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 Founder and Chairman Dr Ahmed Heikal
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 US$0.5 million and a 72.8% narrowing year-on-year of its consolidated net loss to US$ 6.9 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 US$ 217.7million, 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 US$ 17.4 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 US$528 million 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 US$507,976 on revenues of US$ 3 million, compared with a net loss of US$ 1.3 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 anet loss of US$ 6.9 million in 2Q13,a narrowing of 72.8% 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.
Energy
The Energy division saw revenues increase by 8.7% year-on-year in the second quarter to US$ 48.2 million, while EBITDA increased by 6.6% to US$ 4 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 US$ 90.5 million compared to US$ 90.9 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.
Transportation
The Transportation division posted aggregate revenues in 2Q13 of US$ 19.2 million, a 12.6% increase over US$ 17 million in 2Q12. EBITDA, while still in the red, saw a 71.5% improvement year-on-year in 2Q13 to negative US$ 1.3 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 US$ 1.3 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).
Agrifoods
The Agrifoods division reported a 6.5% y-o-y improvement in revenues in 2Q13 to US$ 47 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 US$ 5.1 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 US$ 94.2 million compared to US$ 88.2 million in 1H12, while EBITDA climbed 97.3% year-on-year to US$ 9.2 million on the same factors supporting the 2Q results.
Mining
In the second quarter, the Mining division’s platform company ASCOM reported a 6.6% year-on-year increase in revenues to US$ 20.6 million and a very positive EBITDA swing from negative US$ 885,329 in 2Q12 to positive US$ 711,166 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 US$ 39.7 million, while the successes of 2Q13 led to a 71.8% upswing in EBITDA to US$ 1.6 million, compared to US$ 899,843 in 1H12.
Cement
Aggregate sector revenues were down 7.9% year-on-year in 2Q13 to US$ 77.5 million compared to US$ 83.6 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 US$ 8.9million, affected by the overhaul and temporary halt of production at Zahana cement in Algeria. That said, the division tripled EBITDA quarter-on-quarter, reporting US$ 8.9million compared to US$ 2.7 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 US$ 159.6 million on lower revenues from both the Cement and Construction divisions, while EBITDA decreased 22.8% to US$ 11.6 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 atir.citadelcapital.com.
