Qalaa reports revenues of EGP 7.8 bn in FY16, up 25% Y-o-Y alongside significant FX--related and impairment losses; FY16 EBITDA remaining stable despite inflationary pressures; ERC nearing completion with construction progress at 94.1% as of May 2017

Bottom-line turns a loss of EGP 4.1 billion in FY 2016 driven predominantly by total non-cash charges of c.EGP 3.5 billion related to FX losses and impairments following the devaluation of the Egyptian pound

Qalaa Holdings, a leader in energy and infrastructure (CCAP.CA on the Egyptian Exchange, formerly Citadel Capital), released today its consolidated financial results for the year ending 31 December 2016, reporting a net loss after minority interest of EGP 4,106.5 million on revenues of EGP 7,848.8 million. On a quarterly basis, revenues posted EGP 2,525.1, up 45.6% y-o-y, with bottom-line losses recording EGP 3,369.1 million. Full-year and quarterly profitability were weighed down by FX losses totaling EGP 2,003.4 million in 4Q16 following the float of the Egyptian Pound in November 2016, a development that also drove up impairments and losses from discontinued operations.

Revenue growth in FY16 was largely driven by platform company TAQA Arabia where it posted a 38% y-o-y growth in full-year revenues to EGP 3,214.5 million and contributing 56% to Qalaa top-line growth in absolute value. TAQA’s top-line growth reflects both improved operational performance as well as the effect of translating the BVI parent company’s USD denominated financials to EGP on Qalaa’s consolidated statements following the float of the Egyptian Pound by the Central Bank of Egypt (CBE) in November 2016.

ASEC Holding subsidiaries ASEC Cement and ASEC Engineering also helped drive-up Qalaa’s revenues in FY16, with the two platform companies contributing 23% to revenue growth in absolute terms. Improved performance came thanks to increased volumes at ASEC Cement’s Sudan plant (Al-Takamol) and higher fees per ton at ASEC Engineering.

“Over the past 12 months Qalaa has made very significant strides toward reshaping its business model and positioning itself for future growth as the economy prepares to enjoy a good multi-year run,” said Qalaa Holdings Chairman and Founder Ahmed Heikal. “Our top-line is already capturing the upside of the macroeconomic themes that are now coming to play with revenues up 25.0% y-o-y at the close of 2016.”

“The steps taken by the Government of Egypt to fully embrace a reform program, including the float of the Egyptian Pound and the phase-out of energy subsidies, are exactly the policies we’ve been advocating for over a decade. And while the economic reform program has taken a short-term toll on bottom-line profitability for all businesses operating in Egypt, in the long haul it is set to benefit those who can deliver increased efficiency, exporters and producers of import substitutes, all of which are characteristics of our investment portfolio,” Heikal added.

Qalaa Holdings controls exporters including ASCOM Carbonate and Chemicals Manufacturing and GlassRock; import substitutes particularly its USD 3.7 billion Egyptian Refining Company, which will curb by c. 50% Egypt’s present-day diesel imports; plays on liberalization of energy markets, including TAQA Arabia, solid waste management company Tawazon and Nile Logistics which can deliver increased transportation efficiencies.

At the EBITDA level Qalaa posted EGP 442.2 million in FY16, down only 2% y-o-y despite the significant pressures on its subsidiaries’ cost base. Meanwhile, on a quarterly basis the company’s EBITDA surged more than three-fold to EGP 120.5 million. The significant increase in 4Q16 EBITDA comes on the back of several factors, namely improved performance at energy plays TAQA Arabia and Tawazon during the quarter as well as lower one-off SG&A expenses. In 4Q15, the company had booked EGP 67.2 million in non-recurring SG&A — related to the advisory and legal fees for the multiple transactions concluded during the quarter — compared to EGP 21.1 million in 4Q16.

Qalaa recorded impairments of EGP 1,463.5 million in FY16, up 112.6% y-o-y, with EGP 568.0 million being related to Wafra, Qalaa’s agriculture business in Sudan the financials of which are translated from USD to EGP on Qalaa’s consolidated statements. Additionally, an impairment of EGP 190 million was booked at Grandview on the back of a downward asset revaluation; a goodwill impairment of EGP 179 million at Nile Logistics; and EGP 178 million in impairments at ASEC Cement’s Djelfa (Algeria Cement) related to goodwill and projects under construction.

Meanwhile, losses from discontinued operations posted EGP 765.7 million in FY16 of which c.63% (EGP 478.8 million) relate to Africa Railways and EGP 80 million from Mena Home (Designopolis mall). Higher losses from Africa Railways came as float of the Egyptian Pound in November 2016 inflated the company’s foreign currency denominated operational losses following their translation into EGP on Qalaa’s financials.

Overall the CBE’s float of the Egyptian Pound on 3 November 2016 — which saw the EGP lose over 50% of its value to trade at a USD/EGP rate of 18.41 as of 31 December 2016 versus a pre-float rate of 8.79 — led to Qalaa recording total FX losses of EGP 2,067.5 million in FY16, of which EGP 2,003.4 million were booked in 4Q16.

“Qalaa Holdings stands today as a very different company than it did a few short years ago,” said Qalaa Holdings Co-Founder and Managing Director Hisham El-Khazindar. “We have continued to push forward with our divestment strategy as we seek to streamline and reshape our investments, concluding early this year exits from Tanmeyah and Misr Glass Manufacturing. This allowed us to deconsolidate and repay a portion of debt in 2016.”

“Now with ERC making progress toward completion and production earmarked for 2018; with TAQA Arabia and other subsidiaries continuing to deliver healthy top- and bottom-line growth; and with the macro trends moving decisively in our favor and foreign exchange losses now behind us, we are increasingly confident in our proven winners and look forward to a transformative 2017 that will bring us closer to the point of profitability,” El-Khazindar added.

Qalaa Holdings’ full business review for 4Q/FY2016 and the financial statements on which it is based are now available for download on


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

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

Forward-Looking Statements
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Ms. Ghada Hammouda
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Qalaa Holdings

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