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.
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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.