Qalaa records Q1 2016 net loss of $27.33 mln

Qalaa Holdings, an African leader in energy and infrastructure, recorded first quarter net loss of 242.7 million Egyptian pounds ($27.33 million), wider than 112.2 million pounds loss last year, the company announced Monday.

Total revenues saw a 20 percent increase y-o-y in 1Q16 compared to the adjusted 1,441.0 million pounds recorded in 1Q15. Comparative 1Q15 figures have been adjusted to reflect the divestment of ASEC Minya, ASEC Ready Mix, Misr Qena Cement, Rashidi El-Mizan, Tanmeya and Mashreq, eliminating the figures of divested companies. Additionally, ASCOM’s 1Q16 results were added to Qalaa’s 1Q15 figures, owing to ASCOM’s income statement consolidation starting 3Q15, to allow for a more accurate comparison of year-on-year results.

Top-line growth was driven primarily by operational improvement at ASEC Cement’s Sudan subsidiary Al-Takamol and Qalaa’s energy generation and distribution platform, TAQA Arabia.

“At the mid-way point in 2016, we are laser focused on our core energy units, Egyptian Refining Company and TAQA Arabia, and will continue to press forward with our divestment program,” said Qalaa Holdings Chairman and Founder Ahmed Heikal.

“On that front, ERC — Egypt’s largest in-progress private-sector megaproject — is more than 85 percent complete and we expect to sell the first on-spec product in 2017 as planned, with the first full operational year expected to hike Qalaa’s consolidated EBITDA in 2018.”

EBITDA for the period stood at 143.2 million pounds, remaining somewhat flat compared to 1Q15 adjusted figure owing to higher SG&A expenses booked during the quarter.

During 1Q16, Qalaa continued to deliver on its divestment and deleveraging strategy having concluded the sale of Misr Glass Manufacturing (MGM) as well as microfinance player Tanmeyah. On the deleveraging front, during the period between 1Q15 and 1Q16 Qalaa Holdings deconsolidated 1.3 billion pounds of debt through disposals and repaid an additional 1.1 billion pounds, both of which play into the reduction of financial and operational risk.

“This year marks a critical point for Qalaa and the peak of our transformation strategy. Management is taking concrete steps and decisions in a clear direction that will stabilize the company’s profitability, releasing insolvent investments and enabling us to better direct our focus towards key value-adding projects with promising futures, all within the framework of a difficult economic context,” said Qalaa Holdings Co-founder and Managing Director Hisham El-Khazindar. “Our divestment strategy has seen the company generate net gains from the sale of investments, deconsolidate and repay a total of over 2.4 billion pounds in debt since the beginning of FY2015 to date, and clean up our books in preparation for the start of ERC’s production.”

Net Loss after Minority Interest stood at 242.7 million pounds in 1Q16, compared to the 1Q15 loss of 119.1 million pounds. Results were weighed down in part by non-cash charges, including consolidated FX losses of 45 million pounds on the back of the 14 percent devaluation of the EGP against the USD, as well as discontinued operations totaling 94 million pounds.