Company Analysis - Commissioned /

Summa: Kigali Arena completed in record time

    Kiti Pantskhava
    Kiti Pantskhava

    Senior Credit Analyst

    Tellimer Research
    15 October 2019
    Published by

    Summa Group continues to deliver ambitious projects in Africa and has reported outstanding financial results for FY 18. Inauguration of a 10,000-seater indoor stadium in Kigali, Rwanda, built by Summa in record time, came shortly after the company completed its reconstruction of Diori Hamani International Airport (DHIA) in Niger – becoming its sole operator under a 30-year concession agreement – and handed over Niger’s first internationally branded hotel to the owners, Radisson Hospitality.

    Kigali Arena completed in just six months. Designed primarily as a venue for indoors sport competitions, Kigali Arena can also host conferences, exhibitions and concerts (Figures 1-4). Summa began construction of the arena in January and finished the project a mere 168 days later, in July. The company employed over 1,600 workers, of whom more than 70% were hired locally. Summa Group, the Rwanda Housing Authority and the Rwanda Ministry of Sports jointly financed the US$104mn design and build project. 

    Excellent financial results. In 2018, Summa Group delivered its best results since at least 2012. The company reported EUR343mn in revenues (an increase of 92% yoy), EUR88mn in EBITDA (three times higher than the previous year’s result) and net income of EUR76mn (Table 1). Although the company used more debt in 2018 than in previous years, leverage remained negligible, with the debt/EBITDA ratio standing at 0.8x. The cash balance fully covered financial liabilities, resulting in a US$29mn net cash position. Summa has continued its transition from a contract-dependent construction business to a company that benefits from more sustainable revenue flow from hospitality and airport management operations. 

    Non-construction revenue set to increase in 2019. In 2018, the company earned most of its EUR343mn revenues from construction contracts, with recurring non-construction revenue standing at EUR37mn. However, Summa has added two important sources of non-construction revenues this year: 

    1. It assumed operatorship of the DHIA, with the terms of the concession allowing Summa to monetise aeronautical services as well as retail, catering and other essential services of a modern airport, and to collect a EUR52 infrastructure development charge from the International Air Transport Association (IATA) for each departing international passenger; and 
    2. It opened a new 189-room Radisson Blu Hotel in Niamey, Niger.

    This report has been commissioned by Summa and independently prepared and issued by Tellimer for publication. All information used in the publication of this report has been compiled from information provided to us by Summa and publicly available sources that are believed to be reliable; however, we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Tellimer at the time of publication. The sponsor has had no editorial input into the content of the note, and Tellimer’s fees are not contingent on the sponsor’s approval of the research.