millionfromLE2,303.6millionin4Q14.

• MotorcyclesandThree-Wheelersrevenuefell11.1%in4Q15toLE485.9millionfromLE546.7millionin4Q14.

• Commercial Vehicles and Construction Equipment revenue closed thequarteratLE286.8million,an8%increasefromLE265.5millionin4Q14.

• Tiresrevenueregistereda15.4%decreaseinthequartertoLE90.5million.

• FinancingBusinessesrevenue increasedby14.5%toLE294.4million in4Q15.

• Others revenuecame inat LE32.9million,growingby184.2% forPre-OwnedVehicles,legacyfleettransportationcontracts,andLubricants.

AUTO.CAontheEgyptianExchange

GB Auto’s Shareholding Structure as of 31 December 2015

GB Auto 4Q & FY15 Results: Highlights

Ghabbour Family

Free Float

58.7%

41.3%

2


GB Auto Reports 4Q & FY15 ResultsLeading auto industry player reports bottom-line growth for the year 2015, despite challenging macroeconomic backdrop and resultant operational difficulties.

15 March 2016 —(Cairo, Egypt)GBAuto(AUTO.CAontheEgyptianExchange),aleadingautomo-tiveassembleranddistributorintheMiddleEastandNorthAfrica,announcedtodayitsconsolidatedresultsforthefourthquarterandfullyearof2015,reportingrevenuesofLE12,264.7millionforFY15,down0.5%y-o-y.Netprofitrose34%y-o-y,closingtheyearatLE233.1million,withanetprofitmarginof1.9%,anincreaseof0.5percentagepointsoverFY14.“2015isthefirstyeartoseeGBAutopostadropinitstop-linesinceitsIPOin2007.However,

thecompany’sperformance thispastyearhasbeen impressive,givencurrentcircumstances–especiallytheforeigncurrencyshortageinEgypt,”saidGBAutoChiefExecutiveOfficer,RaoufGhabbour.“Theyearhasbeenatruetestamenttoourincisivestrategyandthecompetenceanddepthofourmanagementapproach.Moreover, followingyesterday’s14.3%devaluationof theEGPbytheCBE,averyboldmoveinouropinion,webelievethatforeigncurrencypolicyisontherighttrackandthattheFXshortagewillsoonbebehindus.”Overall,thePassengerCarsdivisionsawrevenuesdeclineby15.9%y-o-yinFY15toLE7,489.9

millionfromLE8,909.9millionintheyearbefore,onthebackofa21.2%decreaseinsalesvolumes.ThedropwasmainlyowingtoadecreaseinrevenuesfromIraqbyhalf,butalsototheimpactoftheforeigncurrencydeficitinEgyptonimportactivities.TheMotorcycles&Three-Wheelerslineofbusinessshowedgreatresilienceinthefaceofthe

foreigncurrencyshortage,recordinga49.7%y-o-yincreaseinFY15revenues,whichstoodatLE1,997.2millionatyear’send.OntheCommercialVehicles&ConstructionEquipmentfront,theLOBremainedsolid,growing

salesoverallrevenuesby45.5%overFY14toLE1,327.9,mainlyonthebackofincreasedvolumesandrevenuefromthebussegment.Tires,ontheotherhand,sawrevenuesdeclineby21.9%y-o-yduringtheyeartoreachLE324.4millionfromLE415.2million.ThedivisionwashitthehardestbytheFXblow,asdelaysincurrencyallocationmadeitdifficulttomeetmarketdemandandcostthecompanymuchindemurrages.However,theTiresdivisionbeganshowingsignsofrecoverystarting4Q15.Meanwhile,ourFinancingBusinessesreportedexcellentresults,postinga44.8%increaseinover-

allrevenuesascomparedto2014,whichreachedLE1,046.2millionattheendofthefinancialyear.OurnewestfinancingventureTasaheelhasalsorecordedpromisingresultsduringitsfirstquarterinoperation,andmanagementisconfidentitisboundforthesamesuccessachievedbyGBCapital’sotherfinancingbusinesses.“Itismybeliefthatdifficultcircumstancesarewhenthebestopportunitiesgenerallyariseandwe

arefullyconfidentwecanfacetheseheadwindsandusethemtoourownbenefit,”saidGhabbour.“Itisintimeslikethesethatwemustbegintoinvestandworkhardtoplaceourselvesinaposi-tionthatwillallowustocapturegreaterreturnsandrewardsfromtheinevitablemarketrebound.“Iamwellawarethatwearenotoutofthewoodsyetandthatthetimesaheadwillcomewith

theirownsetofchallenges,”Ghabbourcontinued.“Luckily,ourexperienceisvastwhenitcomestodealingwithdifficultiesandourstrategiesforcurrenttimesweredevelopedfromthatsameplay-bookthatsuccessfullycarriedusthroughtryingtimessuchasEgypt’sfirstcurrencycrisisin1981,theglobalfinancialcrisisof2009,andthepoliticalturbulencethatbeganin2011.IremainconfidentintheunderlyingfundamentalsoftheEgyptianautomotivemarketnowthatoureconomyisontherighttrack.”GBAutoisheadinginto2016withfivedifferentCKDmodelscomparedtoonlytwolastyear,

markinganimportantmilestoneintwodecadesofcarassemblyoperations.AmongkeyoperationalhighlightsthisyearisGBAuto’stripartiteagreementwithEgypt’sAboul

FotouhAutomotiveandChina’sCheryInternational,whichwillseethecompanybecometheex-clusivedistributorofCheryinEgypt.Together,GBAutoandAFAutomotive’scombinedcapacitycouldreachupto90,000vehiclesperannum.HighlightsofGBAuto’s4QandFY15resultsfollow,alongwithmanagement’sanalysisofthe

company’sperformance.Completefinancialsareavailablefordownloadonir.ghabbourauto.com.

It is my belief that difficult circumstances are when the best op-portunities generally arise and we are fully confident we can face these head-winds and use them to our own benefit.



Fourth Quarter 2015 at a Glance

Financing Businesses

Startups

Tires

Commercial Vehicles & Construction Equipment

Motorcycles & Three-Wheelers

PassengerCars

1.8%

Gross Pro�t Contribution by Line of Business

4.8% -1.0%2.0%

1.4%

-0.7%2.8%

1.1%

6.0%

68.3

%22.4

%

3.8%

-1.8%

-0.3%

3.0%

5.3%

65.3

%

18.7

%

3.5% 13.1%

54.1

%24.2%

10.0

%

4.1%

44.0

%

23.4%

16.6%

67.5

%

25.4

%

11.1%

4Q12

3.3%3.4%

70.3%

18.4

%

4Q13

3.3%

4.6%

4.6%

5.5% -0.1%

72.2

%

14.6

%

4Q14

7.6%

3.1%

7.4%

4Q15

1.2%

0.3%

3.4%

10.9%

55.7

%18.1%

Revenue Contributionby Line of Business

4Q11

0.1%5.4%

1.9%2.7%

76.3

%

13.6

%

66.0

%15.7

%10

.7%

Key Indicators(all �gures in LE million)

4Q11

1,877.5

4Q12

2,354.2

4Q13

2,818.9

4Q14

3,491.5

2,689.3

4Q15

4Q11 4Q12 4Q13 4Q14 4Q15

4Q11 4Q12 4Q13 4Q14 4Q15

4Q11 4Q12 4Q13 4Q14 4Q15

Revenues

243.0

354.9 347.5

413.5 409.3

Gross Pro�ts

131.9

206.7

175.6

235.4

130.1

EBIT

43.6

77.5

45.1

32.128.1

Net Income



Full Year 2015 at a Glance

Financing Businesses

Startups

Tires

Commercial Vehicles & Construction Equipment

Motorcycles & Three-Wheelers

PassengerCars

Gross Pro�t Contribution by Line of Business

4.3% -1.0%2.8%

0.7%

-0.9%4.0%

1.9%

6.4%

67.2

%

21.3

%

5.0%

-0.6%

-0.3%

3.2%

65.5

%16.3

%

4.0%

6.2%

10.7%

63.9

%15.5

%11

.0%

2.3%

49.7

%

21.7%

14.7%

64.4

%28.8

%

10.6%

0.6%

FY12

3.5%3.0%

73.2%

14.6

%

FY13

4.3%

5.6%

5.3%

5.3%

71.6

%

13.5

%

FY14

7.4%

3.4%5.9%

FY15

0.6%

0.2%

2.6%8.5%

61.1

%16.3%

Revenue Contributionby Line of Business

FY11

0.1%4.6%

2.2%2.1%

77.4

%

13.5

%

72.3

%

10.8

%10

.8%

Key Indicators(all �gures in LE million)

FY11

7,415.3

FY12

8,290.1

FY13

9,126.7

FY14

12,322.1 12,264.7

FY15

FY11 FY12 FY13 FY14 FY15



Revenues

883.31,071.6

1,170.3

1,581.7 1,594.4

Gross Pro�ts

519.2616.5 586.5

857.4750.2

EBIT

190.6

219.4

116.0

174.0

233.1

Net Income



Passenger Car Line Of BusinessGB Auto is a leading passenger car importer, assembler and distributor in the Middle East and North Africa. In Egypt, it is the largest player in the market, as the sole representative of Hyundai, Geely Emgrand, Mazda, and Chery passenger cars, and owns the biggest nationwide distribution and after-sales service networks of any brand. Regionally, GB Auto distributes Hyundai passenger cars in Iraq and Geely Emgrand passenger cars in Algeria. GB Auto serves the Egyptian market with both Completely-Knocked-Down (CKD) and Completely-Built-Up (CBU) products, while operating in Iraq and Algeria with CBU units.

Egypt • AccordingtotheEgyptianAutomotiveMarketingInformationCouncil(AMIC),

theEgyptianPassengerCarmarketinFY15witnesseda6%dropintotalsalesvolumesin2015,fallingfrom207,973inFY14to195,559unitsthisyear.Brandswithinthe1.0-1.3literrangewitnesseda14%y-o-ydeclineinvolumes,whilethosewithinthe1.3-1.5literrangefellby22%.Meanwhile,brandswithinthe1.5-1.6litersawsalesvolumesincreaseby5%,whileSUVswithanengineca-pacitylargerthan2.0literssawvolumesriseby27%.

• GBAuto’sPassengerCarstotalsalesvolumesandrevenueswitnessedadeclineof14.6%and3.4%,respectively,duringFY15.ThedropcameonthebackofdifficultiessourcingforeigncurrencyduetoashortageintheEgyptianmarketwhoseeffectswereaccentuatedduringthesecondhalfoftheyear,particularlyinthefourthquarter.TheshortageimpactedGBAuto’sabilitytofinanceim-portsandrestockitsinventory.

• TherumorsanduncertaintiessurroundingthefutureofcarpricesinEgypthavealsoaffecteddemand,mostlyduring thesecondhalfof theyear. It isworthmentioningthatdemandforPassengerCarscustomarilywanesduringthelastquarteroftheyear,especiallyinDecember.

• Managementisconfidentthecompanyiswell-positionedtocapitalizeonthepent-updemandoncethemarket’sappetiterecovers.

• Acrossallbrands,GBAutoheldatotalmarketshareof26.8%(includingHyun-dai,GeelyEmgrandandMazda) inFY15,3percentagepointsbelowFY14’sshareof29.8%.Hyundai’stotalmarketsharesincreasedto22.2%in2015from21.6%in2014.

• HyundaiCBUsalesincreasedby4.8%y-o-yinFY15,whileCKDsalesdeclinedby11.7%,duetodisruptionsinassemblyoperationsduetotheaforementionedforeigncurrencycrunch.

• ThefourthquartersawMazdacontinueitsupwardtrend,increasingsalesvol-

Passenger Car RevenueBreakdown by Segment

4Q13

0.1% 3.9%

1.1%

4Q14

4.5%0.3%

18.5

%43

.0%

61.3%

4Q15

7.5%2.8%

66.0

%

39.6%

Hyundai Iraq

Geely Egypt

Mazda Egypt

Hyundai Egypt

Others*

* Others includes Geely Libya, Geely Algeria and Karry Egypt

After-Sales

12.6

%

4.6%

13.1%

12.3%

6.5%

2.3%

4Q13

4Q14

4Q15

Breakdown of Units Sold, all brandsand markets*

CKD**

*Markets currently include Egypt, Iraq, and Algeria; Iraq and Algeria are CBU only** CBU refers to Completely -Built-Up units; CKD refers to Completely-Knocked-Down units

CBU**

9,763

11,484

5,846

6,948

9,590

9,686



The drop came on the back of difficulties sourc-ing foreign currency due to a shortage in the Egyp-tian market whose effects were accentuated during the second half of the year, particularly in the fourth quarter. The shortage impacted GB Auto’s abil-ity to finance imports and restock its inventory.

umesby6.9%ascomparedto4Q14,andshowinggrowthof135.4%y-o-yforthefullyearof2015.

• GeelyCBUsalesvolumesincreasedby12.7%y-o-yduringFY15,whileCKDsalesfellby61.6%.Sinceitslaunch,GBAutosoldover30thousandunitsofGeely’sEmgrand7model,however,salesduring2015wereimpactedanega-tivesocialmediacampaignthatthecompanydealtwithdecisivelythroughob-tainingthird-partyqualitycertificationsprovingtheerroneousnessoftheclaimsonsocialmedia.

• ThePassengerCarsAfter-Salesdivisioncontinuedonitsgradualgrowthtrajec-tory,postingstrongresultsforboth4Q15andFY15.Thedivisionreportedrev-enueandgrossprofitgrowthof15.4%and33.3%,respectively,forthefullyear.Managementintendstoestablishadditionalafter-salescentersinnewlocationssuchasUpperEgyptandtheNorthCoasttomeettheever-increasingcapacity,whichhasnearlydoubledoverthelasttwoyears.

• SalesofChineseCheryvehicles areexpected toboost thedivision’sperfor-manceastheycommenceinMarch2016,andmanagementisoptimisticaboutthebrand’sperformanceintheEgyptianmarketowingtothesemodels’previ-oussuccesswitnessedpriortotheproductionhalt.ThecompanyhadenteredintoatripartiteagreementwiththeChinesemanufactureraswellastheEgyp-tianAFAutomotiveinthethirdquarterof2015.(SeeRecentCorporateDevel-opments).

• TheadditionofChery’stwonewCKDmodels,alongsidetheHyundaiElantra,willmeanthatbytheendof1Q16,GBAutowillbeofferingfiveCKDmodelscomparedtoonlytwoin2015.

Iraq• ConditionsintheIraqimarketcontinuedtonegativelyimpactouroperations,

largelyduetothecountry’ssluggisheconomicbackdropaswellasoversup-plyproblemscarryingthroughfromthepreviousquarter.Fromacomparativestandpoint,GBAuto’sposition in themarket isbetter thanmost in termsofbankdebt,stocks,andforeigncurrency.

• AsisthecasewithmanyotherbusinessesinIraq,thereislimitedvisibilityonfutureconditions.GBAutointendstomaintainitsoperationsandmanagementisreadytotakethebestcourseofactioninwhateversituationthecompanyisfacedwith.

Algeria• LikeEgypt,theAlgerianmarketisalsofacingchallengesbroughtonbyforeign

currencyshortagesandrestrictionsonimports.Carimportsintothecountryaretemporarilysuspended,pendingregulatorychanges.

• Thecompanyliquidatedmuchofitsstockinthecountry,andonly250unitsremainthatmanagementintendstosellentirelyduringthefirstquarterof2016.

• Despitethesedifficulties,managementisoptimisticabouttherecoveryofthispotentially lucrativemarket and is still pursuing additional opportunities forlong-termgrowth.

Table 1A: Total Passenger Car Sales Activity — All Brands and Markets

4Q14 4Q15% Change

4Q14 v 4Q15 FY14 FY15% Change

FY14 v FY15Total Sales Volume (Units) 21,247 12,794 -39.8% 83,780 66,034 -21.2%Sales Revenue (LE million) 2,200.7 1,386.8 -37.0% 8,535.4 7,056.0 -17.3%Gross Profit (LE million) 193.9 140.9 -27.3% 891.8 642.3 -28.0%Gross Profit Margin (%) 8.8% 10.2% 1.3 10.4% 9.1% -1.3After-Sales Revenue (LE million) 102.8 111.9 8.8% 374.5 433.9 15.9%After-Sales Gross Profit (LE million) 29.8 39.2 31.5% 118.9 150.7 26.7%After-Sales Gross Profit Margin (%) 29.0% 35.1% 6.1 31.8% 34.7% 3.0Total Passenger Car Revenues (LE million) 2,303.6 1,498.8 -34.9% 8,909.9 7,489.9 -15.9%Total Passenger Car Gross Profit (LE million) 223.7 180.1 -19.5% 1,010.8 793.0 -21.5%Passenger Car Gross Margin (%) 9.7% 12.0% 2.3 11.3% 10.6% -0.8



Table 1B: Passenger Car Sales Activity — Egypt

* AsestimatedbytheAutomotiveMarketingInformationCouncilofEgypt(AMIC).PleasenotethatAMICfiguresarebasedonindividualcompanieswillinglycontributing/reportingtheirsalesandthatGBAutocannotcheckthefullaccuracyoftheseorguaranteethatallcompaniesoperatinginEgyptreporttoAMIC.

** AsestimatedbytheAutomotiveMarketingInformationCouncilofEgypt(AMIC).

Table 1C: Hyundai Passenger Car Sales Activity — Iraq

4Q14 4Q15% Change


FY14 v FY15

CBU Sales Volume (Hyundai) (Units) 7,272 4,017 -44.8% 21,229 22,239 4.8%CBU Sales Volume (Geely) (Units) 283 253 -10.6% 1,269 1,430 12.7%CBU Sales Volume (Mazda) (Units) 333 356 6.9% 823 1,937 135.4%CKD Sales Volume (Hyundai) (Units) 5,704 4,688 -17.8% 24,185 21,356 -11.7%CKD Sales Volume (Karry) - 84 - - 618 -CKD Sales Volume (Geely) (Units) 4,059 1,074 -73.5% 14,950 5,744 -61.6%Total Sales Volume (Units) 17,651 10,472 -40.7% 62,456 53,324 -14.6%Sales Revenue (LE million) 1,767.9 1,162.2 -34.3% 5,911.7 5,713.1 -3.4%Gross Profit (LE million) 184.7 170.7 -7.6% 662.2 647.9 -2.2%Gross Profit Margin (%) 10.5% 14.7% 4.2 11.2% 11.3% 0.1After-Sales Revenue (LE million) 84.1 94.9 13.0% 314.6 363.0 15.4%After-Sales Gross Profit (LE million) 23.2 33.5 44.4% 97.5 130.0 33.3%After-Sales Gross Profit Margin (%) 27.6% 35.3% - 31.0% 35.8% 4.8Total Egypt Passenger Car Revenues (LE million) 1,852.1 1,257.1 -32.1% 6,226.3 6,076.1 -2.4%Total Egypt Passenger Car Gross Profit (LE million) 207.9 204.2 -1.8% 759.8 777.9 2.4%Passenger Car Egypt Gross Margin (%) 11.2% 16.2% 5.0 12.2% 12.8% 0.6

4Q14 4Q15% Change


FY14 v FY15

Total Sales Volume (Units) 3,465 1,779 -48.7% 19,606 10,985 -44.0%Sales Revenue (LE million) 426.0 189.0 -55.6% 2,505.3 1,230.4 -50.9%Gross Profit (LE million) 11.2 -22.6 - 228.8 1.8 -99.2%Gross Profit Margin (%) 2.6% -11.9% -14.6 9.1% 0.1% -9.0After-Sales Revenue (LE million) 11.9 15.4 29.6% 49.2 64.3 30.7%After-Sales Gross Profit (LE million) 7.0 5.2 -25% 21.0 19.3 -8.1%After-Sales Gross Profit Margin (%) 58.8% 34.1% -24.7 42.7% 30.0% -12.7Total Iraq Passenger Car Revenues (LE million) 437.8 204.4 -53.3% 2,554.4 1,294.7 -49.3%Total Iraq Passenger Car Gross Profit (LE million) 18.2 -17.3 - 249.8 21.1 -91.5%Passenger Car Iraq Gross Margin (%) 4.2% -8.5% -12.6 9.8% 1.6% -8.1

Table 1D: Passenger Car Sales Activity — Algeria

4Q14 4Q15% Change


FY14 v FY15

Total Sales Volume (Units) - 358 - - 1,278 -Sales Revenue (LE million) - 21.1 - - 74.1 -Gross Profit (LE million) - 1.6 - - 5.4 -Gross Profit Margin (%) - 7.8% - - 7.3% -After-Sales Revenue (LE million) 6.9 1.6 -76.1% 10.7 6.7 -37.8%After-Sales Gross Profit (LE million) -0.3 0.5 - 0.4 1.4 -After-Sales Gross Profit Margin (%) -4.9% 31.0% 35.9 3.7% 21.5% 17.8%Total Algeria Passenger Car Revenues (LE million) 6.9 22.7 - 10.7 80.7 -Total Algeria Passenger Car Gross Profit (LE million) -0.3 2.2 - 0.4 6.8 -Passenger Car Algeria Gross Margin (%) -4.9% 9.5% 14.4 3.7% 8.4% 4.7



Motorcycle & Three-Wheeler Line of Business GB Auto is the Egyptian distributor for Bajaj three-wheelers (“tuk-tuks”) and motorcycles.

Motorcycles & Three-Wheelers• TheMotorcycles&Three-Wheelers division reported strong results for FY15,

postingan increaseof 40.3%y-o-y in sales volumesanda49.6% increase inrevenuesoverFY14figures.Grossprofitalsoroseby40.9%andmanagementbelievesthedivisionstillhasampleroomtogrowandexpandfurther.

• Thedivision’sAftersalesrevenueandgrossprofitalsowitnessedincreases,risingby51.5%and47.0%y-o-y,respectively,witnessinggrowthinboththeEgyptianandIraqimarkets.

• GBAuto’scurrentfacilitiesinEgyptareconsideredtobethefirstmotorizedas-semblylineofproductionforBajajThree-WheelersoutsideofIndia.Thecom-pany isfinalizingagreements to installnewpaintingandwelding shopswithconsiderablecomponentsandprocesslocalization.Proceedsfromtherecentlyfinalizedcapitalincreasethroughrightsissuewillinpartbeusedtofinancethisexpansion.

• ManagementhasalsolaunchedsalesofthesevehiclesinIraq,andunitsalessofarhavebeenpromising.GBAutohassoldatotal850unitssincesalesbegan,andGBAutoalsooperatesasmallservicecenterandsparepartsoutletinBaghdad,andhasrecentlyaddedasecondintheareaofAlNajafthatalsoincludesaBajajshowroom.

Table 2: Motorcycle & Three-Wheeler Sales Activity — Egypt and Iraq

Motorcycle & Three-Wheeler Revenue Breakdown by Segment

4Q13

3.0%

4Q14

3.6

4Q15

5.7%

18.2

%

80.4

%80

.8%

15.6%

75.2

%

16.5%

After-Sales

Motorcycles

Three-Wheelers

4Q13

4Q14

4Q15

Breakdown of Units Sold

Motorcycles

Three-Wheelers

13,737

25,397

12,665

19,340

11,180

20,441

4Q14 4Q15% Change


FY14 v FY15

Three-Wheeler Sales Volume (Units) 25,397 19,340 -23.8% 61,068 85,808 40.5%Motorcycle Sales Volume (Units) 13,737 12,665 -7.8% 36,801 51,065 38.8%Total Sales Volume* (Units) 39,134 32,433 -17.1% 97,869 137,301 40.3%Sales Revenue (LE million) 527.0 458.2 -13.1% 1,271.2 1,902.1 49.6%Gross Profit (LE million) 96.3 90.3 -6.3% 234.2 330.0 40.9%Gross Profit Margin (%) 18.3% 19.7% 1.43 18.4% 17.3% -1.1After-Sales Revenue (LE million) 19.7 27.7 41.0% 62.8 95.1 51.5%After-Sales Gross Profit (LE million) 3.7 5.6 49.8% 11.4 16.7 47.0%After-Sales Gross Profit Margin (%) 18.9% 20.1% 1.2 18.1% 17.5% -0.5Total Motorcycle & Three-Wheeler Revenues (LE million) 546.7 485.9 -11.1% 1,334.0 1,997.2 49.7%

Total Motorcycle & Three-Wheeler Gross Profit (LE million) 100.0 95.8 -4.2% 245.6 346.7 41.2%

Motorcycle & Three-Wheeler Gross Margin (%) 18.3% 19.7% 1.4 18.4% 17.4% -1.0



Commercial Vehicles & Construction Equipment Line of BusinessThe Commercial Vehicles & Construction Equipment line of business offers a wide range of trucks and locally manufactured buses under exclusive distributorship agreements with Mitsubishi, Volvo and Iveco. GB Auto manufactures and distributes semi-trailers and superstructures (i.e. oil and chemical tankers as well as concrete mixers). In Egypt, this line of business also distributes earth-moving equipment, road machinery and power generators under distribution agreements with Volvo Construction, SDLG and Aksa, as well as YTO tractors, and produces buses for domestic and export markets through GB Polo (a joint venture between Ghabbour and Marcopolo, the world’s larges bus body manufacturer).

4Q13

4Q14

4Q15

Tractors

Construction Equipment

Trailers

Trucks

Buses

Breakdown of Units Sold

157812

10225

205482

5414

74

86354

57

5111

80

• TheCommercialVehicles&ConstructionEquipmentlineofbusinesssawtotalrevenuesandgrossprofitriseby45.5%and79.3%,respectively,overFY14.Althoughmostofourproductsinthiscategorysawanincreasesalesvolumes,truckunitsaleswitnessedadecrease,mainlyduetotheeffectsofthenation-wideforeigncurrencyshortageoncompanyimports.

• Buseswerethetop-performersinthissegment,witnessingincreasesacrosstheboard,thankstoagovernmenttenderthatsawGBAutosupplyEgypt’sPublicTransportAuthoritywith450citybuses forCairoandAlexandria in2015.

• Duringthequarter,GBPolodeliveredthefirstCTAbusesassembledonVolvochassistoacommitteeofCTAinspectors,whoapprovedtheorderuponfirstinspection.Thesuccessof thisorder isa testament toGBAuto’sability tobenefitfromthesharingofknowledgeandexpertiseanddeliverinternationalqualitystandardstothelocalmarket.

Commercial Vehicles &Construction EquipmentRevenue Breakdownby Segment

4Q13

4.6%

6.9%

1.4%

52.0%

11.9% 23.2%

4Q14

4Q15

1.2%

64.8%

8.5% 16.4%

46.2%

27.4%

Tractors

Construction Equipment

After-Sales

Trailers

Trucks

Buses

2.7%

6.3%

0.9%1.2%

10.8%

13.3

%



Table 3: Commercial Vehicles and Construction Equipment (CV&CE) Sales Activity

• ThecompanyisexpectedtosupplytheCairoAuthoritywithanadditional149unitsbytheendofJune,whichwillbefollowedbyanotherbatchof90unitstotheAlexandriaTransportAuthorityinthesecondhalfof2016.ThedeliveryoftheseunitswillhelpstrengthenGBPoloandGBAuto’smarketstandinginthecitybussegment.

• ManagementhasnotedtheCairoTransportAuthorityislookingintosigningagreementswithprivatefleetownerstooperatecertaincitylinesandthatGBAutoiscurrentlyintalkswiththeauthority.

• TrucksreportedavolumedropinFY15ascomparedtoFY14,impactedbycurrencyshortagesinthethirdandfourthquartersoftheyear.Managementexpectsnewproductoffers,thatnowcatertohigh-andlow-endsegments,willhelpramp-upthedivision’sperformanceduring2016.

• Meanwhile,theTrailersdivision’sunitsalesdoubledduring2015,andshowedanincreaseof3.9%inrevenue.

4Q14 4Q15% Change


FY14 v FY15

Bus Sales Volume (Units) 157 205 30.6% 1,055 1,172 11.1%Truck Sales Volume (Units) 812 482 -40.6% 2,292 1,415 -38.3%Tractor Sales Volume (Units) 102 54 -47.1% 208 134 -35.6%Trailer Sales Volume (Units) 25 14 -44.0% 147 224 52.4%Construction Equipment Sales Volume (Units) 80 74 -7.5% 474 222 -53.2%Total Sales Volume (Units) 1,176 829 -29.5% 4,176 3,167 -24.2%Sales Revenue (LE million) 242.8 255.7 5.3% 838.7 1,216.9 45.1%Gross Profit (LE million) 19.5 36.7 87.9% 86.1 158.1 83.7%Gross Profit Margin (%) 8.0% 14.4% 6.3 10.3% 13.0% 2.7After-Sales Revenue (LE million) 22.7 31.1 37.0% 74.2 111.0 49.7%After-Sales Gross Profit (LE million) 2.6 4.4 69.8% 12.0 17.7 47.8%After-Sales Gross Profit Margin (%) 11.4% 14.1% 2.7 16.1% 15.9% -0.2Total Commercial Vehicles & Construction Equipment Revenue (LE million) 265.5 286.8 8.0% 912.9 1,327.9 45.5%

Total Commercial Vehicles & Construction Equipment Gross Profit (LE million) 22.1 41.1 85.8% 98.1 175.8 79.3%

Commercial Vehicles & Construction Equipment Gross Margin (%) 8.3% 14.3% 6.0 10.7% 13.2% 2.5



Tires Line of BusinessGB Auto has agreements with a number of Original Equipment Manufacturers (OEMs) to distribute a wide variety of tires in five countries. In Egypt, the company distributes Lassa, Yokohama, Westlake and Double Coin tires, while it distributes Westlake, Diamond Back and Jumbo tires in Iraq. In Jordan, the company distributes Diamond Back, Triangle and Jumbo tires; and in Algeria it distributes Lassa, Grandstone and, most recently, Goodyear tires.

• RevenuesandprofitabilityattheTireslineofbusinesssufferedfromthese-vereforeigncurrencyshortageinEgyptaswellasthechallenginggeopoliticalconditionsintheregion.Despitethat,ourTiresdivisionhasreportedsolidresultsin4Q15withrevenuesgrowingby33.3%q-o-qwhilegrossprofitmar-ginimprovedto18.7%in4Q15from4.4%in3Q15.

• GBAutoisalsofinetuningitsoverallgo-tomarketapproachthroughanum-berofactivitiesaimedatincreasingmarketshareandliftingprofitabilityacrosstheregionandtostart2016onamoresolidfooting.Amongtheseeffortsare,1)theoptimizationofourbrandportfoliotocovernewprofitablesegments(DoubleCoinfortrucksandlighttrucks,OTRtiresinEgypt,AvontiresforpassengercarsandSUVsinJordanandIraqaswellasPrimoforAgri-tiresinEgypt.);2)Consolidatingourpositioninthepassengercarretailchannelstoimprovethedistributedvolumesandcementourpositionindirectsalestoheavytruckfleetsand;3)Shiftingourpaymenttermstoanall-cashsystemfor80%ofourEgyptiantirebusinessandthere-organizationofoursalesforcetoachieveamoreeffectivecoverageofkeyareasinEgyptandAlgeria.

• GBAutoconfirmsitsshort-termplanstolaunchatiremanufacturingfacilityintheregiontolock-insuppliesofproductsappropriatetoitsmarketswhilealsocateringtostronglocaldemandintheGCCandMENAregions.Negotiationsareongoingwithtechnologypartnerstograntthemostsuitableproductport-folioandcompetitivecoststructurefortheproject.Overallrequiredcapacitywillbeabove100,000tonswhichwillsupportourcostcompetitiveness.

Table 4A: Total Tires Sales Activity

Table 4B: Tires Sales Activity — Egypt

Table 4C: Tires Sales Activity — Regional

4Q14 4Q15% Change


FY14 v FY15

Total Sales Revenues (LE million) 107.0 90.5 -15.4% 415.2 324.4 -21.9%Total Gross Profit (LE million) 14.6 16.9 15.9% 63.7 36.0 -43.4%Gross Margin (%) 13.7% 18.7% 5.1 15.3% 11.1% -4.2

4Q14 4Q15% Change


FY14 v FY15

Total Sales Revenues (LE million) 75.1 59.8 -20.3% 315.4 203.2 -35.6%Total Gross Profit (LE million) 12.5 14.7 17.0% 56.2 27.5 -51.0%Gross Margin (%) 16.7% 24.5% 7.8 17.8% 13.6% -4.3

4Q14 4Q15% Change


FY14 v FY15

Total Sales Revenues (LE million) 32.0 30.7 -3.9% 99.8 121.2 21.5%Total Gross Profit (LE million) 2.1 2.27 9.0% 7.5 8.5 13.3%Gross Margin (%) 6.5% 7.4% 0.9 7.5% 7.0% -0.5



Financing Line of BusinessGB Auto’s future strategy aims to create a full-fledged financial arm that serves its core business while competing aggressively with other non-bank financial service providers. GB Capital is the driver of this strategy. Today, GB Capital oversees the operations of the group’s five financial service providers: GB Lease, which offers financial leasing services to a wide range of companies; Mashroey, which offers asset-based lending to microfinance eligible clients throughout Egypt; Drive, which offers factoring services to individuals and companies; Haram Limousine, which offers car rental services on a quasi-operational lease basis to companies in the market; and most recently Tasaheel, which similar to Mashroey, offers direct microfinance lending services to micro entrepreneurs throughout Egypt. GB Capital’s strategy is to benchmark its operations against the best in the field, building on strict and robust credit policies specifically developed for each industry. All companies are staffed with veterans of the financial services industry to provide the required expertise and know-how, and all companies work on a non-exclusive basis with GB Auto to ensure the competitiveness of operations. The companies’ credit approval and disbursement mechanisms are well-advanced and comply with best practices of financial institutions in the country. Furthermore, asset quality and collections — the backbone for the success of any financial institution — are closely monitored, well-maintained and controlled within the group. The aim of GB Capital is to develop a well-diversified and synergetic group of financial services, building on the spirit and strategy of GB Auto while maintaining a high level of focus and specialized expertise within each company. To that end, GB Capital is also on the lookout for new additions to complement its portfolio.

• GBAuto’sFinancingBusinessesmaintaineditssolidperformanceduring4Q15,reportingstrongresultsforboththe4QandFY15andcontributingabout44%ofthecompany’sbottomline.

• TheFinancingBusinessesunderGBcapitalareonapathofconstantgrowth;overallrevenuesforFY15increasedby44.8%toLE1,046.2millioncomparedtoLE722.7millioninFY14.TotalgrossprofitrosetoLE233.8millionin2015fromLE168.6milliontheyearbefore,showinganincreaseof38.5%y-o-y.

• At22.3%,grossprofitmargin,albeit1%lowerthanFY14,improveswitheachquarterandremainsrobustcomparedtomarketnorms.Nonetheless,itistobenotedthatgrossprofitmarginisanunusualmeasurementofprofitabilityorop-erationsforfinancialinstitutions,wherethelatterfocusonnetbottomline,ROE,andportfolioquality.Alongthesemeasurementcriteria,theFinancingBusinessesreportedanetbottomlineofLE99.6millionforFY15,up56.9%y-o-y,andmain-tainedaveryhealthy loanportfolioqualitywithnon-performing loansunder0.61%withacoverageratioinexcessof100%.ROAEstandsat26.2%.

• TheFinancingBusinessmodel isbuilton thecompanies’ability toobtain le-veragetofueltheirlendingportfolios,whichwidelydiffersfromthetradingormanufacturingbusinessmodelintermsofamountofdebtincurredandthetenorofsuchdebtbyanycompany.AllcompaniesunderGBCapitalremainstronglyunder-leveragedcomparedtoindustrynormsandregulatorycapswhich,inlightofthenatureofthebusiness(especiallyforGBLease,DriveandTasaheel),al-



Table 5: Financing Businesses Activity

lowsthecompaniestoborrowupto8xShareholders’Equity.TotalleveragefortheFinancingBusinessesstoodat2.74xasatDecember31,2015.

• GBLeasemaintaineditspositionasaleadingperformerintheFinancingBusinesses,andcontinuedtohaveastrongfootholdinthemarketduringFY15,reportingatop-lineincreaseof56.5%y-o-y.Bylaw,GBLeaseprovidesbusiness-to-businessfinancialleasingsolutions.Itisnon-exclusivetoGBAutoandcaterstoadiversifiedclientbase.GBLease’sassetbaseisdiversified,includingrealestate,automotive,productionlinesandotherassetclasses.Tenorismediumterm,andthecompany’sfocusisonriskdiversificationbyassetclass,industrysectorandclients.Itoperatesprudentriskmanagementpracticeswithrespecttoprovisionsandriskrecognition.

• Mashroeyclosedtheyearasthetop-performerofthislineofbusiness,exhibitingtop-linegrowthof32.7%y-o-ycompared toFY14.Thecompanymaintainsanextensiveproductsbase,withthebulkofitsportfoliogearedtowardasset-basedlendingtofinancethepurchaseofTukTuksandTricycles,andwithnewproductsinthepipeline.Mashroey’screditpolicyisstringent,itsportfoliotenorispredomi-nantlyshorttermanditoperatesanationwidenetworkofover80branchesandunits.

• Driveoffersfactoringservicestoawell-diversifiedclientbase,rangingfrombusi-ness-to-business(SMEs)tobusiness-to-consumer(retail).Ithascontinuedwithitssolidgrowth,postinga49%y-o-yincreaseintop-lineforFY15.Drivecontinuestoexpanditsfactoringsolutions,offeringinnovativefinancingproducts.Operat-ingunderarobustcreditpolicy,thecompany’sportfoliotenorispredominatelymediumterm.

• HaramTourismTransport“HTT”(alsoknownasHaramLimousine)recordedy-o-ytop-linegrowthof31.9%inFY15.Thecompanyoperatesasacarrental/quasi-operationalleasecompanyandservesaselectrangeoftop-tierindustrial,serviceandmultinationalcompanies. Itsserviceagreementsare tailored,andentailac-quisition,registration,insuranceandmaintenanceofthevehicles,withthird-partyinsuranceinplace.Averagetenoroftheportfolioisthreeyears.

• Tasaheel,GBCapital’smostrecentfinancingventure, recordedLE2.2million inrevenuesinceitslaunchinAugust2015.TasaheelwasfoundedwithanauthorizedcapitalofLE40millionofwhichLE20millionwerepaidinduring2015,withtheremainingLE20millionearmarkedfor1Q16.Thecompanyis90%ownedbyGBCapitaland10%byEQI.Tasaheeloperatesasanon-bankfinancialservicescom-pany,operatingundertheMicrofinanceLaw#141fortheyear2014.Itfocusesondirectlendingtomicrofinanceeligibleclients—predominatelygrouplendingtowomen—withtheaimofhelpinglowincomeearnersgeneratehigherincomesandimprovetheirlivingstandards,andindoingsoalsosupportoverallcommu-nitydevelopmentandeconomicgrowth.

• GBLease,DriveandTasaheelareregulatedundertheEgyptianFinancialSupervi-soryAuthority(EFSA).

• ManagementnotesthatasMashroey,DriveandHaramTourismTransporttransactwiththePassengerCarsandtheMotorcycles&ThreeWheelerslinesofbusiness,thereareinvariablyintercompanysalesbetweentheseunits.Resultsafterelimina-tionoftheseintercompanysalesaresummarizedinTable5(below).

4Q14 4Q15% Change


FY14 v FY15

Total Sales Revenues (LE million) 375.4 432.6 15.2% 1,113.4 1,587.1 42.5%Total Sales Revenues after Intercompany Elimination (LE milllion) 257.2 294.4 14.5% 722.7 1,046.2 44.8%

Total Gross Profit (LE million) 54.1 67.9 25.6% 168.8 233.8 38.5%Gross Margin* (%) 21.0% 23.1% 2.0 23.4% 22.3% -1.0

* PleasenotethatGrossMarginiscalculatedontotalrevenuesafterintercompanyelimination.



StartupsGB Auto’s Pre-Owned Vehicles division — branded Fabrika — is rolling-out a western-style, pre-owned car operation at all GB-owned points of presence in Egypt. Our newly launched Lubricants business — PAL — distributes G-Energy and Gazpromneft products at GB Auto-branded and third-party points of sales in the Egyptian market under an exclusive strategic alliance with Gazpromneft Lubricants. Our Retail arm will operate retail After-Sales outlets to distribute tires, tire parts, batteries, parts and lubricants. These points of presence will also offer services including tire installation and balancing, battery service and the sale and injection of lubricants in select locations.

• PALoperationsshowedsubstantialandpromisinggrowthin2015,asrevenuesjumpedtoLE33.9millionfromtoLE2millioninFY14.Thedivision’ssalesandprofitswerein-linewithmanagement’sexpectationsandGBAutoantici-patesfurtherannouncementsregardingnewproductrepresentationswithincompany-brandedservicecentersandthird-partypointsofsaleinthenearfuture.

• FabrikaalsopostedsolidfiguresforFY15asitcontinuedtosteadilygrowitssalesandexpanditsrangeofproducts.GBAuto’spre-ownedvehiclesopera-tionclosedtheyearwithLE42.0millioninsalesrevenuecomparedtoLE22.0milliontheyearbefore.

• Thedivision’sgrossprofitmarginalsoincreasedtocomeinat20.9%,showinganimprovementof14.4percentagepointsoverFY14.

• GBAuto’sRetail arm is in theprocessof rolling-outnewAfter-Sales retailoutletsthatwillbecalled‘360,’andwilldistributetires,tireparts,batteries,partsandlubricants.Thesepointsofpresencewillalsoofferservicesinclud-ingtireinstallationandbalancing,batteryservices,andthesaleandinjectionoflubricantsinselectlocations.

• Overall,newdivisionscontributedpositivelytotheGroup’sgrossprofitsin2015,andfurthercontributionsareexpectedfrom2016onwards.

Table 6: Other Sales Activity

4Q14 4Q15% Change


FY14 v FY15

Transport Business Revenues (LE million) 0.7 0.8 6.0% 3.3 3.1 -5.5%Lubricants Sales Revenue (LE million) 1.5 18.7 - 2.4 33.9 -Pre-Owned Vehicles Sales Revenue (LE million) 9.3 13.4 43.9% 21.7 42.0 93.8%Total Sales Revenues (LE million) 11.6 32.9 - 27.4 79.0 -Transport Business Gross Profits (LE million) -1.7 -1.7 -1.3% -6.7 -6.9 1.7%Lubricants Gross Profit (LE million) 0.4 8.1 - 0.6 13.5 -Pre-Owned Vehicles Gross Profit (LE million) 0.2 0.9 - 1.0 2.4 -Total Gross Profit (LE million) -1.1 7.3 - -5.2 9.0 -Gross Margin (%) -9.3% 22.4% 31.6 -18.9% 11.3% 30.3



As we enter 2016 with a replenished inven-tory, a solid pricing strat-egy, and a rather healthy market demand (despite natural inflation), we are in a better position to reap the benefits from our high-growth markets.

Financial Position and Working Capital ManagementGBAutosawtotalsalerevenuesdecreaseby23.0%and0.5%y-o-yduring4QandFY2015,re-spectively,mainlyasaresultofthechallengingFXenvironmentinEgypt(especiallytowardstheendoftheyear)aswellastheturbulentIraqimarket(throughoutthefullyearof2015).InEgypt,thedecreaseinsalesofthepassengercardivisionwerecompensatedbytheTwo-andThree-Wheelerdivision,theCommercialandConstructionVehiclesdivision,aswellasourFinancingbusiness.Despitethedecreaseinsalesin4Q15,ourgrossprofitmarginswerequitestrongy-o-y,aswereportedGPMsof15%in4Q15versus11.8%in4Q14asaresultofpriceincreasesthegroupintroducedinthequarter.FullyearprofitabilityalsoimprovedasweclosedtheyearatGPMof13%.Overall, ouroperatingprofitdecreased 30.5%y-o-ywhileournetprofit showeda 34.4%

increasecomparedto2014,onthebackofaone-timegainfromthefairvaluereassessmentofaninvestmentpropertyreportedin3Q15,aswellaslowertaxespaidduetoaweak4Q15andanoveralllowertaxrateof22.5%.Thepositiveminorityinterestreportedthroughouttheyearismainlyduetothereportedregionallosses,especiallyinIraqwherelow-oil-priceshavetakentheirtollontheeconomicsituation,inadditiontotheregionalover-supplysituationwithspill-oversmainlyaffectingIraqioperations.Onthecash front, thecompanyhasusedmostof itscashgenerated throughout theyear

(fundsfromoperationsinthefirstninemonthsof2015amountedtoLE622.5millioninadditiontooutstandingcashbalancesthatstoodatEGP2.2billionattheendof3Q15)tobuildinventorylaterin4Q15,whichwillboostperformanceduring2016.WehavenowreplenishedmostofourPassengerCarstocks,aswellasTwo-andThree-WheelersandCommercialVehicles,inadifficultFXenvironment.Thisisanoperationalhedgethatwewouldn’thaveachievedhadwenothadaccesstothisexcessliquiditybytheendof2015.Asaresult,theGroupreturnedtoanegativeFFOfront,albeitinamuchbettersituationthanattheendof2014.TheGroup’snetdebtstoodatLE4.0billion,anincreaseofLE1.2billioncomparedto3Q2015,

andLE300millionabovethefinalfigureattheendof2014.Netdebt/equitydroppedto1.0xasat31December,2015from1.3xattheendof2014.Meanwhile,netdebt/EBITDAfromcontinuingoperationsstoodat3.1xvs.3.5xasat31December2014.TotaldebtclimbedtoLE5.2billionattheendof2015,andincludesLE1.3billionoffinancingbusinessdebt,aswecontinuetoexpandandgrowouroperations.ThefigurealsoincludesanFXexposureequivalenttoLE668.8mil-lion.GBAutoisworkingtosettleitsFXdebtpromptlyandhasalreadytakenstepstoreduceit.Asweenter2016withareplenishedinventory,asolidpricingstrategy,andaratherhealthy

marketdemand(despitenaturalinflation),weareinabetterpositiontoreapthebenefitsfromourhigh-growthmarkets.Wecontinuetooperatearelativelyleancompany,withCAPEXforthefullyearstandingatLE

290.3million(comparedtoadepreciationexpenseofLE255million),leavingampleroomforGBAuto’splannedexpansionintheTiresbusinessandtheTwo-andThree-Wheelerbusiness,whichweexpecttoreportsoliddevelopmentsonverysoon.



GB Auto’s After-Sales division performed well in 2015, boosting the con-tribution of the Passenger Cars, Motorcycles & Three-Wheelers, and Commercial Vehicles & Construction Equipment to the company’s overall profits.

Latest Corporate Developments

1) GB Auto adds Chery vehicles to its brand portfolio in tripartite cooperation agreement InOctober2015,GBAutoenteredintoatripartitecooperationagreementwithCheryInternationalofChinaandAboulFotouhAutomotive(AFAutomotive)ofEgyptthatwillseeGBAutoexclusivelydistributeChery-brandvehiclesthroughitsnationwidenetworkinEgypt.TheagreementcoversbothCKDandCBUmod-elsproducedbyCheryInternational,includingsub-compacts,compacts,sedansandsmallSUVs,allwithenginesinthe1.0Lto2.4Lrange.

2) GB Auto establishes new servicing facility in AlexandriaInMarch2016,GBAutoestablisheditslatest3SfacilityinAmareya,Alexandria,toserviceitsdifferentpassengercarsandcommercialvehiclebrands.

3) GB Auto awarded new tender for 150 busesGBAutowasawardedanewtenderfromtheEgyptianPublicTransportAuthor-itytodeliver150busesin2016.PleaserefertotheCommercialVehiclessectionofthisreportformoredetails.

4) GB Auto appoints Karim Gaddas as the new CEO for the Tires businessInOctober2015,GBAutoappointedMr.KarimGaddasastheChiefExecutiveOfficerforitsTiresbusiness.Mr.Gaddaswillleadthegroup’seffortinestablish-inganewtiresmanufacturingfacilityaswellasmanagethegroup’scurrenttiresdistributionbusiness.Mr.Gaddashasover20yearsofexperienceingeneralmanagement,operations,andsalesandmarketingactivitieshavingpreviouslyservedinnumerouspositionsatPirelli,includingheadquarter-levelrolesinMi-lan,andregionalrolesinParis,Dubai,CairoandAlexandria.

OutlookTheEgyptianeconomyrestsonanumberofpillars,includingaswellingpopula-tionfigure,akeygeographicposition,andabasketoffree-tradeagreements,thatGBAutobelievesplayakeyroleinsupportingfundamentalandlong-termgrowthinthemarket.Wecontinuetoinvestaccordingly,despitealackofshort-termvis-ibilityimposedbythenation’scurrentforeigncurrencysituationandproceduralreforms.Inthatvein,managementhassuccessfullyclosedanLE960millioncapitalin-

creasetofundconstructionoftwonewfacilities.Thefirstwillbeawholly-ownedplantthatwillassemblemotorcyclesandthree-wheelers,whichmanagementbe-lievestobethefirstofitskindoutsideofIndiaforBajaj.Thesecondwillbeanewtire-manufacturingfacilitytoservetheMENAregion’sgrowingtiresmarket.ThetwonewfacilitieswillexpandGBAuto’sopportunitiesinthesefast-growinglinesofbusiness, inadditiontoenhancingGroupprofitabilityandFXoutlookinthelong-term(viaexports).Inadditiontoacontinualfocusongrowthandinvestmentinlong-termoppor-

tunities,managementhasalsostressedefficiency.Thecompanyisaccustomedtooperatinginalean,efficientmannerinallaspectsofthebusiness—atraitthatwillserveuswellasthecountry’sfreetradeagreementswiththeEUandTurkeyonimportsdutiesarefullyimplemented.TheseagreementshavealreadyplacedChineseandSouthKoreanvehiclesatadisadvantage,andmanagementbelievesthefullimplementationofthetwopartnershipagreementscouldhaveasubstantialnegative impacton themarket.ThegovernmentofEgyptappears to recognize



thedifficultposition intowhichautomotivemanufacturers andassemblersfindthemselves,andmanagementcontinues toactivelyadvocate for legislation thatwouldprotectdomesticassemblersandthethousandsofvaluablemanufacturingjobstheysupport.In the Passenger Car segment,management acknowledges downside risk to

previousguidancearisingfromthecurrentnationalforeign-exchangecrunchandalackofvisibilityasregardstothetimelineonwhichthiswillberesolved.GBAutowillcontinuetoprioritizealeanandefficientcostbase,formulatingpricingpoliciesthatwilltakejudiciousadvantageofitspricingpowertopreservemarginsforaslongaspossible.DownsideriskcouldbemitigatedbyanymovetoprioritizeforeignexchangeforCKDkitsasopposedtoCBUunits,givenGBAuto’spositionasaleadingdomesticassembler.Furthermore,themarketstillawaitsthefinaliza-tionoftheAutomotiveDirectivewhichaimstobenefitlocalassemblersandthusimproveourmarginprofile.OntheCommercialVehicles&ConstructionEquipmentlineofbusiness,man-

agement does not expect significant growth of the tourismmarket until 2016.However,giventheongoinginvestmentininfrastructureandrenewedeconomicactivity–suchastherecentoverhaulinpublictransportthatsawthegovernmentpurchasemorethan400newcitybuses–divisionsinthiskeylineofbusinessareexpectedtocontinuetheircurrentgrowthtrendsforsolongasstatespendingoninfrastructure(includingurbantransportfleets)continues.AspartofGBAuto’songoingdriveforinvestment,thecompanyintendstolaunchapre-ownedcon-structionandheavy-truckdistributionventureinthefirsthalfof2016,propelledbythesuccessofourpre-ownedPassengerCaroperation.In-linewithmanagementexpectations,GBAuto’sAfter-Salesdivisionperformed

wellin2015,boostingthecontributionofthePassengerCars,Motorcycles&Three-Wheelers,andCommercialVehicles&ConstructionEquipmenttothecompany’soverall profits. It is considered likely thatAfter-Saleswill turn in aparticularlystrongperformancein2016aswell,especiallyasthecompanyroll-outnewoutletsinkey,underservedgeographiclocations.Sincethebeginningoftheyear,weshiftedpaymenttermsforourTiresBusi-

nesstoanall-cashsystem.Whilethisinitiallypressuredoursaleslevelsduringthefirstquarteroftheyear,salesbegantopickupagaininthesecondquarter.Inthesecondhalfoftheyear,however,problemswithFXallocationbeganchallengingtheLOBoncemore.Meanwhile,ourFinancingbusinessdeliveredastrongperformancethroughout

the year andmanagement expects this lineof business to continue this trend,especially with company’s fifth financing venture, Tasaheel, posting promisingresultsduringitsfirstmonthsinoperation.Turningourattentiontotheregion,GBAutocontinuestoviewmeasuredriskas

worthwhileandremainsaninvestorinlong-termgrowth,notimmediatepayoffs.OuroperationsinAlgeriaandIraqshouldbeviewedthroughthatlens.InAlgeria,GBAutoisconvincedofthelong-termpotentialofthismarketand

hasworkedtoalignwithGeelytogettherightmodelsattherightprices,setupanexcellentmanagementteamandestablishaneffectivedealernetwork.Further-more,ourrepresentationsintiresareverywarmlyreceivedinAlgeria.Goingfor-ward,managementremainswatchfulofopportunitiestodeliveraproductofferingspecificallytailoredtotheAlgerianmarket.TheIraqimarket,asexpectedanddiscussedinpreviousearningsreleases,be-

gan2015onachallengingnoteasaresultpoliticalandsecuritydevelopments.AlthoughitremainspossiblethatturmoilwillremainafeatureoftheIraqimarketforsometimetocome,private-sectoractorswhostaythecoursethroughouttheheadwindswillbethoseideallyplacedtocapturetheupswingwhenthemarket

The two new facili-ties will expand GB Auto’s opportunities in these fast-growing lines of business, in addition to enhancing Group profitability and FX outlook in the long run.



beginstoimprove.Furthermore,asweweatherthisperiod,managementcontin-ues topursueacapital-lightapproach to in-marketexpansion thathasalreadyseenitrolloutitsmotorcycleandthree-wheelerofferingsinIraq,withthelattercapturingtheattentionofIraqiconsumersandachievingpromisingresultsthusfar.InLibya,thechallengingsecuritysituationisseeingGBAutoliquidateitsstocks

asitpreparestoexitthemarket.WhileallinventorystillinLibyaremainsinsured,itispossiblemanagementwillrecordchargesduereceivablesifitdeemsthesamenon-collectable.Finally,wenotethatguidancegoingforwardremainssubjecttochangeinlight

ofchangingregionalgeopoliticalandmacroeconomicconditionsaswellastheongoingforeignexchangechallengeinEgypt.



Financial Statements

Income Statement

Three Months Ended Year Ended

(LE million) 4Q14 4Q15 % Change FY14 FY15 % Change

Passenger Cars Revenues 2,303.6 1,498.8 -34.9% 8,909.9 7,489.9 -15.9%Motorcycles & Three-Wheelers Revenues 546.7 485.9 -11.1% 1,334.0 1,997.2 49.7%Commercial Vehicles & Construction Equipment Revenues 265.5 286.8 8.0% 912.9 1,327.9 45.5%Tires Revenues 107.0 90.5 -15.4% 415.2 324.4 -21.9%Financing Businesses Revenues 257.2 294.4 14.5% 722.7 1,046.2 44.8%Other Revenues 11.6 32.9 184.2% 27.4 79.0 188.6%Total Sales Revenues 3,491.5 2,689.3 -23.0% 12,322.1 12,264.7 -0.5%Total Gross Profit 413.5 409.3 -1.0% 1,581.7 1,594.4 0.8%Gross Profit Margin 11.8% 15.2% 3.4 12.8% 13.0% 0.2Selling and Marketing -117.1 -178.9 52.7% -439.6 -551.9 25.6%Administration Expenses -73.4 -69.7 -5.1% -272.6 -343.7 26.1%Other Operating Income (Expenses) 26.7 8.9 -66.7% 55.7 33.3 -40.3%Operating Profit 249.6 169.6 -32.1% 925.2 732.0 -20.9%Operating Profit Margin (%) 7.1% 6.3% -0.8 7.5% 6.0% -1.5Net Provisions and Non-Operating -14.2 -39.5 178.4% -67.8 -69.2 2.1%FV of Investment Property 87.3EBIT 235.4 130.1 -44.7% 857.4 750.2 -12.5%EBIT Margin (%) 6.7% 4.8% -1.9 7.0% 6.1% -0.8Foreign Exchange Gains (Losses) -65.7 -60.2 -8.4% -157.1 -175.4 11.6%Net Finance Cost -99.5 -83.8 -15.7% -374.4 -337.8 -9.8%Earnings Before Tax 70.2 -13.9 - 325.9 236.9 -27.3%Income Taxes -41.6 -4.2 -89.8% -90.2 -45.4 -49.7%Net Profit Before Minority Interest 28.6 -18.2 - 235.7 191.5 -18.7%Minority Interest 3.4 46.3 - -61.7 41.6 -Net Income 32.1 28.1 -12.3% 174.0 233.1 34.0%Net Profit Margin (%) 0.9% 1.0% 0.1 1.4% 1.9% 0.5



Balance Sheet

As Of

(LE million) 31-Dec-14 31-Dec-15 % Change

Cash 1,177.6 1,188.7 0.9%Net Accounts Receivable 1,309.0 1,649.6 26.0%Inventory 2,345.7 2,951.0 25.8%Assets Held For Sale 313.1 329.2 5.1%Other Current Assets 833.3 1,155.7 38.7%Total Current Assets 5,978.7 7,274.2 21.7%

Net Fixed Assets 1,829.2 2,044.6 11.8%Goodwill and Intangible Assets 282.5 293.1 3.8%Lessor Assets 1,159.7 1,615.8 39.3%Investment Property 0.6 91.5 -Other Long-Term Assets 334.5 479.1 43.2%Total Long-Term Assets 3,606.4 4,524.0 25.4%Total Assets 9,585.1 11,798.2 23.1%

Short-Term Notes and Debt 4,144.8 4,334.8 4.6%Accounts Payable 1,298.3 1,796.4 38.4%Other Current Liabilities 150.4 202.9 34.9%Total Current Liabilities 5,593.5 6,334.1 13.2%

Long-Term Notes and Debt 680.9 898.5 32.0%Other Long-Term Liabilities 536.8 622.5 16.0%Total Long-Term Liabilities 1,217.7 1,521.0 24.9%

Minority Interest 637.8 608.7 -4.6%

Common Stock 135.3 1,094.0 -Shares Held With the Group -3.3 -26.5 -Legal Reserve 267.3 296.6 11.0%Other Reserves 1,066.8 1,153.0 8.1%Retained Earnings (Losses) 670.0 817.4 22.0%Total Shareholder’s Equity 2,136.1 3,334.4 56.1%Total Liabilities and Shareholder’s Equity 9,585.1 11,798.2 23.1%



About GB Auto S.A.E.GBAutoS.A.E.(AUTO.CAontheEgyptianExchange)isaleadingautomotivepro-duceranddistributorintheMiddleEastandNorthAfrica.Acrossfiveprimarylinesofbusiness—PassengerCars,Motorcycles&Three-Wheelers,CommercialVehicles&ConstructionEquipment,TiresandFinancing—thecompany’smainbusinessactivitiesincludeassembly,manufacturing,salesanddistribution,financingandaf-ter-sales services.GBAuto’sportfolioofbrands includesHyundai,Mazda,GeelyEmgrand,Chery,Bajaj,Marcopolo,Iveco,VolvoTruck&Bus,VolvoConstructionEquipment,MitsubishiFuso,YTO,Karry,SDLG,Aksa,Lassa,Yokohama,Goodyear,Westlake,Triangle,Grandstone,DiamondBack,DiamondCoin,Jumbo,MonroeandGazpromneft.GBAutohasoperationsinEgypt,Iraq,LibyaandAlgeria,andisac-tivelypursuingopportunitiesinnewgeographieswithinitscorefootprint.Thecom-panyisheadquarteredinGiza,GreaterCairoArea,Egypt.www.ghabbourauto.com

Forward-Looking StatementsThisdocumentmaycontaincertain“forward-lookingstatements”relating to theCompany’sbusiness.Thesemaybeidentifiedinpartthroughtheuseofforward-lookingterminologysuchas“will,”“planned,”“expectations”and“forecast”aswellassimilarexplanationsorqualifiersandbydiscussionsofstrategy,plansorinten-tions.Thesestatementsmayincludedescriptionsofinvestmentsplannedorcur-rentlyunderconsiderationordevelopmentbytheCompanyandtheanticipatedimpactoftheseinvestments.AnysuchstatementsreflectthecurrentviewsoftheCompanywithrespecttofutureeventsandaresubjecttocertainrisks,uncertain-tiesandassumptions.Manyfactorscouldcausetheactualresults,performance,decisionsorachievementsoftheCompanytobemateriallydifferentfromanyfu-tureresultsthatmaybeexpressedorimpliedbysuchforward-lookingstatements.

Head OfficeCairo-Alex Desert Road, Km 28 Industrial ZoneAbu Rawash, Giza, Egypt

Investor RelationsMenatalla Sadek, CFAChief Investment Officer

Hoda YehiaAVP - Corporate Finance

Direct: +202 3910 0485Tel: +202 3539 1201Fax: +202 3539 0139e-mail: [email protected]

ir.ghabbourauto.com

Shareholder InformationReuters Code: AUTO.CABloomberg Code: AUTO.EY

Shares Outstanding: 1,094,009,733

auto.ca gb auto 4q & fy15 results: on the egyptian...

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