Amanat Holdings, the UAE investor in healthcare and education, expects to post a profit in 2019 amid an anticipated increase in revenues after it swung to a third quarter loss on higher costs and lower income, its chief financial officer said.
The Dubai-listed company also plans to continue to deploy capital in line with its 2018 strategy as it seeks to boost revenue and grow its current portfolio of seven assets, four of which were acquired this year, said Dawod Alghoul.
So far this year, the company has invested Dh1.3 billion.
"We are optimistic that we'll end the year on a high note with strong fourth quarter results, and expect a profitable 2019 especially that a lot of the investments that we deployed this year did not give us the full impact of 12 months," Mr Alghoul told The National.
“Growth in revenue will offset an increase in cost next year.”
Amanat posted a Dh3.6 million third quarter loss compared to a Dh14.9m net profit year-earlier as total operating expenses more than doubled and revenue halved. Nine-month profit fell to Dh24.3m from Dh39.9m from the same period in 2017.
Acquisition costs and one-off items contributed to the third quarter loss, the chief financial officer said.
The company incurred a one-off loss of Dh9.3m from the Dh369m acquisition of the UAE-based Middlesex University in August. The company also booked a Dh7m gain in the third quarter of 2017 that skewed profit in the same period in 2018.
“If you exclude these two one-offs, you will see on a normalised basis the results were very strong and it is within what we expected,” he said.
Amanat expects the fourth quarter to be better than the third quarter because income from Middlesex University will start to trickle through.
Next year the company also will start to see income from the Dh141.7m acquisition of a majority stake in the Royal Maternity Hospital Holding in Bahrain.
“The cost of those two acquisitions and the operational costs entered into our profit and loss [statement] without a revenue yet,” said Mr Alghoul. “Our corporate cost was flat [in the third quarter] versus the last year.”
The company will have “a strong deployment” of capital next year and is in talks to raise funding as it grows its Dh2bn assets under management.
“We are working with banks for debt in 2019 and the current cash that we have to keep the pace of deployment in line with this year.”
The company, which earlier this year announced its intention to expand beyond the Arabian Gulf, could make an acquisition in a non-GCC country next year, he said, declining to name the potential destination of investment.
Amanat’s ticket size for investments ranges between Dh150m to Dh300m and the company continues to target this bracket.
It is bullish on investments as governments in the Arabian Gulf’s continue to invest in healthcare and education and are open to private sector's participation in these social sectors, he added.
The GCC expenditure on health care is forecast to rise to $104.6bn (Dh384.1bn) in 2022 from $76.1bn in 2017, rising at a compound annual growth rate of 6.6 per cent, Dubai-based investment bank Alpen Capital said in a report earlier this year.
The demand for schools in the GCC region is projected to grow at a 3 per cent CAGR from an estimated 43,903 in 2015 to 50,978 in 2020, according to the report.