SHUAA Capital : Earnings Presentation Q1 2024

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