Shuaa Capital narrows Q4 loss, provisions hit 2011

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DUBAI: Shuaa Capital’s net loss narrowed in the fourth quarter as the investment bank cut costs and quit unprofitable businesses to offset the impact of slumping global markets and Arab political unrest.

But provisions and one-time charges related to the moves weighed on full-year results.

Dubai-listed Shuaa said it had a net loss of 111.8 million UAE dirhams ($30.44 million) in the quarter ended Dec. 31, compared to a loss of 186.7 million in the prior-year period.

One analyst at HSBC had forecast a 84 million dirhams loss.

On the year, Shuaa had a net loss of 293.8 million dirhams, a 31.3 percent rise over its 2010 loss of 223.7 million dirhams.

Shuaa attributed much of the annual loss to impairments and valuation adjustments, with one-off costs relating to the closure of its retail brokerage business in Jordan and Egypt and significant downsizing in Abu Dhabi and Riyadh weighing.

"It has been evident that with the onset of the Arab Spring in early 2011, the company was not going to see the expected market recovery and consequently embarked on a more fundamental restructuring program," Shuaa said in a statement.

"As a result, the company accelerated cost cutting initiatives and launched a systematic rightsizing program, which has improved operational efficiency and adapted the company’s cost structure in line with market conditions."

Overall, Shuaa said it took provisions and one-off charges of 136.3 million dirhams in 2011 and cut staffing costs over the year by 39 percent.

Total revenue for 2011 slumped 47.3 percent, to 99.2 million dirhams from 188.4 million dirhams in 2010.

Shuaa had cash reserves of 340.2 million dirhams and total liabilities of 437.2 million dirhams at the end of 2011, compared to 397.1 million dirhams and 447.6 million dirhams respectively a year before.

The firm’s share price, which has rallied in recent days, was up 14.75 percent on Monday. The stock has seen double-digit gains in the past two trading sessions and gained 23.3 percent year-to-date, prior to the start of trading on Monday. –Additional Reporting by Mirna Sleiman


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