AFRICAN LEADER IN ENERGY & INFRASTRUCTURE
BEARING
A n n u a l R e p o r t
TABLE OF
CONTENTS01
Chairman's Message
04
Financial
Review
2023
A N N U A L
R E P O R T
02
At a Glance
03
Operational Highlights
05
Sustainability
06
Financial
& Corporate Governance
Statements
CHAIRMAN'S
MESSAGEQalaa Holdings // 2023 Annual Report 3
Chairman's Message At a Glance Operational Highlights Financial Review
Sustainability
& Corporate Governance Financial Statements
Chairman's Message
Ahmed Heikal
Chairman and Founder
Qalaa Holdings // 2023 Annual Report
Throughout 2023, we took major steps in our deleveraging strategy, which has led to a significant reduction in the
Group's debt levels and laid a solid foundation
for future growth.
80+
Businesses Founded & Developed
Fellow Shareholders,
2023 was a transformative year for Qalaa Holdings, one defined by strategic restructuring, financial discipline, and a reaffir-mation of our long-term commitment to sustainable growth. Over the past year, we made decisive moves to streamline our balance sheet, optimize our portfolio, and position Qalaa for a future of sustained profitability and value creation. We have also managed to successfully navigate a complex macroeconomic environment both locally and globally with agility, ensuring that our businesses remain resilient and forward-looking.
Reducing Debt and Optimizing Structure
At the heart of this transformation has been our steadfast focus on deleveraging. Through a series of well-executed debt settlements and asset transactions (with the right to repurchase the sold shares), we have successfully reduced our consolidated debt. The significance of this achievement cannot be overstated-it marks a turning point where the pressure on Qalaa as a holding company has been substantially relieved, allowing us to focus on growing our businesses and maximizing stakeholder value.
Throughout 2023, Qalaa Holdings concluded several agreements and transactions for the settlement and restructuring of the Group's debt, including: ASEC Holding's debt settlement and restructuring and the National Service Projects Organization's (NSPO) debt settlement. Subsequently, in 2024, we continue to settle the bulk of our liabilities at both the holding level and with our subsidiaries to Financial Holdings Investments Ltd. (FHI), Egyptian banks senior debt settlement, and AIB settlement and restructuring. The remaining components of debt restructuring are at final stages.
4
Chairman's Message At a Glance Operational Highlights Financial Review
Sustainability
& Corporate Governance Financial Statements
Additionally, in 3Q23, APM Investment Holdings Limited (APM), a wholly owned subsidiary of ASCOM, sold its c.35% stake in Ethiopia's Kurmuk Gold Project to the Canadian company Allied Gold Corp. The transaction resulted in an EGP
2.6 billion gain on the sale of assets.
This debt reduction has been accompanied by a broader restructuring strategy, which includes divestitures, financial settlements, and a clear roadmap for optimizing our ownership structure. Agreements with Egyptian banks, the restructuring of our senior debt, and the successful listing of TAQA Arabia on the Egyptian Exchange (EGX) were all part of this process. We remain committed to a process that will eventually, over the course of several years, simplify Qalaa's structure and increase transparency, making it easier for investors to assess the full value of our portfolio.
Maintaining Robust Growth and Profitability
Today, all of our operating companies are profitable, with strong cash flow generation that enables us to invest prudently in their expansion. Our companies are delivering solid growth at a rate of 40-50% per annum, a trend that we expect will continue for the next three years. This performance validates our strategy of fostering businesses that contribute to Egypt's economic resilience, particularly in sectors like energy, infrastructure, and industrial manufacturing. Our success is rooted and validated in our long-standing investment thesis that places emphasis on import substitution, export growth, and the maximization of operational efficiencies.
The Egyptian Refining Company (ERC), which remains our largest asset, has naturally faced cyclical challenges given the nature of its industry. Refining margins have been impacted by global energy price shifis and market normalization following the significant spike in oil prices in 2022. Despite these headwinds, ERC continues to perform a vital role in reducing Egypt's reliance on imported refined products, generating employment, and
supporting industrial activity. Additionally, we have undertaken important steps to optimize ERC's financial structure, ensuring that it remains on track to fully settle its senior debt by 2025. Once this milestone is reached, ERC will be in a position to start distributing dividends, creating additional value for our shareholders.
Beyond ERC, the breadth of our portfolio companies-ranging from energy distribution at TAQA Arabia to our industrial and agribusiness ventures-continues to reflect our commitment to strengthening Egypt's economic growth.
TAQA Arabia has been a standout performer, delivering robust revenue growth driven by its natural gas, power, and fuel distribution businesses. The company has successfully expanded its CNG station network and is playing an increasingly pivotal role in Egypt's energy transition, particularly through its renewable energy initiatives. Similarly, our industrial businesses-including National Printing and ASCOM-are demonstrating strong growth, capitalizing on rising domestic demand and increasing export potential.
Dina Farms, another key pillar of our portfolio, continues to benefit from Egypt's growing focus on food security. We have invested in expanding production capacity, introducing new product lines, and leveraging our distribution channels to drive revenue growth. Our agrifoods segment remains an area of strategic importance, and we see significant potential in further expanding our footprint in this sector.
ESG Integral to Our Agenda
As we look to the future, we continue to recognize the importance of sustainability and environmental stewardship. Our businesses are increasingly focused on integrating environmental, social, and governance (ESG) principles into their operations. Whether through renewable energy investments, responsible resource management, or corporate governance enhancements, we continue to lead by example in building
Qalaa Holdings // 2023 Annual Report 5