Qalaa sees revenues rise by 39 pc
October 2, 2018— Cairo-based Qalaa Holdings, a leading investor in African energy and infrastructure projects, saw revenues rise by 39 pc to EGP 3.1 billion ($173 million) and a net income of EGP 274 million ($15.3 million) during the first half of 2018. Before the end of the year, the Egyptian Refinery Company (ERC) will begin operations marking Qalaa’s biggest investment project to date.
Presenting the results last week, Chairman and Founder Ahmed Heikal said, “I am very pleased with our company’s performance in the second quarter and first half of 2018. Our core energy and infrastructure subsidiaries continue to deliver operational growth as they capitalize on favorable market dynamics. Strong revenue growth saw Qalaa report a solid 52% increase in its EBITDA for 2Q/18, with bottom-line profitability buoyed as gains from restructuring efforts offset interest expenses carried at the holding and subsidiary levels.”
Formerly known as Citadel Capital, Qalaa Holdings controls subsidiaries in industries including energy, cement, transportation and logistics, and mining.
According to the latest financial report, strong growth came on the back of a solid performance by the Group’s energy division coupled with the consolidation of National Printing, which began during the first quarter of 2018.
The Group recorded a net profit of EGP 486.9 million ($27 million) in 2Q/18, largely driven by non-cash gains of EGP 1.3 billion delivered through restructuring efforts. On a six month basis, Qalaa’s net profit came in at EGP 300.2 million ($16.7 million) on revenues of EGP 6.2 billion ($346 million) in the first half of 2018, up 43% year-on-year.
In 2Q/18, Qalaa recorded an EGP 919.6 million non-cash gain from the deconsolidation of the operational liabilities (net of foreign exchange reserve and minority interest) under Africa Railways. This, however, is only a partial deconsolidation as Qalaa expects a second one-off non-cash gain of EGP 2.5 billion (related to the debt portion of Africa Railways) during the coming months once a sale or liquidation takes place.
Additionally, Qalaa booked a gain of EGP 345.4 million at the holding level in 2Q/18 related to acquisition and restructuring activities. The gain was primarily generated from a differential between National Printing’s consolidated book value and its fair market value as determined by an independent financial advisor, as well as the purchase of a loan from one of Qalaa’s subsidiaries which was settled directly with the bank at a discount.
Hisham El-Khazindar, Qalaa Co-Founder and Managing Director said, “Our results in the second quarter reflect our ongoing efforts to streamline and optimize our portfolio with the company beginning to harvest the merits of its strategy. Our decision to bring National Printing into the fold is already seeing it make significant top- and bottom-line contributions, while efforts to clean-up our portfolio and shed discontinued operations has paid off as the account reports almost zero losses in 2Q18.”
He said, “Meanwhile, as previously communicated we have booked an expected non-cash gain on the partial deconsolidation of Africa Railways nearing EGP 1 billion. We are actively exploring avenues to sell or liquidate the company and trigger the complete deconsolidation of its debt obligation which should result in a further gain of c. EGP 2.5 billion in the coming months. Together said gains will help offset the effect of a related impairment of EGP 3.2 billion booked in FY17, and consequently strengthen our financial position as we head into the next growth phase for Qalaa.”
Heikal said, “Qalaa is also looking to increase its ownership in the Egyptian Refining Company’s transformative project which is now 98 pc complete with start of commissioning by end of 2018. Meanwhile, new capacities for RDF production at Tawazon have already been procured and commissioning is expected by 2019. Said investments alongside similar ventures in our mining and logistics platforms will see Qalaa continue to deliver on this growth momentum and cement its position as an African leader in energy and infrastructure.”