SHUAA Capital's revenues for the full year stood at AED178.2 million (2014: AED213.4 million), and the company posted an overall loss of AED190.3 million (2014: profit of AED25.8 million).
For the fourth quarter of 2015, the company reported revenues of AED40.1 million, representing a 58% increase compared to AED25.4 million in Q4 2014, and a loss of AED161.8 million (Q4 2014: loss of AED14.8 million).
"The difficult market conditions driven by the decline in oil prices, global economic instability and continued political uncertainty in the region witnessed during the course of 2015 created a challenging operating environment for SHUAA's business units, particularly in the second half of the year," said Abdul Rahman Hareb Rashed Al Hareb, Chairman of SHUAA Capital. "We have during the course of 2015 closely monitored market developments and reassessed our positioning accordingly, and we are currently working on a number of initiatives that we are confident will enhance SHUAA's performance in 2016."
The majority of the loss recorded in 2015 is attributable to Gulf Finance, the SME Lending business, which set aside provisions of AED154.6 million against bad loans. Despite this, the business increased full year revenues by 21% to AED159.7 million (2014: AED131.5 million) and continues to see strong demand for its financing products, particularly in the Saudi Arabia division, where SMEs have historically experienced difficulty in accessing growth finance.
Despite volatile market conditions in 2015, SHUAA maintained a solid balance sheet and total assets at year-end stood at AED1.6 billion (2014: AED1.6 billion). The Group's liquidity position remains strong with AED263 million in cash. Liabilities increased to AED639 million from AED459 million in 2014, principally due to additional financing support for the SME lending business. As of 31 December 2015, net assets stood at AED961 million while the leverage ratio was 0.47 at year-end.
Rigorous cost control measures continue to be a strategic priority. Operating expenses remained stable at AED164.3 million (2014: AED165.1 million) while general and administrative expenses for the year reduced by 9%.
Al Hareb added: "Looking ahead, some of the key growth areas we see in 2016 include our Asset Management division, which has performed well in 2015 despite challenging markets and has a number of new product launches in the pipeline; SHUAA Capital Saudi Arabia which has entered into a partnership with Jumeirah Group and is nearing completion of two of its principle hotel projects in the Kingdom; and continued growth of Gulf Finance, both in the UAE and in Saudi Arabia, where we see significant opportunity for the business and continued strong demand for our financing products."
Asset Management reported full year revenues of AED15.8 million (2014: AED26.4 million) and a profit of AED10.3 million (2014: AED20.7 million). The division, which recently received an award for Best UAE Equity Fund 2015 from MENA Fund Manager for the fifth consecutive year, and named Best Regional Asset Manager for 2015 by Banker Middle East is currently working on a number of new products that are expected to launch in the coming six months.
SHUAA's flagship funds, the Emirates Gateway Fund and the Arab Gateway Fund, recorded annual returns of -5.7% and -10.5% respectively, outperforming their benchmarks by 11.3% and 6.6%. As of 31 December 2015, client assets under management remained stable at AED856 million (AED853 million in 2014).
SHUAA Capital Saudi Arabia (SCSA), which acts as a fund manager and investment manager focusing primarily on the real estate and hospitality sectors in Saudi Arabia, reported progress on two of its three hotel projects in the Kingdom which are nearing completion. In Q4, the division also announced the forming of a strategic partnership with the Jumeirah Group to jointly explore opportunities in Saudi Arabia in order to develop hospitality projects to be operated under the Jumeirah brand.
Since the launch of SCSA in 2008, the division has developed an expertise in acquiring and developing prime land and real estate in areas with strong long-term growth prospects and supply-constrained market dynamics. SCSA currently has a number of projects in the pipeline which will materialize during the course of 2016.
Gulf Finance UAE and Gulf Finance Saudi Arabia reported a 21% increase in revenue to AED159.7 million (2014: AED131.5 million), and an overall loss of AED119.9 million (2014: profit of AED33.4 million) for the full year 2015.
The loss is primarily due to the setting aside of provisions against bad loans seen in the UAE's SME market, particularly during the second half of 2015. Despite this market volatility, Gulf Finance remains committed to servicing the SME sector and has succeeded in cautiously growing the business during the course of the year. Demand for SME financing products in the UAE remains robust. The business will continue to closely monitor developments in the SME sector and adjust its growth strategy thereafter.
Gulf Finance Saudi Arabia, which offers Shariah- compliant financing solutions to SMEs in the Kingdom, has continued to see stable growth fuelled by strong demand from the Saudi SME market. The business also successfully secured an operating license from the Saudi Arabian Monetary Agency (SAMA) which allows it to operate as a regulated finance company under the new Finance Companies Control Law. The business also recently appointed a new Chairman and is planning to open new offices in Jeddah, Riyadh and Dammam in 2016.
© The Saudi Gazette 2016
