Shuaa Capital full-year net income falls on provisions and revaluations

Total group revenues, however, rose year-on-year despite net loss of Dh29.2m in fourth quarter, compared with a profit Dh14.2m from a year earlier

Shuaa Capital increased assets under management to $14bn by the end of 2019. Jaime Puebla / The National

Shuaa Capital, a Dubai-headquartered investment bank, reported a 63 per cent decline in its full-year 2018 net income as it re-evaluated its investments and took one-off provision.

Net profit for the 12-month period ending 31 December fell to Dh27.2 million, Shuaa said in a statement to Dubai Financial Market, where its shares are traded. Total group revenues for the period, however, increased by 23 per cent to reach Dh165.2m.

The company took “mark-to-market charges” on its investments in the fourth quarter of last year and additional one-off provisions on its legacy assets, it said. Mark-to-market is a measure of fair value of accounts that can change over time, such as assets and liabilities, and it aims to provide a realistic appraisal of a company's current financial situation.

The fourth quarter dented the earnings the most as Shuaa swung to a net loss of Dh29.2m, compared with a profit Dh14.2m recorded for the last three months of 2017. The fourth-quarter 2018 revenues, however rose 40 per cent year-on-year to Dh60.1m.

“During the year we continued executing our turnaround strategy and completed acquisitions of Integrated Securities, Integrated Capital and Amwal Investments, adding cash-flow generative businesses that have significant cross-sell opportunities and allowing us to distribute our first dividend in 10 years,” said Fawad Tariq-Khan, chief executive of Shuaa.

“We also re-leveraged our balance sheet with favourable debt terms once we had repaid our legacy loans, providing the group with ample liquidity coming into 2019.”

While the company’s profitability for the year was impacted by challenging market conditions at the end of last year, its core operations continued to grow, he noted.

Although volatility across regional markets, especially during the second half of the last year, held the company back from achieving previously set targets, the firm continued rolling out products and services into new jurisdictions such as Kuwait, Turkey and Jordan, according to the statement.

Total assets at the end of 2018 rose to Dh2.1 billion from Dh1.2bn recorded a year earlier. The group had Dh441.4m in cash and its liabilities rose to Dh1.2bn from 325.4m in 2017, it said.