QALA For Financial Investments : Qalaa Holdings 4Q22 Business Review - Consolidated Results

FY 2022 BUSINESS REVIEW

CAIRO, EGYPT: 13 May 2023

Qalaa Holdings Reports FY 2022 Results

• Qalaa's consolidated revenue grew 113% y-o-y to EGP 97.7 billion in FY22 and recurring EBITDA reached EGP 32.3 billion compared to EGP 4.1 billion in FY21, supported by record refining margins at the Egyptian Refining Company (ERC) and strong performances across all subsidiaries;
• In FY22, Qalaa recorded a net loss of EGP 2.3 billion on par with the previous year, despite operational improvements, due to an FX loss of EGP 4.7 billion following the devaluation of the Egyptian pound;
• ERC was the primary driver behind consolidated revenue growth, contributing c.76% to Qalaa's total revenue in FY22. ERC's refining margins were exceptionally high throughout FY22 and have started tapering towards normalized margins in 2023.
• Excluding ERC, Qalaa's revenue grew by 33% y-o-y and recurring EBITDA increased by 101% y-o-y in FY22, driven by positive performances across Qalaa's subsidiaries;
• TAQA Arabia's solid topline results were primarily driven by a strong performance across all business lines: gas distribution, electricity generation and distribution, petroleum products distribution and water treatment;
• ASEC Holdings delivered a 48% y-o-y revenue growth on the back of strong topline results at ASEC Cement during FY22;
• National Printing saw improved volumes and benefitted from higher prices at all its companies. El Baddar continued to capitalize on its new cutting-edge facility, while Shorouk for Modern Printing and Packaging witnessed higher export volume and an increased average price per ton;
• ASCOM's growth was driven by volume and price expansion at GlassRock and ASCOM for Chemicals & Carbonates Manufacturing (ACCM);
• Dina Farms Holding's revenue grew y-o-y as ongoing facility enhancement projects continue to improve operations at Dina Farms and its manufacturing subsidiary; ICDP benefits from its direct distribution strategy, as well as improved pricing;
• The Group's export proceeds recorded c. USD 22.1 million in 4Q22 compared to USD 25.0 million in 4Q21. Full-year proceeds were USD 123.4 million compared to USD 95.5 million in FY21. Whereas local foreign currency revenue recorded c. USD 927 million in 4Q22 vs. USD 680.3 million in 4Q21 and USD 3.9 billion in FY22 compared to USD 1.19 billion in FY21. Moving forward, the Group will continue focusing on exports and leverage the cost advantage available to local manufacturers;
• Despite ERC's receivables from EGPC having reached USD 618.2 million as of 31 December 2022, EGPC continues to make enough payments enabling ERC to exceed mandatory debt repayments, including its upcoming debt repayment that is set for June 2023;
• Finalizing debt restructuring at Qalaa Holdings remains a priority, yet the process is slowed by the ongoing FX turbulence. Qalaa may settle some debt obligations using selected assets with the option of repurchasing these assets in the future;
• Qalaa has been resilient despite highly challenging macroeconomic conditions. The Group will continue driving growth by making small incremental investments in its subsidiaries, expanding cashflows, thereby reducing debt to cash flow ratios. Management is confident this strategy will continue to deliver;
• Furthermore, Qalaa is currently studying several new medium-sized, export oriented, predominantly green, and high local value-added investments, to be executed through its subsidiaries;
• Qalaa's Sudan based staff and assets are safe and Qalaa continues to closely monitor the ongoing developments within the country.

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FY 2022 BUSINESS REVIEW

CAIRO, EGYPT: 13 May 2023

4Q 2022 Consolidated Income Statement Highlights

	Revenue	Revenue (excluding ERC)
	EGP 28.3 bn	EGP 6.6 bn
	vs. EGP 14.9 bn in 4Q21	vs. EGP 4.6 bn in 4Q21
	EBITDA*	EBITDA (excluding ERC)
	EGP 10.5 bn	EGP 931.1 million
	vs. EGP 2.1 bn in 4Q21	vs. EGP 511.8 million in 4Q21
	Net Income After Minority	Net Income After Minority (excluding ERC)
	EGP (2.1) bn	EGP (2.8) bn
	vs. EGP (0.9) bn in 4Q21	vs. EGP (1.0) bn in 4Q21
	FY 2022 Consolidated Income Statement Highlights
	Revenue		Revenue (excluding ERC)
		EGP 22.9 bn
	EGP 97.7 bn
		vs. EGP 17.3 bn in FY21
	vs. EGP 45.8 bn in FY21
	EBITDA*		EBITDA (excluding ERC)
	EGP 32.3 bn		EGP 3.7 bn
	vs. EGP 4.1 bn in FY21		vs. EGP 1.8 bn in FY21
	Net Income After Minority		Net Income After Minority (excluding ERC)
	EGP (2.3) bn		EGP (4.8) bn
	vs. EGP (2.3) bn in FY21		vs. EGP (1.8) bn in FY21

Highlights from Consolidated Balance Sheet at 31 December 2022

Consolidated Assets

EGP 144.8 bn

At current book value vs. EGP 84.3 bn in FY21

Consolidated Debt

EGP 80.8 bn

Of which EGP 53.0 bn related to ERC

*Recurring EBITDA excludes one-off selling, general and administrative expenses

Qalaa Holdings, a leader in energy and infrastructure (CCAP.CA on the Egyptian Exchange), released today its consolidated financial results for the year ending 31 December 2022. The Group recorded a 113% y-o-y increase in revenue to EGP

97.7 billion in FY22, and recurring EBITDA of EGP 32.3 billion compared to EGP 4.1 billion in FY21. The solid performance reflects record refining margins at ERC and strong performances across all subsidiaries.

It is worth noting that ERC's refining margins were remarkably strong in 2022, averaging USD 4.9 million per day in 4Q22 compared to USD 1.8 million per day in 4Q21, as a result of high petroleum product prices. Excluding ERC, Qalaa's revenue grew by 33% y-o-y to EGP 22.9 billion in FY22 and recurring EBITDA increased by 101% y-o-y to EGP 3.7 billion in FY22.

At Qalaa's bottom line, the Group recorded a net loss after minority of EGP 2.3 billion, in line with last year. The net loss came despite operational improvements, due to an FX loss of EGP 4.7 billion following the devaluation of the Egyptian pound.

Financial and operational highlights follow, as do the management's comments and overview of the performance of different business units. Full financials are now available for download at ir.qalaaholdings.com.

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FY 2022 BUSINESS REVIEW

CAIRO, EGYPT: 13 May 2023

Financial and Operational Highlights

QALAA HOLDINGS

CONSOLIDATED REVENUE FY22

87%

• Qalaa's consolidated revenue grew in 4Q22 by 91% y-o-y to EGP 28.3 billion, closing the full year with a 113% y-o-y increase to EGP 97.7 billion in FY22, an increase that was primarily driven by ERC's revenue contribution.

EGP 97,716.9 mn

1%

1%

4% 5%

ERC's revenue more than doubled y-o-y to EGP 21.7 billion in 4Q22, compared to EGP 10.2 billion in 4Q21, and recorded a full-year growth of 162% y-o-y to EGP 74.7 billion in FY22. ERC's revenue constitutes more than 76% of Qalaa Holdings' topline for the year. The performance was driven by high refined petroleum product prices in relation to feedstock prices, and improved operational efficiency exemplified by no slowdowns or shutdowns in ERC's operation during the year.

◼ Energy	◼ Agrifoods
◼ Cement	◼ T&L
◼ Packaging &	◼ Other
Printing

• Mining

REVENUE PROGRESSION

			(EGP mn)
	12,781.3	28,331.9				97,716.9
		45,826
					.1
	4Q21		4Q22		FY21		FY22

RECURRING EBITDA

PROGRESSION (EGP mn)

2,085.9	10,504.1	4,131.9	32,259.6
4Q21	4Q22	FY21	FY22

• Excluding ERC, Qalaa's revenue in 4Q22 grew to EGP 6.6 billion, up 44% y-o- y compared to 4Q21. On a full-year basis, revenue marked a 33% y-o-y growth to EGP 22.9 billion in FY22, driven by improved performances across all subsidiaries.
  TAQA Arabia's revenue grew 25% y-o-y in 4Q22 reaching EGP 3.1 billion compared to EGP 2.5 billion in 4Q21. On a full-year basis, revenue grew to EGP 10.7 billion from EGP 9.1 billion in FY21, an 18% y-o-y increase. Revenue growth was primarily driven by a strong performance across all business lines.

National Printing delivered a 33% y-o-y increase in revenue during 4Q22 as well as a 67% y-o-y topline expansion in FY22 as it continued reaping the rewards of its new El Baddar state-of-the-art facility. Additionally, higher volume and an optimized pricing strategy at both Shorouk and Uniboard reflected positively on National Printing's results during both the quarter as well as the full year.

Meanwhile, ASCOM delivered a 45% y-o-y increase in top-line to EGP 364.0 million in 4Q22. In FY 22, revenue was also up by 45% y-o-y, reaching EGP 1.4 billion supported by increased volume and higher prices at GlassRock and ACCM.

At ASEC Holding revenue expanded 122% y-o-y in 4Q22 to EGP 1.5 billion, as well as 48% y-o-y in FY22, to reach EGP 4.6 billion owing to a strong performance in the production segment. Furthermore, ASEC closed the year with an EBITDA of EGP 450 million, which was undermined to the tune of c.EGP 106 million due to the hyperinflation calculation methodology in Sudan.

Meanwhile, Dina Farms Holding's revenue reached EGP 346.1 million in 4Q22, up 33% y-o-y. Dina Farms Holding's revenue was also up in full-year terms, reaching EGP 1.3 billion in FY22, a 24% y-o-y increase. The company's performance was backed by improved operations at Dina Farms and ICDP's revenue benefiting from higher prices and direct distribution strategy.

Finally, Nile Logistics delivered a 95% y-o-y revenue increase to EGP 119.4 million in 4Q22, as well as a 47% y-o-y increase in revenue to EGP 370.8 million in FY22.

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RECURRING EBITDA

PROGRESSION (Excluding ERC) (EGP mn)

		931.1				3,703.2
511.8			1,841
					.2
4Q21	4Q22	FY21		FY22

NET PROFIT PROGRESSION

(EGP mn)

			(2,081.7)		(2,278.4)		(2,287.6)
	(957.6)

4Q21

4Q22

FY21

FY22

FY 2022 BUSINESS REVIEW

CAIRO, EGYPT: 13 May 2023

• Qalaa's recurring EBITDA increased substantially in 4Q22 to EGP 10.5 billion compared to EGP 2.1 billion in 4Q21. As at year end, full-year recurring EBITDA reached EGP 32.3 billion compared to EGP 4.1 million in FY21.
  Profitability was primarily supported by ERC's positive performance during the year.
  ERC's gross refining margin improved significantly to USD 4.9 million per day versus USD 1.8 million per day in the same quarter last year on account of higher prices of refined petroleum products and improved operational efficiency. On a full-year basis, gross refining margins were also up, rising from USD 1.2 million per day in FY21 to USD 4.5 million per day in FY22.

Consolidated Recurring EBITDA Progression Chart* (EGP mn)

Consolidated EBITDA		Consolidated EBITDA ex- ERC	10,504

9,025

8,841

															3,890
													2,085
						762						1,205					932	1,057
329					328	367	320	626	357	750				783
	290	303								931
				521	509
	329	290	303	328	320	360	214	303	90	454
1Q19	2Q19	Q319	Q419	1Q20	2Q20	3Q20	Q420	1Q21	2Q21	3Q21	4Q21	1Q22	2Q22	3Q22	4Q22

• Excluding ERC, Qalaa recorded a recurring EBITDA increase of 82% y-o-y up to EGP 931.1 in 4Q22 compared to EGP 511.8 million in 4Q21. For FY22, recurring EBITDA expanded by 101% y-o-y to EGP 3.7 billion, driven by improved profitability across all the Group's subsidiaries.
  Qalaa's EBITDA excluding ERC was primarily driven by contributions from
  TAQA, National Printing, and ACH. Additionally, ASCOM's export-driven businesses delivered a strong performance, capitalizing on its competitive advantage in global markets, with increased pricing and volume at GlassRock and ACCM.
• Depreciation and amortization expenses stood at EGP 1.8 billion in 4Q22, up 60% y-o-y compared to EGP 1.1 billion in 4Q21, of which EGP 1.4 billion are related to ERC. The y-o-y increase is primarily due to the impact of currency translations, closing FY22 with a 30% y-o-y increase.
• Bank interest expense recorded EGP 1.8 billion in 4Q22, up 132% y-o-y versus the EGP 785.5 million recorded in 4Q21, and was up 50% y-o-y in FY22, closing the year at EGP 5.5 billion. The increase was attributed to higher interest

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FY 2022 BUSINESS REVIEW

CAIRO, EGYPT: 13 May 2023

rates, reflecting global monetary tightening, along with the impact of FX translations.

• Qalaa recorded an FX loss of EGP 3.2 billion in 4Q22 compared to a gain of EGP 73.6 million in 4Q21. In FY22, the Group recorded an FX loss of EGP 4.7 billion versus a gain of EGP 228.6 in FY21. The depreciation of the Egyptian Pound was the main reason behind the loss due to the predominantly dollar denominated debt at Qalaa Holdings.
• Qalaa Holdings recorded a consolidated net loss after minority interest of EGP 2.1 billion for 4Q22 compared to a loss of EGP 957.6 million in 4Q21. As for FY22, Qalaa recorded a net loss of EGP 2.3 million, in line with FY21. The net loss for the period is mainly attributable to a substantial FX loss on the back of the EGP depreciation.
  Qalaa's debt restructuring efforts at the holding level are progressing and remain a top priority for the Group. Additionally, ERC's negotiations with its lenders for a full debt restructuring are underway.
• Acquisitions and restructuring gain of EGP 33.0 million in 4Q22 was due to the ongoing restructuring in the cement sector. FY22 recorded an EGP 830.8 million gain resulting mainly from Logistics debt restructuring.
• Qalaa's consolidated net debt totaled at EGP 71.55 billion as of 31 December 2022 vs EGP 55.59 billion as of 31 December 2021, out of which ERC and ERC- related debt stood at EGP 56.15 billion as of 31 December 2022 compared to EGP 45.55 billion as of 31 December 2021. The increase was partially driven by exchange rate fluctuation. Starting from 1Q23, ERC has become current on all its scheduled debt payments.

Net Bank Debt Progression (EGP bn)

March 2022: EGP floatation

October 2022: EGP floatation

	55.00
	50.00											50.57
	45.00
	40.00
Billion	35.00
30.00
EGP	25.00
20.00
	15.00											15.40
	10.00
	5.00											5.58
	0.00
	Mar'2020	Jun'2020	Sep'2020	Dec'2020	Mar'2021	Jun'2021	Sep'2021	Dec'2021	Mar'2022	Jun'2022	Sept'2022	Dec'2022
		2020			2021			2022
			All Others	ERC		QH SPVs related to financing ERC Shares
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