SHUAA shrinks net loss 31 per cent in Q1.
SHU said it has started the year well, reporting the best bottom line result since June 2011, it said in a press release. Revenues were AED 36.2 million down from AED 55.0 million on the same period in 2012, reflecting lower investment returns on SHU managed funds and the expected drop in fees and commissions following the decision to cease operations of the unprofitable retail brokerage business in 2012. Expenses were down significantly year on year as the cost reductions in 2012 have taken full effect. General and administrative expenses fell to AED 37.7 million (Q1 2012: AED 54.9 million). The year-on-year total expense reduction of 37 per cent to AED 39.1 million contributed to the overall improvement of the bottom line and places SHU on the right trajectory to achieve its 2013 earnings guidance.
SHU's balance sheet shows total assets at AED 1.3 billion (Q4 2012: AED 1.4 billion) with good liquidity, according to a media statement. "Total loans and advances increased to AED 635.2 million (Q4 2012: AED 562.4 million),validating the strategy of redeploying non-core assets to lending. Loans and advances related to the SME Lending business have increased 18 per cent to AED 607.6 million from AED 513.9 million in Q4 2012. Total liabilities reduced to AED 202.6 million from AED 269.4 million in the Q4 2012. SHU's debt/equity ratio now stands at only seven per cent.
SHU has restated the segmental information in its financial statements to enhance transparency and disclosure related to its activities in continuing operations such as investment banking and capital markets and the discontinued retail brokerage business, which ceased operation in January 2013.
HH Sheikh Maktoum Hasher Al Maktoum, Executive Chairman of SHU Capital, commented, "The reported result is consistent with our earnings guidance for 2013 and reveals the progress we have made on the strategic initiatives that were launched in 2012 to reduce our cost structure and expand our earnings capabilities through redeployment of our balance sheet.
"Last year, we focused on liquidating non-core assets to generate cash and reduce liabilities. The year 2013 will be marked by investments in growth and positioning SHU for the market recovery, underpinned by our strong balance sheet and established brand. Compared to last year's first quarter we have increased the amount we lend to SMEs by 40 per cent through Gulf Finance Corporation in the UAE and the newly established Gulf Installments Company in Saudi Arabia. SME lending generated AED 151.7 million of new loans, a 76 per cent increase year on year. The full impact of increased lending activity will become visible in the second half of 2013.
"Group-wide expenses were reduced by 37 per cent to AED 39.1 million, which is 8 per cent ahead of our announced target run rate of 42.5 million per quarter. The net loss of AED 5.9 million is clear evidence of a consistent trend of reducing earnings volatility and improving our bottom line.
"We are now focused on enhancing our revenue generation capabilities in asset management and investment bankingwhere opportunities are starting to emerge as global investors are re-engaging with GCC markets."
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