Shuaa posts Dh40 million net profit after impairments in 2021

Shuaa Capital on Monday announced that its annual net profit before one-off impairments reached record high of Dh229 million while net profit after impairments dropped by 69 per cent from Dh125 million in 2020 to Dh40 million last year.

In a statement, the leading asset management and investment banking platform in the region said its preliminary financial results for fiscal year 2021 included one-off charges of net Dh189 million mainly relating to valuation impairments following the decision to accelerate the restructuring of a legacy, illiquid investment portfolio. Shuaa’s net profit on a like-for-like basis would have been Dh229 million in 2021. Similarly, EBITDA declined from Dh350 million in financial year 2020 to Dh233 million in 2021 and stood at Dh422 million adjusted for net one-off items.

“As we draw an end to cleaning up legacy and non-core investments and portfolios, our focus is now solely on driving revenues and shareholder returns whilst maintaining a strict discipline on costs,” Jassim Alseddiqi, group chief executive officer of Shuaa Capital, said.

“We remain confident about the numerous and long-term opportunities for our business. And we are excited about finding new ways to grow our business and differentiate our offerings. I am optimistic that with our enhanced team and capabilities and new offering, Shuaa is now poised to deliver accelerated growth,” he added.

Operating income continues to show progress towards high quality revenues as its operating income surged 11 per cent to Dh394 million in 2021, once adjusted for the one-time effect from a single transaction of Dh183 million in 2020.

Net fee and commission income increased by 21 per cent year-on-year basis to Dh265 million in 2021. Expenses have remained under control with operating expenses up six per cent at Dh315 million, as a result of targeted strategic hiring across the business.

Strengthening balance sheet

Shuaa continues to take proactive measures to strengthen its balance sheet. The group has now almost completely worked out its non-core assets unit which was set-up after the merger with Abu Dhabi Financial Group in August 2019.

In addition, the strong underlying result of 2021 allowed it to proactively restructure an illiquid legacy portfolio and absorb the one-off charges in this year. These measures will not only protect future earnings of the Group but also help enhance the focus on key growth areas and align investments with strengthened risk limit and capital allocation criteria.

Focus on core capabilities

During the year, Shuaa continued to develop and significantly expand its capabilities and strengthen its client offering. This included hiring new world-class teams for real estate investment and client coverage, driving a 33 per cent increase in core headcount.

In real estate, the appointment of the new CEO of real estate division will further expand the group’s presence in different geographies. Shuaa continued to build on its successful investment strategy in the UK property market, with plans to deliver £2 billion worth of property projects in London through its wholly-owned subsidiary Northacre. Work is continuing at No.1 Palace Street and The Broadway, with both development projects due to complete during the second quarter of 2022.

— business@khaleejtimes.com