E a r n i n g s P r e s e n t a t i o n

Q 2 2 0 2 3

10 August 2023

© 2023 SHUAA Capital psc. All rights reserved

Executive Summary

Financial Measures

Key Metrics

Group

Updates

  • Group revenues of AED 99 million in H1 2023 significantly higher compared to AED 59 million in H1 2022 on a normalized basis excluding revenues from discontinued operations.
  • H1 2023 operating income (excluding carry and one-off items) continues to show progress at AED 32 million compared to AED 3 million in prior year.
  • The Group reported net profit of AED 20 million for the first half of the year compared to a net loss of AED 164 million (excl. one-off charges net loss of AED 14 million) in the previous year.
  • Stable operating margins for the business in H1 2023 at ~33% mainly due to cost efficiencies highlighting the lower operational leverage of the business.
  • The cost-income ratio of 67% H1 2023 is significantly lower than prior year mainly driven by cost optimization measures undertaken in 2022 and in line with management's medium-term target of 65% with further revenue enhancing initiatives to continue for the rest of the fiscal year.
  • The Group's continued focus on deleveraging is highlighted through the Debt-to-Equity ratio improving to 88% in current year from 105% in Q4 2022. AED 173 million of payments made since Dec 2022 highlighting management's continued commitment to reduce leverage.
  • Hiring: Appointment of Wafik Ben Mansour as Head of Investment Banking succeeding Fawad Tariq Khan who took over as Group CEO in 2022 and Nikola Babic as new VP of Risk.
  • Managed Funds: Launch of new Sharia-compliant Saudi Equity fund, the sixth fund to be launched under the ICC Fund umbrella taking AUM of the platform above USD 350 million.
  • Sukuk Issuance: Issued USD 100 million Sharia-compliant Sukuk as a private placement in Q2 2023.

Key Financial Highlights H1 2023

H1 2023 Financial Performance

Income Statement (AED Mn)

Change vs.

H1-23

H1-22

H1-22

Q2-23

Q1-23

Net Fee and Commission Revenue

87.3

147.8

(60.5)

32.8

54.5

Other Revenue

12.0

10.1

1.8

6.7

5.2

Total Revenues

99.2

157.9

(58.7)

39.5

59.7

Operating Expenses (excl. one-off items and

(66.8)

(155.0)

88.2

(35.2)

(31.7)

carry expense)

Net Operating Income (excl. one-off items and

32.4

2.9

29.5

4.4

28.0

carry expense)

One-off items and Employee Carry

8.5

(11.7)

20.1

(1.8)

10.2

Net Operating Income/(Loss)

40.9

(8.8)

49.6

2.6

38.3

Other Income/(Expenses)

1.8

58.8

(56.9)

6.7

(4.8)

Profit/(Loss) before impairment of

42.7

50.0

(7.3)

9.3

33.4

intangibles and finance costs

Impairment of intangibles and Finance Cost

(33.7)

(156.5)

122.8

(19.9)

(13.8)

Profit/(loss) from discontinued operations

-

(86.1)

86.1

-

-

Non-Controlling Interests

11.0

28.2

(17.2)

16.0

(5.0)

Net Profit/(Loss) 1

20.0

(164.3)

184.3

5.3

14.7

EBITDA 2

60.1

(6.3)

66.4

28.3

31.7

Key Metrics

Operating Margin (%) excl. one-off items

33%

2%

31%

11%

47%

and carry expense

CIR (%) excl. one-off items and carry

67%

98%

31%

89%

53%

expense

Commentary

Net Operating Income of AED 32 million in H1 2023 mainly driven by strong performance from managed funds and cost efficiencies.

  • H1 2023 net profit of AED 20 million compared to loss of AED 164 million in H1 2022 due to one-off charges taken in prior year as part of the strategic review process to simplify the business.
  • H1 2023 revenues AED 40 million higher than prior year after excluding AED 99 million of revenues from discontinued operations mainly due to sale of a non- core asset and Astrea contract run-off.
  • Cost to income ratio at 67% in H1 2023 lower than 2022 due to cost efficiencies achieved as a result of the strategic review process undertaken across the Group in 2022.

Balance Sheet (AED Mn)

Total Assets

Total Debt

Total Equity

Key Metrics

Debt to Equity

Return on Equity - Parent

1 Net Profit attributable to shareholders

3 2 Excludes results for discontinued operations

% Change vs.

% Change

Q2-23

Q4-22

Q4-22

Q1-23

vs. Q1-23

3,134

3,476

(10%)

3,465

(10%)

1,346

1,594

16%

1,646

18%

1,533

1,520

1%

1,545

(1%)

0.88x

1.05x

17%

1.07x

19%

3%

(10%)

13%

5%

(2%)

Balance sheet metrics on upward trajectory

  • Continued disciplined approach to deleveraging with debt-to-equity ratio at 88% in Q2 23 compared to 105% in Q4 2022.

Revenue Breakdown

AEDm

Asset Management

Investment Banking

Discontinued

Operations

59

60

2

6

2

55

54

Year-over-Year Revenues

158

99

59

40

8

2

4

51

99

+40m

+68%

2

10

88

Commentary

Revenues in H1 2023 AED 40 million higher than prior year on a normalized basis post deconsolidation of AED 99 million of revenues due to sale of a non-core asset and Astrea contract run-off. Increase in 2023 revenues is mainly driven by fund management fees, performance fees and sales & trading income.

  • Asset management revenues significantly higher than prior year on a normalized basis driven by management and performance fees as a result of increase in AUM and strong performance of managed funds.
  • Investment banking revenues higher in H1 2023 driven by strong performance in sales and trading business offsetting lower advisory fees due to lack of transactions closing in the year.
  • Sale of a non-core asset and successful completion of SHUAA subsidiary Astrea's portfolio management mandate in London normalizing revenues by AED 99 million from prior year.

34

Q4-22

Q1-23

Q2-23

H1-22

H1-23

4

Asset Management Segment Performance

Asset Management Revenues

AEDm

Commentary

Real Estate

Public Markets

Private Markets

Debt

Discontinued

Operations

55

1

7

10

36

54

1

8

18

26

34

1

7

17

8

+37m

79 +73%

27

51

2

9

14

25

88

2

15

36

35

Higher revenues in current year mainly driven by strong performance in managed funds generating management and performance-based incentive fees. AED 27 million of revenues normalized from previous year due to completion of Astrea's portfolio management mandate.

Real Estate:

  • Recurring fund management fees from the Palm Project and performance fees realized in Q1 2023.
  • Deconsolidation of AED 27 million of revenues from prior year due to completion of SHUAA subsidiary Astrea's portfolio management mandate in London.

Public Markets:

  • Increase in AUM from market performance, strong investor demand and launch of new funds driving up fund management fees.
  • Performance fees realized in H1 2023 through Goldilocks and ICC Fund vehicles.

Private Markets:

§ Higher valuation of managed assets driving up

management fees.

Q4-22

Q1-23

Q2-23

H1-22

H1-23

EBITDA

29

35

9

(42)

44

Net

24

31

6

(58)

37

Profit

Debt:

  • Stable recurring management fee revenues from flagship fund.

5

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SHUAA Capital PSC published this content on 10 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2023 07:10:09 UTC.