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Citadel posts $26m loss

A lack of exits, one-off refinancing fees and the poor performance of portfolio company ASEC Holding led to the firm posting a net loss of $26.4m, a 43% increase year-on-year.

Cairo-listed Citadel Capital has significantly reduced its operating expenditure but still posted a loss in the first quarter, it said in a result statement on Monday.

Its first quarter net loss was $5.1 million on revenues of $4 million, compared with a net loss of $4.4 million in the first quarter last year and $6.3 million in the fourth quarter last year. Setting aside the one-off fees, Citadel said it would have posted a standalone net profit of $3.9 million in the first quarter.

Citadel cited one-off costs of $9 million associated with the refinancing of the firm’s existing $175 million credit facility and the arrangement of a new facility backed by the United States Overseas Investment Corporation (OPIC). 

It also said the performance of portfolio company ASEC Holding had proven a drag on earnings. The company’s construction businesses “remain challenged” and its cement plants underwent shutdowns for repairs and maintenance in the quarter, Citadel said. With the exception of ASEC however, Citadel said its portfolio companies showed “broad-based improvements in financial and operational performance in the quarter just ended”.

The firm’s assets under management rose by five percent year-on-year to $4.4 billion. Citadel also drew down and deployed $81.3 million of the $150 million facility provided by OPIC, in order to accelerate the growth of select portfolio companies.

“The first quarter of 2012 is an inflection point marking the start of the next stage of Citadel Capital’s development,” said Citadel chairman Ahmed Heikal. “We are now deploying the liquidity added to our balance sheet in the 2011 financial year to accelerate development of select platform and portfolio companies as we continue the groundwork for the divestment of minor and non-core holdings. This programme — alongside continued cost cutting at the Citadel Capital level — will free management bandwidth and cashflows to focus on core investments.”

Citadel’s earnings before interest, tax, depreciation and amortisation grew to $1.1 million on the back of rising revenues and a 53 percent quarter-on-quarter reduction in operating expenditure to $3.8 million. Heikal said this new operating expense figure represented a “new normal”, after the firm had cut expenditure on compensation and consultancy fees.