Qalaa Holdings, an African leader in energy and infrastructure (CCAP.CA on the Egyptian Exchange), formerly Citadel Capital, has released its consolidated financial results for the second quarter of 2016, reporting a net loss after minority interest of USD 32 million (1H16: USD 59 million) on revenues of USD 202 million (1H16: USD 202 million). Comparative 2015 figures are adjusted to reflect the divestment of ASEC Minya, ASEC Ready Mix, Misr Qena Cement, Rashidi El-Mizan, RIS, Tanmeyah and Mashreq, eliminating the figures of divested companies in addition to figures of investments held for sale starting 1Q16, including Africa Railways. Additionally, ASCOM’s 2016 results were added to Qalaa’s 2015 figures, owing to ASCOM’s income statement consolidation starting 3Q15,for a more accurate comparison of year-on-year results.
Top-line growth during the second quarter of 2016 was largely attributable to an 18% increase in TAQA Arabia revenues and a 13% improvement in ASEC Holding revenues.
“Despite operating in an extremely difficult economic environment, Qalaa’s second quarter results show improvements in revenue almost entirely across the board,” said Qalaa Holdings Chairman and Founder Ahmed Heikal. “The top-line improvement reflects both the resilience of our subsidiaries and management’s ability to focus on proven winners following a divestment strategy that has allowed us to focus on proven winners following a divestment strategy that has allowed us to focus on our most profitable investments and maintain a forward –looking, long –term vision for the company. “
EBITDA for the quarter stood at USD 104 million, down 40% year-on-year from the USD 17 million posted in 2Q15. Management, however, is confident that the temporary drop witnessed in 2Q16, owing to operational hiccups at cement subsidiaries primarily Sudan’s Takamol plant, will reverse in the coming quarters as productivity is already improving and hence EBITDA contributions will return to their normal levels.
Qalaa incurred non-cash charges in 2Q16 totalling USD 35 million (1H16: USD 44 million), up almost eight fold compared to the million recorded in 2Q15 (1H15: USD 4 million). These non-cash charges relate to total impairments of USD 28 million booked in 2Q16 (1H16: USD 29 million) as well as FX losses of USD 4 million (1H16: USD 9 million)
Net Loss after Minority Interest stood at USD 32 million in 2Q16 (1H16: USD 59 million), compared to the 2Q15 loss of USD 450,450 (1H15: USD 13 million). Setting aside the impact of the above mentioned non-cash charges, Qalaa’s bottom line in 2Q16 would have turned slightly in the black to USD 31 million and a loss of USD 15 million in 1H16
“We are well aware of the toll taken on our bottom-line from these non-cash charges and management is working diligently to reduce them and shore-up the company’s financial statements prior to the commencement of operations at ERC,” said Qalaa Holdings Co-founder and Managing Director Hisham El-Khazindar. “With ERC now 90% complete and almost three months away from pre-commissioning, mechanical completion is expected by the second half of 2017. This coupled with TAQA’s strong growth momentum will position Qalaa for a financial turnaround by the end of next year.”
“Meanwhile, we will continue to implement our strategy of allocating generated cash flow to deleveraging and the reduction of financial risk at the subsidiary level, while proceeds from future asset sales are to be utilized for deleverage at the holding company level,”EL-Khazindar added.
Qalaa Holdings’ full business review for 2Q2016 and the financial statements on which it is based are now available for download on ir.qalaaholdings.com
