Qalaa reports revenue growth of 25% y-o-y in 2Q17 to EGP 2.3 bn on the back of improved operational performance across all sectors led by energy and cement. EBITDA records growth of 76% y-o-y to EGP 167.4 mn driven by higher contributions from ASCOM, Gozour and Tawazon; ERC reaches 95% completion

Despite double digit topline growth and important headways in restructuring efforts, Qalaa recorded bottom-line loss of EGP 2.8 bn driven predominantly by the full impairment of Africa Railways' assets in Kenya; substantial gain on consolidated income statement anticipated once Qalaa cedes control of Africa Railways and deconsolidates its liabilities in the coming period.

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 quarter ended 30 June 2017, reporting revenue growth of 25% y-o-y to EGP 2.3 billion in 2Q17. Revenue growth during the quarter was largely driven by improved performances at Qalaa’s energy and cement platforms.

TAQA Arabia turned in solid results for the period, recording revenue growth of 24% y-o-y in 2Q17 as it benefits from gradual phase-out of energy subsidies. Meanwhile, Tawazon posted a solid 127% y-o-y increase in top-line owing to higher demand for alternative fuels — including biomass and Refuse Derived Fuel (RDF) — as well as new contracts for the construction of sanitary landfills. At ASEC Cement’s Al Takamol plant in Sudan, improved productivity saw revenues grow 28% y-o-y in 2Q17, while ARESCO recorded a two-fold increase in top-line during the quarter as it began implementing work on new projects.

“As the country maintains a steady reform course, we remain increasingly confident in our position to capture the upside and capitalize on the new favorable economic framework,” said Qalaa Holdings Chairman and Founder Ahmed Heikal. “Almost a year in since the rollout of the government’s reform program, Qalaa has consistently delivered double-digit top-line growth as platforms across its portfolio reap the rewards of Egypt’s new macroeconomic environment. In 2Q17, we delivered growth as our energy plays TAQA Arabia and Tawazon benefitted from the phase-out of energy subsidies at both ends of the spectrum, while other portfolio companies are also finding strong footings as they leverage their ability to deliver efficiencies deemed ideal in today’s macroeconomic environment.”

“Our mining subsidiary ASCOM is gaining increased price-competitiveness both locally and regionally thanks to its position as a quality exporter and an import substitution play. And we are also pushing through higher operational efficiency at Dina Farms as we seek to cement its standing as one of the country’s leading agribusinesses. Meanwhile, our greenfield Egyptian Refining Company is at 95% completion and is gearing up to deliver much needed energy resources to our national economy,” Heikal added. “Our focus in the months ahead will be to bring ERC online and translate competitive advantages and operational efficiencies gained across our portfolio into bottom-line profitability and accretive returns to our investors.”

At the EBITDA level, Qalaa recorded growth of 76% y-o-y to EGP 167.4 million in 2Q17, driven by higher contributions from ASCOM, Gozour and Tawazon’s ENTAG subsidiary in Oman. EBITDA growth was also supported by lower SG&A as a percentage of sales, standing at 11% in 2Q17 versus 12% in the same period last year. The company also booked lower non-recurring SG&A expenses of EGP 1.8 million in 2Q17 compared to EGP 11.9 million in 2Q16.

Qalaa recorded a gain from sale of investment of EGP 404.4 million in 2Q17 following the sale of ASEC Djelfa (ASEC Cement’s greenfield plant in Algeria) in late May 2017. Meanwhile, following the 31 July 2017 ruling by the High Court of Kenya to terminate the Africa Railways concession to operate the Kenyan Railway, the company initiated the transfer of its assets to the regulatory authority and thus booked the asset impairment (net-of-minority) of EGP 2.7 billion on its 2Q17 consolidated financial statements as per the conservative Egyptian accounting standards.

Qalaa Holdings continues to carry Africa Railways’ liabilities totaling EGP 5.6 billion on its consolidated financial statements. Once Qalaa Holdings cedes control of Africa Railways, said liabilities will be deconsolidated and Qalaa will potentially book a substantial gain on its consolidated income statement in the coming period (net of FX reserves and minority interests).

Following the impairment of Africa Railways, Qalaa’s losses from discontinued operations declined to EGP 11.7 million in 2Q17, down from EGP 149.0 million in 2Q16 and EGP 225.6 million in 1Q17.

Qalaa recorded a net loss after minority interest of EGP 2.8 billion in 2Q17, compared to a loss of EGP 277.5 million in 2Q16. Factoring out Africa Railways’ impairment net of minority interests, Qalaa’s bottom-line would have posted a loss of EGP 20.6 million in 2Q17.

“The quarter just ended saw us make important headway in our efforts to restructure our portfolio and streamline investments in a manner that accelerates Qalaa’s return to profitability by 2018,” said Qalaa Holdings Co-Founder and Managing Director Hisham El-Khazindar. “We successfully divested from our Algerian greenfield cement plant Djelfa as part of our strategy to focus management bandwidth on operational and profit-generating platforms, and in parallel booked a gain from the transaction of c.EGP 404 million in proceeds some of which will be partly earmarked for deleveraging at both the platform and Qalaa Holdings levels.”

“More importantly, in 2Q17 we took the difficult but necessary decision to fully impair Africa Railways’ assets in Kenya. While the decision took a heavy toll on our profitability for the quarter nearing EGP 2.7 billion, the impairment effectively caps future losses from a discontinued operation that is facing increased operational difficulty and is otherwise a drain on resources and capital that could be deployed to other, more promising growth avenues. Additionally, we anticipate a substantial gain on our income statement once we cede control of Africa Railways’ and deconsolidate its EGP 5.6 billion in liabilities in the coming period.”

It is worth noting that Qalaa Holdings had fully impaired its investment in Africa Railways on its FY2016 standalone financial statements.

“With our investment portfolio becoming increasingly optimized for today’s economic realities, and with ERC now 95% complete, we are reaching a watershed moment in our transformation into a lean and profitable company that maximizes value for shareholders,” El-Khazindar concluded.

Qalaa Holdings’ full business review for 2Q2017 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
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 Qalaa Holdings 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.

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