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Citadel Capital Reports 2Q13 Results: Standalone Net Profit of EGP 3.5 mn, 61.9% YOY Narrowing of Consolidated Loss, 1.7% Rise in Aggregate Revenues and 12.9% hike in EBITDA at Operational Core Platforms

Citadel Capital continues to report improved financial performance at operational core platforms as it seeks majority stakes in most of its investments in five core industries: energy, transportation, agrifoods, mining and cement

Citadel Capital (CCAP.CA on the Egyptian Exchange), the leading investment company in Africa and the Middle East with US$ 9.5 billion in investments under control, reported today its financial results for the second quarter of 2013, highlights of which include a standalone net profit of EGP 3.5 million and a 61.9% narrowing year-on-year of its consolidated net loss to EGP 47.3 million.

Citadel Capital’s Business Review focuses primarily on the performance of its eight operational platforms in the core industries of energy, transportation, agrifoods, mining and cement, which together reported 2Q13 aggregate revenues of EGP 1.5 billion, up 1.7% from the same quarter last year. The energy, transportation, agrifoods and mining sectors all reported growth in aggregate sector revenues.

Meanwhile, aggregate EBITDA across operational core platforms rose 12.9% in the same period to EGP 119.9 million. Notable drivers of aggregate EBITDA growth included ASCOM (mining), Africa Railways (transportation) and Gozour (agrifoods).

“We are broadly speaking pleased with our second quarter results, where rising aggregate revenues and EBITDA figures for our core operational platform companies underscores the clear logic of our transformation into an investment company,” said Citadel Capital Founder and Chairman Ahmed Heikal. “We look forward to shareholder approval to launch our EGP 3.64 billion share issuance, which will further drive the transformation — and which we expect to close as scheduled in late December 2013 or early January 2014.”

For 2Q13, Citadel Capital reported a standalone net profit of EGP 3.5 million on revenues of EGP 21.1 million, compared with a net loss of EGP 9.2 million in the same quarter last year, marking the second consecutive quarter of profitability for the firm on a standalone basis, driven by steady advisory fees, lack of non-recurring OPEX, and net financing and forex gains.

On a consolidated basis, the firm reports a net loss of EGP 47.3 million in 2Q13, a narrowing of 61.9% year-on-year.

As consolidated results do not present a complete picture of the performance of core platform companies that will remain part of Citadel Capital’s investments following the winding down of a three-plus year divestment program for non-core assets, Management has presented aggregate revenue and EBITDA figures for the firm’s eight core operational platform companies since its FY12 Business Review. These aggregate figures give a more accurate picture of financial and operational performance than do consolidated results, which will become better indicators of the firm’s performance as the transformation process moves forward.

Highlights of the performance of the firm’s investments in each of the five core industries follow.


The Energy division saw revenues increase by 8.7% year-on-year in the second quarter to EGP 332.1 million, while EBITDA increased by 6.6% to EGP 27.9 million, on the back of better performance in the quarter at both TAQA Arabia and Tawazon. In the first half, revenue was essentially flat at EGP 623.6 million compared to EGP 626.5 million in the same period of 2012, while EBITDA declined 33.1% year-on-year in the half, as falling power generation and distribution volumes and margins in 1Q13 were only somewhat offset by gains in the second quarter. Notably, segment EBITDA grew by 49% in 2Q13 over 1Q13.


The Transportation division posted aggregate revenues in 2Q13 of EGP 132.2 million, a 12.6% increase over EGP 117.4 million in 2Q12. EBITDA, while still in the red, saw a 71.5% improvement year-on-year in 2Q13 to negative EGP 9.3 million, primarily driven by the better performance of Africa Railways portfolio company and turnaround play Rift Valley Railways (RVR). RVR recorded in 2Q13 its first profitable month on the EBITDA level, leading EBITDA losses to contract to less than US$ 0.1 million in 2Q13 from US$ 3.8 million the previous quarter. Nile Logistics, although recording a quarter-on-quarter improvement to negative EGP 9.2 million in 2Q13, continues to account for the majority of the Transportation segment’s EBITDA losses, as delays in the lifting of diesel subsidies — the macro theme backing this investment — offset the positive impact of Nile Barges (South Sudan).


The Agrifoods division reported a 6.5% y-o-y improvement in revenues in 2Q13 to EGP 324.3 million, as platforms Gozour (Egypt) and Wafra (newly operational greenfield in Sudan and South Sudan) both reported improved revenues. Meanwhile EBITDA surged by 68.3% y-o-y to EGP 35.4 million, primarily on strong performance by Gozour, and the lowering of EBITDA losses at Wafra. The segment saw a 6.9% rise in aggregate revenues in 1H13 to EGP 649.1 million compared to EGP 607.4 million in 1H12, while EBITDA climbed 97.3% year-on-year to EGP 63.6 million on the same factors supporting the 2Q results.


In the second quarter, the Mining division’s platform company ASCOM reported a 6.6% year-on-year increase in revenues to EGP 141.6 million and a very positive EBITDA swing from negative EGP 6.1 million in 2Q12 to positive EGP 4.9 million in 2Q13, bolstered by significant improvements at newly operational ACCM and Egyptian quarrying operations (via ASCOM standalone). In the first half, ASCOM reported a modest 1.7% y-o-y increase in revenues to EGP 273.4 million, while the successes of 2Q13 led to a 71.8% upswing in EBITDA to EGP 10.7 million, compared to EGP 6.2 million in 1H12.


Aggregate sector revenues were down 7.9% year-on-year in 2Q13 to EGP 533.7 million compared to EGP 579.3 million in 2Q12 as a 16.0% drop in revenues from Construction activities offset a 2.5% increase from the Cement division. EBITDA was down 37.6% over the same period at EGP 61.0 million, affected by the overhaul and temporary halt of production at Zahana cement in Algeria. That said, the division tripled EBITDA quarter-on-quarter, reporting EGP 61.0 million compared to EGP 18.3 million in 1Q13, thanks largely to improvements at the Cement division’s Al-Takamol Cement Plant and a turnaround at the Construction division’s ARESCO. In the first half, aggregate revenues for the sector were down 3.8% y-o-y at EGP 1.1 billion on lower revenues from both the Cement and Construction divisions, while EBITDA decreased 22.8% to EGP 80.1 million.

Principal Investments

Citadel Capital principal investments from its own balance sheet remain largely unchanged at US$ 1,132.1 million.
Full financial statements and management’s analysis of the performance of operational core platform companies as well as the firm’s standalone and consolidated financial results are available for download at ir.citadelcapital.com.


Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading investment company in Africa and Middle East. Citadel Capital controls investments of US$ 9.5 billion and focuses on 5 core industries: Energy, Transportation, Agrifoods, Mining, and Cement. For more information, please visit citadelcapital.com.

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