SHUAA Capital (SHUAA) Q3 2024 earnings summary

Executive summary

• Reported net loss of AED 138 million to AED 147.98 million for the nine months ended 30 September 2024, reflecting a gradual slowdown in impairments and significant improvement from prior year losses of AED 570 million and AED 796.96 million respectively.

• Breached covenants on a bilateral facility, resulting in AED 208 million loan classified as current liability; accumulated losses reached AED 965 million.

• Agreement reached with bondholders to amend and extend AED 520 million bond settlement to 31 March 2025; plans to issue Mandatory Convertible Bonds (MCB) by Q1 2025 to restructure debt and raise equity.

• Adjusted operating income for YTD 2024 was a loss of AED 8 million, mainly due to temporary revenue reduction during business transformation.

• Revenues for YTD 2024 were AED 69 million, down from AED 128.1 million prior year, mainly due to lower management fees, trading income, and advisory fees amid challenging market conditions.

Financial highlights

• Total revenues for the nine months were AED 69 million, down from AED 88 million to AED 128.1 million year-over-year after adjusting for one-off items.

• Operating margin for YTD 2024 was (11%), mainly due to lower revenues during capital optimization, partly offset by cost reductions; operating loss for the period was AED 17.8 million.

• Cost-income ratio for YTD 2024 was 111%, above the medium-term target of 65%.

• Net loss attributable to owners for YTD 2024 was AED 138 million to AED 147.98 million, a significant improvement from prior year losses.

• Total assets decreased to AED 1.37 billion from AED 1.72 billion at year-end 2023; cash and cash equivalents stood at AED 30.9 million.

Outlook and guidance

• Management expects to conclude the MCB offering by Q1 2025, aiming to convert at least 50% of outstanding bonds to equity and settle the remainder at an 80% discount.

• Further cost optimization and revenue-enhancing initiatives are planned once the capital optimization plan is enacted.

• Plans to raise up to AED 367 million in equity capital, partially to repay non-converting bondholders.