SHUAA Capital Incurs Net Loss of $22.32 Million in Q1-2024

SHUAA Capital, Dubai-based leading asset management and investment banking platform in the region, on Tuesday said that the company incurred a net loss of $22.32 million for Q1 of 2024, primarily due to non-cash impairments related to company’s associate and investment in legacy assets.

However, the cost to income ratio improved to 84% during the first quarter of this year, reflecting a significant improvement from the 129% in the prior quarter, the company said in a disclosure with Dubai Financial Market (DFM).

Releasing its Q1 of 2024 financial results, SHUAA Capital also said that it has facilitated the resumption of trading in the company’s shares. The total operating revenues reached $8.17 million for Q1 of 2024, driven by recurring fees from the asset management segment, which continues to grow its fee-earning AuM.

The net operating income of $1.36 million for the above said three-month period was driven by cost-saving measures implemented by the management team and there was a significant improvement compared with $3.81 million loss reported in prior quarter.

The operating margin for the quarter was 16%, a stark improvement compared to the negative 29% reported in the prior quarter, highlighting the growing operational strength of the business as cost efficiencies begin to permeate through the bottom line.

During the first quarter of the year, SHUAA continued its balance sheet optimisation efforts, including valuation adjustments related to underlying assets of an associate and impairments of legacy investments in the UK.

Management views these impairments as a necessary step in the company’s capital optimization journey, facilitating a right-sized balance sheet and establishing a lean and efficient capital structure.

SHUAA also reached an agreement with bondholders in April 2024, aiming to reduce debt by over $136.13 million, thereby strengthening the company’s equity base. The company is now focused on completing the necessary regulatory steps to issue Mandatory Convertible Bonds (MCBs) and expects to finalise the capital optimisation plans by the end of 2024.

Transforming Business Model

SHUAA has embarked on transforming its business model, which will focus on asset management and investment banking, bolstered by a robust sales and distribution platform. These actions are anticipated to lead to a more sustainable profit profile and enhance shareholder value.

The company has also announced changes in key senior roles, including the permanent appointment of Wafik Ben Mansour as Chief Executive Officer (CEO), and the hiring of Roberta Calarese as Chief Legal Officer (CLO), in addition to other senior appointments. The Board also nominated Ahmed Alahmadi to act as Managing Director (MD) of SHUAA for a period of one year.

Wafik Ben Mansour said that the company has started to turn a corner by taking a proactive stance towards its legacy investments, bolstering its capital base and laying the foundation for a new business model focused on growth and shareholder value.

“I continue to remain optimistic about the company’s strong fundamentals and future direction, along with the dedicated support of the newly appointed board members. We will continue to provide regular progress updates on our capital optimisation journey, while we focus on transforming our business model and implementing our new strategy. We also anticipate releasing our reviewed financials for the second quarter of 2024 within the set regulatory deadline,” he added.