HiPipo Money

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Operational improvements, new cost efficiencies, deleveraging and divestment program will see Qalaa return to bottom-line profitability by year-end 2015 and increase its ability to capture growth opportunities in core subsidiaries as well as fund favorable share buybacks

Qalaa Holdings (CCAP on the Egyptian Exchange, formerly Citadel Capital) released today its consolidated financial results for the year ending 31 December 2014, reporting revenues of EGP 6.5 billion, up 34% from 2013 pro forma figures. EBITDA stood at EGP at EGP 651.9 million on a full-year basis, a significant improvement over FY13’s figure of negative EGP 23.1 million. Qalaa posted a full-year net loss after tax and minority of EGP 879.6 million, a 54% improvement from the previous year’s pro forma figure of EGP 1.9 billion.

“Despite the headwinds we have faced, Qalaa Holdings has consistently made critical calls since 2004 as regards macro trends and business model that are now being vindicated — and made clear in our financial statements. We have always invested in infrastructure and industry, with a particular eye on energy de-regulation and demand created by Egypt’s compelling demographics. What was an investment thesis is now the core of our business strategy as a holding company as we finalize the transformation of our business model,” said Ahmed Heikal, Chairman and Founder of Qalaa Holdings.

“Most notable in this regard is that we have not just swung to the positive on the EBITDA front, but we have done so in line with our guidance of EBITDA north of EGP 600 million from a negative a year ago,” Heikal said. “Notable in this respect is that our EBITDA line reflects the impact of more than EGP 140 million in negative contributions from Rift Valley Railways — which is in the midst of a multi-year operational turnaround — as well as from pre-operational greenfields Egyptian Refining Company and Mashreq. The completion of the turnaround and the start of operations at greenfields will result in further significant EBIDTA improvements out of proportion to our natural EBITDA growth curve.”

That improvement was muted in part by the impact of one-time charges recorded in 4Q14, including charges related to impairments, restructuring and layoffs, all of them designed to lock-in future efficiencies, weighted particularly toward TAQA Arabia and Rift Valley Railways. Moreover, results reflect the impact of the devaluation of the Egyptian pound against the US dollar, which contributed additional foreign exchange charges and inflated interest expenses, as the company has some dollar-denominated debt.

Some EGP 204 million in negative contributions from discontinued operations relate primarily to ESACO, Elmisrieen and Enjoy. Management restates its previous guidance that it aims for the income statement to include no charges from discontinued operations after 2Q15. Interest and depreciation due to discontinued operations are non-cash items; management accordingly estimates that c. 95% of losses from discontinued operations are non-cash. A significant proportion of other charges on the income statement are also non-cash.

“Against this backdrop, I believe we will look at 2015 as marking a watershed year for Qalaa — a year in which we will distinguish ourselves as the owner and steward of large, transformative assets including Egypt’s largest private-sector megaproject; the nation’s leading independent energy distribution business; a highly competitive regional cement producer; and innovative transportation and logistics businesses that will change how goods move to market in Egypt and East Africa.

“In the year to come, our focus will be the completion of our transformation at the holding company level and a push forward with our divesting and deleveraging program, which will allow us to return to profitability by late this year — well ahead of schedule. Further to that, we will continue the steady build-out of our two key remaining greenfield operations: the Egyptian Refining Company (ERC, which is building a greenfield second-stage refinery in the Greater Cairo Area that will more than halve Egypt’s present-day diesel imports) and Mashreq (which will become the first fuel bunkering facility in the Eastern Mediterranean),” Heikal noted.

Management has outlined key elements of its strategy for 2015:

·         The company will increase its stakes in core assets through a capital increase that will see the firm capitalize liabilities arising from asset purchases worth around EGP 1.7 billion.

·         Sale of non-core assets: Following the exit of Sudanese-Egyptian Bank, Sphinx Glass, the foundries AAC and AMC, and Pharos Holding in 2014 and early 2015, Qalaa is now looking forward to additional divestments of non-core assets including MGM (a container glass business and the sole remaining investment under its GlassWorks platform) and remains watchful for other exit opportunities. The company is presently exploring the exit of Tanmeyah, its microfinance platform, and the sale of both confectioner Rashidi El-Mizan and the farm and fresh milk companies that operate under the Dina Farms brand in the wake of management’s decision to treat the agrifoods sector as non-core. The company is also streamlining and deleveraging its core businesses by selling non-core and non-essential elements of those units, such as ASEC Cement operations in Algeria and the Tebbin land held by Nile Logistics in Egypt. Proceeds of these sales and the consequent de-consolidation of debt will have a powerfully positive impact on the consolidated financial statements.

·         Share Buybacks: Management will create new value through share buybacks, using proceeds from strategic exits to acquire Qalaa shares for so long as these trade at a significant discount to their fair market value.

Equity-linked issuance: Management has appointed Renaissance Capital as mandated lead arranger to explore the potential issuance of a convertible bond in the fourth quarter of the current year.

“Management will continue to pursue exits such as the potential sale of Tanmeyah to fund share buybacks, motivated by the belief that Qalaa’s shares are presently trading at a steep discount to their fair market value,” said Qalaa Co-Founder and Managing Director Hisham El-Khazindar. “As our recent disclosure on the subject indicated, our divestment program is progressing, with multiple transactions having reached stages at which information memoranda have been withdrawn or at which binding offers are shortly due. As it has been for the past year, the mitigation of both financial and operational risk will key to our strategy. We are reducing financial risk by significantly deleveraging at the holding and platform company levels. Meanwhile, we are limiting operation risk through the divestment of underperforming assets, focusing instead on the winners and ensuring they have the funding they need to deliver on growth plans.”

Added Heikal: “We continue to institutionalize the new systems rolled out in 2014 that are not only giving our board better oversight of Qalaa, but which have given both the board and Qalaa management clearer control over subsidiary management. With phase one now complete, we are moving into the second phase of a three-year technology implementation cycle for a common information-sharing platform across Qalaa and all of our subsidiaries. This process is already paying dividends, and we see substantial opportunities to drive efficiencies not just through control of headcount and improved labor productivity, but through consolidation of spending on services and products ranging from assurance and mobile telephony to insurance, human resources and warehousing,” Heikal noted.

During FY14, Qalaa Holdings’ companies contributed a total of EGP 25 million to the Tahya Masr Fund in light of the company’s continued commitment to forging a better future for Egypt and the communities in which it does business.

Qalaa Holdings’ full business review for 4Q/FY14 and the financial statements on which it is based are now available for download on ir.qalaaholdings.com.

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Lamudi explores some of the top up-and-coming residential developments around the country

Uganda has been experiencing a high and steady growth in the real estate market, leading to a boom in residential property development in the country.

Shakib Nsubuga, County Manager of leading property portal Lamudi Uganda, said: “The steady growth of Uganda’s economy has attracted several foreign investors leading to an increase in the development of real estate projects and infrastructure. Some of these developments have been ambitious and groundbreaking which has caused us to see a growth in the real estate market.”

Lamudi looks at some of the top up-and-coming developments in Uganda below.

Megacity Mukono

Mega City is a new township being developed by APEX R1 that is offering a planned living and lifestyle within a city-like community. This development offers the comforts of a high-quality home with the convenience of close proximity to workplaces and the assurance of being part of a larger community. This development will come complete with a clubhouse fully equipped with gymnasium, a community hall, a multiple-purpose sports center, landscape gardens with children’s play area, a swimming pool with a separate children’s pool, a generator backup for all common areas lighting and ample car parking. Other amenities will include a shopping plaza close to the main road, and a free clinic. In total, the development offers 1264 apartments.

Krish Developments

Krish Developers is a highly renowned, international real estate development company, which has been operating in Uganda since 2006. The company has proudly carried out construction for some of the leading structures in Uganda. Current projects include the Krish Shopping Mall and the Krish apartments on Naguru Hill. The Naguru apartments will be luxurious three-bedroom apartments targeting the discerning property buyer. Apart from the Atlantis Naguru Hill apartments, Krish Developers have another project in Bugolobi, the Kailash Bungalows, which range from one-bedroom to three-bedroom luxury villas. Krish Developments is especially reputable due to the quality of its clients and use of high-class and up-to-date construction materials.

Jukas Construction

Jukas Construction is a leading real estate development and investment company in Uganda, which specializes in the construction of commercial and residential properties. This company is the mastermind behind Green Top Villas, a beautiful and well-structured development of five-bedroom apartments in Lubowa, with large spacious compounds, ample parking space and some of the most beautiful views in Uganda. The Green Top Villas provide spacious five- and four-bedroom villas with a secure living environment. Jukas Construction was incorporated in Uganda in February 2009 by a group of professional foreign investors.

ABOUT LAMUDI

Launched in 2013, Lamudi is a global property portal focusing exclusively on emerging markets. The fast-growing platform is currently available in 32 countries in Asia, the Middle East, Africa and Latin America, with more than 900,000 real estate listings across its global network. The leading real estate marketplace offers sellers, buyers, landlords and renters a secure and easy-to-use platform to find or list properties online.

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For five days running, the children of Kiswa Primary school in the outskirts of Kampala have been engrossed in the world of ICT, courtesy of the MTN ICT in Education drive for Primary School going children in the peri-urban and rural areas.

MTN Foundation in partnership with the Makerere University College of Computing and Information Sciences (CoCIS) kicked off the “ICT Clubs for Primary Schools” initiative at Kiswa Primary School. Through the newly acquired MTN Internet Bus, students and teachers were taken through experiential introductory training in computer and internet driven education.

The initiative is in alignment with the MTN Foundation strategy which focuses on social and community investment in Education, Health and National Priority Areas.

According to Anthony Katamba, MTN Uganda General Manager Corporate Services, the objective of this initiative is to create social and peer to peer learning of information technology solutions from the grass root of the educational structures.

“This will be achieved through setting up ICT clubs in primary schools, training of learners and teachers, donation of hardware and internet solutions to the clubs and scholarships for ICT training for patrons of the various school ICT clubs across Uganda”, he said

The project kicked off with a pilot phase covering pioneer Government schools in Kampala that will include five selected schools namely; Kiswa Primary School, Nakasero Primary School, Buganda Road Primary School, Bat Valley Primary School and Kitante Primary School.

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While mobile money is now available in most emerging markets, active usage is still low in many of these countries. Far still, its full potential is yet to be realised in countries where usage has seen deeper penetration.

According to the GSMA state of the industry report, only about 30 percent of registered mobile money accounts are actively used globally.

“Bridging the gap between registration and active usage will require providers to design products and services that are not simply ‘great ideas,’ but truly meet the needs of end users in Uganda and across Africa” said Innocent Kawooya the Partner, Cyberplc and CEO HiPipo.

Digital impact Awards Africa (DIAA) has introduced 3 categories to research and award innovation and excellence in the deployment of digital financial services to improve financial inclusion. These categories are:

1. Best Payments/Transfers Service
2. Best Online/Mobile Banking Service
3. Best Mobile Money Service

For mobile money integration to deliver full digital experience, mobile money should be integrated with web payments to fuel m-commerce and e-commerce on the African continent. DIAA has 3 categories whose ultimate success is tied to the penetration and use of internet connected system and digital payment channels. These categories are

1. Best E-Commerce Classifieds/Marketplace
2. Best E-Commerce Store/Service
3. Best E-Service

For sustainable use of digital financial services to improve financial inclusion, there has to be trust in the digital financial systems. Due to this necessity the DIAA category for Best Cybersecurity Practice will review how well our digital financial services especially those accessed through internet channels are adopting best cybersecurity practices.

“Our research will include, the state of mobile money product offerings including those integrating with web payments. We shall also research on the evolution of mobile finance solutions including mobile insurance, mobile credit and mobile savings,” Kawooya explained.

Digital Impact Awards Africa entry is open. The awards will be held on 13^th August 2015 at Serena Hotel Kampala.

DIAA is proudly presented by Cyberplc and HiPipo, supported by NITA-U and leading organisations in the digital space. 

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Exit of non-core businesses will permit de-risking, deleveraging and the capture of growth opportunities at core subsidiaries. Additional liquidity from the exit of Tanmeyah will be used to finance share buybacks by Qalaa Holdings.

Qalaa Holdings (CCAP.CA on the Egyptian Exchange), an African leader in infrastructure and industry, has appointed CI Capital to study strategic options for the full exit of Tanmeyah for Microfinance Services, a non-core subsidiary in which Qalaa holds a 70% stake. Tanmeyah is the largest private microfinance provider in Egypt.

“Qalaa Holdings is on track in divesting non-core holdings. Our ongoing divesture of those non-core businesses will allow us to de-risk, deleverage and to invest in growth opportunities for our core subsidiaries. The exit from Tanmeyah, if concluded, would provide us with liquidity that exceeds the needs of both our current deleveraging program and our financing needs, and permits share buybacks by Qalaa Holdings on an opportunistic basis,” said Ahmed Heikal, Qalaa Holdings’ Chairman and Founder.

“Management and the Board of Directors are firmly convinced that Qalaa’s shares trade at a steep discount to their fair market value and that the acquisition of treasury shares thus represents an exceptionally compelling path to the creation of shareholder value,” said Qalaa Holdings Co-Founder and Managing Director Hisham El-Khazindar.

The potential exit of Tanmeyah is part of Qalaa’s previously announced program to divest a number of its non-core subsidiaries. The current status of these divestitures is as follows:

• Misr Glass Manufacturing: Due diligence concluded by a number of potential acquirers who are due to submit final binding purchase offers in the coming period.
• Dina Farms: Due diligence by a number of potential acquirers is set to begin in May 2015, with the close of the transaction expected in 2H15.
• Rashidi El-Mizan: Due diligence by a number of potential acquirers is set to begin in May 2015, with the close of the transaction expected in 2H15.
• ASEC Cement Algeria (Djelfa): Qalaa is in advanced talks to exit with short-listed bidders.
• Zahana Cement Company (also in Algeria): Qalaa is in talks with its Algerian partners in the company for an SPA that would see them acquire Qalaa’s stake in Zahana
• Tebbin Port Land (owned by National Company for River Port Management S.A.E.): Purchase offers received and under evaluation.
• Nile Food Industries (Enjoy): Information memorandum has been withdrawn by potential acquirers.
• Egypt October for Food Industries (Elmisrieen): A number of potential buyers have expressed interest. Qalaa expects the due diligence process to soon begin.

“Qalaa may explore additional exits to permit further share buybacks for so long as management sees the company’s share trading at a steep discount to its fair market value,” concluded Heikal.

In 2014 and early 2015, Qalaa Holdings completed exits of non-core assets including Sudanese Egyptian Bank, Sphinx Glass and foundries AAC and AMC as well as Pharos Holding. 

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Leading property portal shares some tips on how to avoid falling victim to mortgage fraud.

Purchasing your dream property can be made easier with the help of the different types mortgages that have been put in place by banks and financial institutions. However, securing a home loan could also become your worst nightmare if you fall victim to mortgage fraud.

Shakib Nsubuga, Country Manager of leading property portal Lamudi Uganda, said: “With the increase in people investing in real estate, there has been an increase in mortgage fraud. Everyone should take extra precautions when getting a mortgage because you stand to lose a lot of hard-earned money if you fall victim to these fraudsters.”

As much as financial institutions are trying to combat the issue, mortgage fraud is becoming an increasingly problem. With Uganda’s real estate market growing fast and people rushing to invest in property, Lamudi Uganda shares important tips on how to avoid mortgage fraud.

Be vigilant and cautious

Make sure you understand everything you are signing. Do not sign any documents that you are not sure about. If there is something you do not understand or about which you have doubts, consult your lawyer or a trusted financial advisor. Look out for any documents that contain blank spaces and hidden costs as they can leave you vulnerable to fraud.

Research and verify all documents and dealings.

Look through all the loan documents to ensure all the information including your name is accurate in order to avoid any kind of misrepresentation which could lead to fraud. If possible, seek referrals for real estate and mortgage professionals from trusted friends and family. This can lower the risk as these people have already interacted with this individual and can vouch for him or her. However, it is advisable to still maintain your guard.

Honesty and transparency

Avoid being pressured into borrowing more than you can afford to repay because this will lead to more damages and debt that might put you at risk. Make sure that you are honest about your finances and what mortgage you can afford so as to avoid any chances of foreclosure. Avoid inflating numbers or giving false information because this is also considered fraud and could create more trouble than you bargained for.

Avoid going through third parties

Purchasing a property involves a lot of paperwork and all this may be tedious and tiresome. However, if you do not have a trusted lawyer or agent make sure that all documents and dealings are monitored closely by you. With hands-on management and direct contact, you will be able to keep an eye on what kind of mortgage and payment you are signing up for.

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How can fast growing start-ups overcome the obstacles to success?

Starting a new business can be as terrifying as it is exciting. At any given time, a fledgling company can come up against a number of common challenges. From hiring the right people to defining your brand, start-ups must overcome these obstacles to ensure success.

Competition

One of the biggest challenges that all start-ups will face is competition, particularly in markets dominated by well-known, established brands. The key is to find a niche market, not yet saturated by other companies with the same product. As there will almost always be another brand offering a similar product, think outside the box; ensure you establish a clear target audience and a specific brand message to differentiate your start-up.

Hiring

Hiring employees to support your venture can be a nerve-wracking experience, but is one of the most important investments for any start-up. To find the right talent whilst sticking to a budget is a challenge for any company, in particular for unknown brands. Building a strong team to nurture and develop a young company is key to success; as you are putting your time, money and trust in your team, it is worth the investment.

Keeping up with change

With advances in technology and the shift online, information is constantly changing. Not only keeping up but staying ahead of the competition is a significant challenge for young companies. Furthermore, with plans to roll a start-up out into multiple markets, each country needs to be approached with an individual strategy based on market conditions.

According to Kian Moini, co-founder of global property portal Lamudi, which began operations in October 2013: “It is difficult to generalize across markets because no two countries are exactly the same, even though there are some similarities.”

A key challenge in some markets, such as Myanmar for example where the Internet penetration is among the lowest in the world, is convincing consumers of the value of the Internet and e-commerce – the value in shifting online. In other more mature markets, which are already heavily digitised, there is stiff competition for start-ups from well-established competitors.”

The website

Making sure that your product keeps up with changes in the market is vital. For Internet-based start-ups, this often means adapting the website. Is your website mobile-friendly? Does it have an attractive, easy-to-manage user interface? With so many websites, it is difficult to make yours stand out in the crowd – however, a secure, reliable and well-performing website can often speak for itself.  

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Kaymu Uganda has proven to be not just any other e-commerce website. Uganda’s Number One Online Marketplace recently took it to the next level, partnering with the Rotaract Club of Kampala City in the support of an initiative recognizing the necessity of Maternal Health Care in the country. The Rotaract Club of Kampala is a volunteer organization made up of various business and professional leaders who aim at helping to build goodwill and peace in the country through a number of humanitarian activities and just causes, health being one of the key interventions.

This year, the maternal health care campaign was developed to generate awareness and build recognition towards the growing necessity in the country. Maternal health care has been a pending issue in Uganda as even the maternal mortality rate has proven to be devastating. The initiative aims at granting women access to high-quality maternal health care services through cooperation and partnerships with community leaders, companies, women and health workers to understand and address the reasons for the vast records of maternal sickness and the rising death rates for the women and children living in unbearable conditions.

Kaymu, in conjunction with the Rotaract Club of Kampala City, held an annual literacy quiz Understanding the Maternal Health Challenge; A week-long event that ran from the 23^rd of March to the 28^th Grand Finale. The Rotaract Club of Kampala City is supported by Rotary Club, a large humanitarian organization that carries out a wide range of community service projects in various parts of the country. The event, which was held at Sundowners, identified the need to generate awareness and share ideas concerning Maternal Health Care. Kaymu’s Country Manager, Justin Christianson, also took some time to sensitize those that were present, on some of the advantages of e-commerce and the benefits of partaking in the buying and selling of products online. The event attracted companies from far and wide including the New Vision, Axial, Urban Tv, Nyange and DFCU, as well as nearly 30 Rotary clubs in Kampala and 50 Rotary Clubs Up country.

The event managed to yield up to USD. 10,000 from both foreign and local sponsors, but nonetheless, the collaborators called upon the public to take this initiative into their own hands as the mothers of our nation are the foundation of our existence. Kaymu also launched an online campaign towards the cause by enabling online buyers to donate 10% of their purchase costs towards the maternal health care initiative. This can be done by simply typing # MaternalHealthMatters in the comment box upon placing their orders. Alternatively, Kaymu also allows buyers to purchase charity products or items should prove to be necessities towards the maternal health care initiative, e.g. mosquito nets, appliances, health products, and many others, all of which are availed at affordable prices on kaymu.co.ug.

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Customers of MTN Mobile Money and M-Pesa in East Africa will be able to transfer money to each other following an agreement between MTN Group and Vodafone Group to interconnect their mobile money services.

This interconnect collaboration between the region’s two biggest mobile money operators will enable convenient and affordable international remittances between M-Pesa customers in Kenya, Tanzania, Democratic Republic of Congo and Mozambique, and MTN Mobile Money customers in Uganda, Rwanda and Zambia.

Under the terms of their Memorandum of Understanding, MTN Group and Vodafone Group will also share best practice and work together to define the rules and standards of mobile-based remittances in Africa.

Vodafone Director of Mobile Money Michael Joseph said: “Our agreement with MTN to connect our mobile money wallets in East Africa is a fantastic example of co-operation and interoperability between competing mobile operators.  By working together, we will deliver cheaper, faster money transfers, improving the lives of many people living in the seven countries involved.”

MTN Group Head of Mobile Financial Services, Serigne Dioum said: “After successful launches in Ivory Coast and Benin in West Africa, we are looking enthusiastically at the collaboration with Vodafone in East Africa.  Together, we aim to build a scalable model that will accelerate remittance roll-out across the continent.”

– Issued by MTN Group Corporate Affairs

About Vodafone

Vodafone is one of the world’s largest telecommunications companies and provides a range of services including voice, messaging, data and fixed communications. Vodafone has mobile operations in 26 countries, partners with mobile networks in 55 more, and fixed broadband operations in 17 markets. As of 31 December 2014, Vodafone had 444 million mobile customers and 11.8 million fixed broadband customers. For more information, please visit: www.vodafone.com.

About the MTN Group

Launched in 1994, the MTN Group is a leading emerging market operator, connecting subscribers in 22 countries in Africa and the Middle East. The MTN Group is listed on the JSE Securities Exchange in South Africa under the share code: “MTN.” As of 31 December 2014, MTN recorded 223,4 million subscribers across its operations in Afghanistan, Benin, Botswana, Cameroon, Cote d’Ivoire, Cyprus, Ghana, Guinea Bissau, Guinea Republic, Iran, Liberia, Nigeria, Republic of Congo (Congo-Brazzaville), Rwanda, South Africa, Sudan, South Sudan, Swaziland, Syria, Uganda, Yemen and Zambia. Visit us at, www.mtnbusiness.com, www.mtn.com and www.mtnmmo.com

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MultiChoice is appalled by the acts of violence being perpetrated against our fellow brothers and sisters in South Africa and strongly condemns these acts.   As a multi-cultural African organisation we respect and embrace diversity, and all the different traditions and religions across the continent.  This is demonstrated through by our multinational staff complement, rich African programming and channels on both our DStv and GOtv platforms.

MultiChoice advocates equality and freedom for all and condemns such acts as we believe Africa’s potential can be achieved through unity and peace. Our condolences go to the families and friends of those who have been affected or lost their lives in these unforgiveable acts of violence.