3Q14 Revenues Rise 11% q-o-q to EGP 1.7 bn, EBITDA (before one-off charges) Increased 39% q-o-q to EGP 257.9 million, Net Loss Falls 67% to EGP 59.6 mn

Company on track to reduce debt by year’s end, expects significant increase in 2015 EBITDA and to return to profitability in 2016

3Q 2014 Financial & Operational Highlights

  • Total Revenues rose 11% quarter-on-quarter to EGP 1,726.6 million.
  • EBITDA (before one-off charges) increased 39% q-o-q to EGP 257.9 million. Total EBITDA in 3Q14 came in at EGP 212.3 million, representing a 17% improvement q-o-q. Meanwhile, EBIT stood at EGP 120.6 million in 3Q14, a two-fold increase over the previous quarter.
  • Net Loss After Minority Interest narrowed significantly, falling 67% to EGP 59.6 million in 3Q14 compared to a loss of EGP 178.7 million in 2Q14 and EGP 231.9 million in 1Q14.
  • Top contributors to Revenues include the cement segment (40%) and energy segment (29%) on the back of standout performances from units of ASEC Cement and TAQA Arabia.
  • Turnaround of a number of operating companies completed.
  • The company reports Total Bank Debt of EGP 11.7 billion, EGP 3.5 billion of which relate to greenfield ERC, vs. Total Equity of EGP 13.1 billion.

Qalaa Holdings (CCAP.CA on the Egyptian Exchange; formerly Citadel Capital), an African leader in infrastructure and industry, released today its consolidated financial results for the three months ending 30 September 2014, reporting Revenues of EGP 1,726.6 million, up 11% compared with EGP 1,560.7 million in 2Q14. The company reported a Net Loss After Minority Interest of EGP 59.6 million in 3Q14.
For the nine months ending 30 September 2014, Qalaa Holdings accordingly reports Revenues of EGP 4,654.1 million, a 34% y-o-y rise compared to the 9M13 pro forma figure of EGP 3,465.2 million.

In the third quarter, EBITDA (before one-off charges) came in at EGP 257.9 million in 3Q14, a 39% improvement q-o-q. Meanwhile, EBIT rose two-fold to EGP 120.6 million on the back of top-line improvements as well as decreased Depreciation and Amortization expenses.

“Our financials reflect a clear improvement in operational performance both quarter-on-quarter and year-on-year owing to both strong management of the businesses across our core industries as well as an improving macro climate, particularly in Egypt,” said Qalaa Holdings Chairman and Founder Ahmed Heikal.

Non-recurring SG&A expenses rose to EGP 45.7 million in 3Q14 from EGP 4.3 million the previous quarter. Expenses in the third quarter include EGP 17.6 million in advisory fees related to the sale of Sphinx Glass; a further EGP 24 million represents the group’s consolidated contribution to corporate social responsibility initiatives.

Notably, Qalaa Holdings recognized in 3Q14 its gains on the sale the previous quarter of Sphinx Glass (EGP 85 million), a subsidiary of Glassworks (a non-core platform company of Qalaa Holdings). Although Qalaa booked foreign exchange losses (EGP 38.2 million) arising primarily from the devaluation of the Sudanese pound, the contribution from discontinued operations continued to improve, with a strong contribution from improving results at subsidiary ASEC Holding’s Algerian cement producer Zahana Cement Co.

“Our efforts to dispose of non-core companies — both discontinued and operational — are ongoing. To that end, Qalaa is engaged in negotiations on multiple fronts. Our expectation is thus that the Discontinued Operations line item will no longer be a component of our income statement by the end of 1Q15,” said Qalaa Holdings Managing Director and Co-Founder Hisham El-Khazindar

Meanwhile, said El-Khazindar, “We will continue to target a declining ratio of SG&A to sales even as we recognize that as economic conditions improve and market conditions change, we will have to be somewhat more aggressive in spending — in absolute terms — to capture new opportunities after several years of austerity.”
Qalaa is now implementing an enterprise resource planning (ERP) system at the group level. The information provided by MIS systems has brought to light a number of potential cost-cutting initiatives that management is presently studying.

“As we continue to emphasize operational performance and bring greenfields into production, our target is simple: To return to profitability in 2016 as we seize the opportunity to grow and make a lasting contribution to the economic development of our home market of Egypt,” concluded Heikal. “We expect to report FY14 EBITDA of some EGP 600-650 million and will look to see that figure grow significantly in the next fiscal year. In conjunction with our efforts to return to profitability, we are diligently working to reduce debt at every level of the organization.”

By year-end 2014, it is expected that total debt at the Qalaa Holdings level will decrease to US$ c. 260 million from US$ 300 million in FY13. The company continues to push forward with reducing debt carried on the operational company levels.

Detailed overviews of performance of operational companies in each of Qalaa’s core industries as well as complete financials are available for download on ir.qalaaholdings.com

—Ends—

Previous Qalaa Holdings press releases on this subject and others may be viewed online from your computer, tablet or mobile device at qalaaholdings.com/newsroom

Qalaa Holdings(CCAP.CA on the Egyptian Stock Exchange) is an African leader in infrastructure and industry. Formerly known as Citadel Capital, Qalaa Holdings controls subsidiaries in core industries including Energy, Cement, Agrifoods, Transportation & Logistics, and Mining. To learn more, please visit qalaaholdings.com.

Forward-Looking Statements
Statements contained in this News Release that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Qalaa Holdings. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Certain information contained herein constitutes “targets” or “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “seek,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Actual events or results or the actual performance of Citadel Capital may differ materially from those reflected or contemplated in such targets or forward-looking statements. The performance of Qalaa Holdings is subject to risks and uncertainties.

For more information, please contact:

Ms. Ghada Hammouda
CMO & Head of Corporate Communications
Qalaa Holdings

ghammouda@qalaaholdings.com

Tel: +20 2 2791-4439
Fax: +20 22 791-4448
Mobile: +20 106 662-0002