QALA For Financial Investments : Qalaa Holdings 2Q23 Business Review – Consolidated Results

Consolidated Assets

EGP 181.0 bn

At current book value vs. EGP 144.9 bn in FY22

Consolidated Debt

EGP 90.7 bn

Of which EGP 55.9 bn related to ERC

EGP 27,655.6 mn

• Energy – 87%◼ Agrifoods – 2%
• Packaging &◼ Transportation &

REVENUE PROGRESSION

(EGP mn)

ERC’s USD-denominated revenue dropped by 3% y-o-y in EGP terms to reach EGP 20.7 billion in 2Q23, driven by the decline in refined petroleum product prices. Despite this, ERC continued to make up the lion share of Qalaa Holding’s top-line for the quarter at 75%. While no slowdowns or shutdowns took place at ERC during the quarter, a planned overhaul took place in 3Q23.

• Excluding ERC, Qalaa’s 2Q23 revenue was up 26% y-o-y, recording EGP 6.9 billion, driven by improved performances across most subsidiaries.
  TAQA Arabia’s revenue grew 30% y-o-y in 2Q23 reaching EGP 3.2 billion compared to EGP 2.5 billion in 2Q22. The company’s revenue growth was primarily driven by a strong performance at TAQA Gas, which benefited from increased connection revenues as well as a rise in CNG volumes sold resulting from an expansion in the number of operating CNG stations versus last year. Revenue was also supported by the increase in the price and volume of both fuel and lubes at TAQA Petroleum.
  National Printing’s revenue remained stable y-o-y in 2Q23, standing at EGP 1.1 billion as the company witnessed mixed performances across its subsidiaries. Most notably, El Baddar continued to capitalize on its new facility to report a 15% y-o-y rise in revenues for the quarter. Meanwhile, Shorouk for Modern Printing and Packaging and Uniboard reported relatively stable revenues versus the previous year.
  ASCOM delivered a 23% y-o-ytop-line increase to EGP 436.7 million in 2Q23, mostly driven by EGP devaluation augmenting revenues at the USD denominated businesses including Ascom for Chemicals and Carbonates Manufacturing (ACCM) and Glassrock, an insulation material producer, the biggest revenue generators for ASCOM. Revenues were further boosted by the strong performance delivered by ASCOM’s Egyptian quarrying business.
  In 2Q23 ASEC Holding’s revenue was EGP 811.2 million, down 25% y-o-y compared to 2Q22, owing to the negative impact of the ongoing armed conflict in Sudan on the company’s operations. It is worth noting that the staff and assets of Qalaa’s Sudan affiliate Takamol Cement are safe and continue to operate at a limited capacity. Qalaa continues to closely monitor the ongoing developments within the country.
  Dina Farms Holding Company’s revenue reached EGP 480.0 million in 2Q23, up 40% y-o-y. The company’s performance was backed by improved operations across all business segments at Dina Farms and ICDP’s revenue benefiting from both higher prices and new product launches.
  Finally, CCTO’s transport & logistics business delivered a 148% y-o-y revenue increase to record EGP 168.6 million in 2Q23 driven by improvements across all revenue streams of its Egyptian arm NRPMC.

RECURRING EBITDA

PROGRESSION (Excluding ERC)

NET PROFIT PROGRESSION

(EGP mn)

2Q 2023 BUSINESS REVIEW

CAIRO, EGYPT: 16 September 2023

• Qalaa’s recurring EBITDA dropped significantly in 2Q23 to EGP 4.5 billion compared to EGP 9.0 billion in 2Q22. Profitability was mainly impacted by the thinning margins at ERC this quarter.
  ERC’s gross refining margins declined significantly during the quarter, averaging USD 1.86 million per day in 2Q23, compared to USD 5.36 million per day in 2Q22. The decline reflected an increase in feed stock prices, a drop in refined product prices, and the lower quality of feedstock received. It also partially reflects a normalization of oil product prices following a spike recorded in 2022.

Consolidated Recurring EBITDA Progression Chart* (EGP mn)

Consolidated EBITDA Consolidated EBITDA ex- ERC

1Q19 2Q19 Q319 Q419 1Q20 2Q20 3Q20 Q420 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23

*ERC started operation in 1Q20

• Excluding ERC, Qalaa recorded a marginal 2% y-o-y drop in recurring EBITDA from EGP 931.7 million in 2Q22 to EGP 915.2 million in 2Q23, driven by rising interest rates and borrowing costs, as well as the negative effects of the ongoing armed conflict in Sudan on Takamol Cement’s results.
  Qalaa’s EBITDA excluding ERC was primarily driven by contributions from TAQA, National Printing, and CCTO. Additionally, ASCOM’s export-driven businesses delivered a strong performance, capitalizing on its competitive advantage in global markets.
• Depreciation and amortization expenses stood at EGP 2.3 billion in 2Q23, up 71% y-o-y compared to EGP 1.1 billion in 2Q22. Of the total, EGP 1.8 billion were related to ERC.
• Bank interest expense recorded EGP 2.4 billion in 2Q23, up 105% y-o-y versus the EGP 1.2 billion recorded in 2Q22. The increase is attributable to higher interest rates, reflecting global monetary tightening, along with the impact of FX translations.
• It is worth noting that all FX gains/losses incurred in 2023 following the devaluation of the EGP were reclassified into other comprehensive income (OCI) under equity on the balance sheet as per the exceptional accounting treatment adopted by Qalaa. Meanwhile, in 2Q23 Qalaa recorded an FX gain of EGP 262.8 million as a result of hyperinflation treatment in Sudan.