E a r n i n g s P re s e n ta t i o n
Q 1 2 0 24
16 July 2024
© 2024 SHUAA Capital psc. All rights reserved
Executive Summary
Financial
Measures
Key Metrics
Capital
Optimization
Process
- Q1 2024 revenues slightly lower compared to Q4 2023 due to a reduction in valuation of managed funds which resulted in lower management fees and revenues from legacy investment in the UK.
- Q1 2024 adjusted operating income amounted to AED 5 million, a significant increase of AED 14 million compared to Q4 2023, mainly driven by cost efficiencies undertaken in 2023 realizing in the Q1 2024 financial results.
- The Group reported net loss to owners of AED 87 million in Q1 2024 mainly due to one-off impairments via share of losses reported by the associate Eshraq and further impairment of legacy real estate investment in the UK.
- In Q1 2024, the operating margins for the business reached 16%, reflecting a notable increase compared to the prior quarter. This growth is primarily attributed to the successful implementation of cost reduction initiatives across the business.
- The cost-incomeratio of 84% in Q1 2024 is lower than prior quarter mainly driven by cost optimization measures but deviating from management's medium-termtarget of 65%. Further efforts in cost optimization were implemented in Q1 2024.
Update on Capital Optimization Process
- To recap, the Capital Optimization plan consist of issuing MCB offerings 1) to settle the noteholders subject to equity raise 2) to bring fresh money in the form of equity.
- An independent valuation advisor will be appointed in due course to value the company which is a regulatory requirement.
Key Financial Highlights Q1 2024
Q1 2024 Financial Performance
Income Statement (AED Mn) | Q1-24 | Q4-23 | Q/Q Change | Q1-23 | Y/Y Change | |||||||
Fee and Commission Revenue | 27.3 | 30.9 | (3.6) | 54.5 | (27.2) | |||||||
Other Revenue | 2.9 | 2.4 | 0.5 | 5.2 | (2.3) | |||||||
Total Revenues | 30.2 | 33.3 | (3.1) | 59.7 | (29.5) | |||||||
Operating Expenses (excl. one-off items) | (25.4) | (42.9) | 17.4 | (34.8) | 9.3 | |||||||
Adjusted Net Operating Income 1 | 4.8 | (9.6) | 14.3 | 24.9 | (20.2) | |||||||
One-off items | 6.9 | (73.1) | 80.0 | 13.3 | (6.5) | |||||||
Net Operating Income/(Loss) | 11.6 | (82.7) | 94.3 | 38.3 | (26.7) | |||||||
Other Income/(Expenses) | (90.3) | (220.0) | 129.8 | (4.8) | (85.4) | |||||||
Profit/(Loss) before finance costs | (78.6) | (302.7) | 224.1 | 33.4 | (112.1) | |||||||
Finance Cost | (13.1) | 5.2 | (18.2) | (13.8) | 0.7 | |||||||
Other Items | (4.2) | (19.3) | 15.1 | (0.0) | (4.2) | |||||||
Non-Controlling Interests | 7.5 | 21.1 | (13.5) | (5.0) | 12.5 | |||||||
Income Tax Credit/(Expense) | 1.2 | (40.9) | 42.1 | - | 1.2 | |||||||
Net Profit/(Loss) to Owners of the Parent 2 | (87.2) | (336.7) | 249.5 | 14.7 | (101.9) | |||||||
Key Metrics - Income Statement | ||||||||||||
Operating Margin (%) excl. one-off items | 16% | (29%) | 45% | 42% | (26%) | |||||||
CIR (%) excl. one-off items | 84% | 129% | 45% | 58% | (26%) | |||||||
Balance Sheet (AED Mn) | ||||||||||||
Total Assets | 1,593 | 1,722 | (7%) | 3,465 | (54%) | |||||||
Total Debt | 1,235 | 1,231 | (0%) | 1,646 | 25% | |||||||
Total Equity | 234 | 350 | (33%) | 1,545 | (85%) | |||||||
Balance Sheet (AED Mn) | ||||||||||||
Debt to Equity | 5.28x | 3.52x | (176%) | 1.07x | (421%) | |||||||
Return on Equity - Parent | NMF | NMF | - | 4.7% | - | |||||||
Commentary
Adjusted Net Operating Income of AED 5 million in Q1 2024 mainly driven by cost optimization measures related to headcount reduction and BOD fees.
- Q1 2024 net loss of AED 87 million due to one-off charges related to impairments in associate, legacy investment in the UK, partially offset by gains related to exit from a fund in KSA and other cost optimization measures.
- Q1 2024 revenues slightly lower than Q4 2023 mainly due to lower valuation for Goldilocks fund resulting in reduced management fees and AED 30m lower than prior year due to one-off fees received from exiting a real estate fund in 2023.
Balance sheet optimization continued to take effect in Q1 2024 with impairments taken by the associate and legacy investment write-offs
- Asset write-offs and impairments to facilitate with right-sizing the balance sheet and emerge with a lean and efficient capital structure.
- Management continues to focus on deleveraging the balance sheet and the agreement reached with bondholders will further facilitate to reduce debt and bolstering the equity base of the company.
1 Excluding one-off items | |
3 | 2 Net Profit attributable to shareholders |
Revenue Breakdown
Quarter-over-Quarter Revenues
Commentary
AEDm
Asset Management
Investment Banking
Corporate
60
6
38
4
54
33
31
2
28
33
2
31
30
4
25
Q1 2024 revenues of AED 30 million slightly lower than prior quarter mainly due to drop in Asset Management revenues partially offset by sales and trading income.
- Asset management revenues in Q1 2024 were impacted by reduction in valuation of managed funds which resulted in lower management fees and revenue run-off from legacy investment in the UK.
- Investment banking revenues came in higher in Q1 2024 due to higher sales & trading income.
- Corporate segment is made up of the Non-core unit which is responsible for divestment of legacy investments.
Q1-23 | Q2-23 | Q3-23 | Q4-23 |
Q1-24
4
Asset Management Segment Performance
AEDm
Real Estate
Public Markets
Private Markets
Debt
54
1
8
Asset Management Revenues
Commentary
Revenues in Q1 2024 lower than prior quarter mainly driven by lower management fees.
Real Estate:
- Recurring fund management fees from the Palm Project and JLT offset by lower income from legacy investment in the UK.
Public Markets:
- Lower management fees earned in Q1 2024 compared to prior quarter due to reduction in valuation of Goldilocks fund.
18
25
Q1-23 | |
Net | |
31 | |
Profit | |
EBITDA | 35 |
33
1
7
17
8
Q2-23
6
9
28
7
14
7
Q3-23
(215)
(211)
31
6
19
6
Q4-23
(13)
(10)
25
5
16
4
Q1-24
35
37
Private Markets:
- Lower management fees from the PE Fund in Q1 2024 compared to prior quarter due to timing of fees.
5
Investment Banking Segment Performance
Investment Banking Revenues
Commentary
AEDm
Advisory
Markets
Investment Management
6
1 | 4 | ||
3 | 1 | ||
3 | |||
2 | |||
Q1-23 | Q2-23 | ||
Net | |||
(2) | (2) | ||
Profit | |||
2
1
1
Q3-23
(5)
2
0
1
-
Q4-23
(5)
4
1
2
Q1-24
(1)
Q1 2024 revenues came in higher than prior quarter by AED 2 million driven by sales and trading income.
Advisory:
- Lower revenues mainly resulting from lack of mandates closing in Q1 2024.
Markets:
- Higher fixed income revenues in Q1 2024 due to increased trading volume compared to prior quarter.
Investment Management:
- Revenues of AED 1 million earned in Q1 2024 due to a non-recurring trade executed in the quarter.
EBITDA | - | - | (3) | (3) | 1 | ||||
6
Corporate Segment Performance
Corporate Revenues
AEDm
0 | 1 | 0 | 1 | 1 |
Commentary
Corporate segment is responsible for exiting and winding down all non-core assets of the Group.
- Corporate revenues recognized in the current quarter is non-recurring in nature.
- Currently undergoing FDD and the finalization of the SPA for the sale of GFC UAE with potential buyer.
Net
Profit
Q1-23
(15)
Q2-23
1
Q3-23
(371)
Q4-23
(319)
Q1-24
(122)
EBITDA | (3) | 19 | (354) | (297) | (111) |
7
Operating Expense Breakdown
AEDm
Quarter-over-Quarter Expenses 1
Commentary
Staff Costs G&A D&A
35
1
3
3
7
Carry Expense
Other Expenses Controllable Costs
35
2
3
11
33
2
3
3
10
43
3
3
16
25
1
3
6
Firm cost discipline maintained across the Group in Q1 2024 with continued decline in operating expenses due to cost optimization initiatives undertaken in 2023 and 2024.
- Controllable costs which includes staff costs and G&A reduced significantly in Q1 2024 on the back of cost optimization measures along with seasonality impacts of G&A costs on a quarter- over-quarter basis.
- D&A declined further in Q1 2024 compared to prior quarter due to accelerated amortization of intangibles .
- Cost-incomeratio of 84% in Q1 2024 significantly improved compared to prior quarter due to implementation of cost efficiencies.
21
Q1-23 | ||
CIR 1 | 58% | |
Operating | ||
42% | ||
Margin 1 | ||
19 | 15 | 19 | |||
Q2-23 | Q3-23 | Q4-23 | |||
93% | 107% | 129% | |||
7% | (7%) | (29%) | |||
16
Q1-24
84%
16%
8 | 1 | CIR and Operating Margin = Calculated by excluding one-off items |
Appendix
Quarterly P&L
AED '000
Revenue
Net foreign exchange gain/(loss)
Other income/(expense)
Change in fair value gains/(losses) from financial assets at FVTPL
Share of net profit /(loss) of investments in associates
Gain/(loss) on derivative financial liability
Interest income
Interest expense
Total income
Staff costs
Employee carried interest
Fee and commission expense
General and administrative expenses
Depreciation and amortisation
Provision for impairment losses on financial assets
Total expenses
Profit/(loss) before impairment of intangibles and finance costs
Finance cost
Impairment of intangibles and other items
Finance credit relating to unit holders
Profit/(loss) from continuing operations
(Loss)/profit from discontinued operations
Profit/(loss) for the period
Non-controlling interests
Profit/(loss) for the period attributable to Owners before tax
Corporate tax
Profit/(loss) for the period attributable to Owners after tax
10
FY | Q4 | Q3 | Q2 | Q1 | ||
2023 | 2023 | 2023 | 2023 | 2023 | ||
161,418 | 33,270 | 30,692 | 37,737 | 59,719 | ||
(9,941) | (9,582) | 7,303 | (4,556) | (3,107) | ||
(41,996) | (27,199) | (60,216) | 52,103 | (6,683) | ||
(329,696) | (71,860) | (220,553) | (50,502) | 13,218 | ||
(136,157) | (114,993) | (22,653) | 9,689 | (8,201) | ||
(207) | 0 | (84) | (52) | (71) | ||
3,598 | 3,598 | 0 | 0 | 0 | ||
0 | 0 | 0 | 0 | 0 | ||
(352,981) | (186,766) | (265,511) | 44,420 | 54,876 | ||
(60,857) | (19,015) | (15,355) | (19,210) | (7,277) | ||
(11,644) | (3,441) | (3,336) | (1,784) | (3,082) | ||
(2,501) | (536) | (1,152) | 337 | (1,150) | ||
(43,266) | (15,516) | (9,757) | (11,471) | (6,522) | ||
(12,525) | (3,045) | (3,106) | (3,102) | (3,272) | ||
(198,208) | (74,412) | (123,724) | 72 | (144) | ||
(329,000) | (115,965) | (156,429) | (35,158) | (21,447) | ||
(681,981) | (302,731) | (421,940) | 9,262 | 33,429 | ||
(77,083) | (24,128) | (19,291) | (19,909) | (13,755) | ||
(384,072) | (19,320) | (364,743) | 0 | (9) | ||
29,290 | 29,290 | 0 | 0 | 0 | ||
(1,113,845) | (316,889) | (805,974) | (10,648) | 19,665 | ||
0 | 0 | 0 | 0 | 0 | ||
(1,113,845) | (316,889) | (805,974) | (10,648) | 19,665 | ||
248,055 | 21,059 | 215,979 | 15,969 | (4,952) | ||
(865,790) | (295,830) | (589,995) | 5,321 | 14,713 | ||
(40,854) | (40,854) | 0 | 0 | 0 | ||
(906,644) | (336,684) | (589,995) | 5,321 | 14,713 | ||
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SHUAA Capital PSC published this content on 16 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 July 2024 13:55:09 UTC.