SHUAA Capital posted revenues of AED22.2 million in Q2 2012 against AED35.7 million in the same period last year underpinned by returns from Shuaa's lending business and from investments in Shuaa managed funds. While SHUAA recorded an overall loss for the Q2 period of AED15.9 million (Q2 2011: profit AED0.6 million) the period saw better results in the Investment Banking and Brokerage divisions. H1 revenues were AED77.2 million (H1 2011: AED62.8 million) and the Company recorded a loss of AED24.4 million (H1 2011: loss AED25.7 million) principally due to the continued tightening of G&A expenses and the reduction in the loss from other investments. Shuaa's balance sheet remains strong with total assets of AED1.5 billion. The Company retains a healthy cash balance of AED272 million at the period end, down from AED345 million at the March 31, 2012 reflecting the further repayment of loans. Net debt currently stands at AED194.0 million as compared to AED251.3 million at the end of June 2011. Shuaa retains a strong liquidity position going forward. Since the launch of Shuaa's systematic rightsizing program in 2011, the company has worked hard to cut costs and improve monthly operating expenditure. Core to this has been the reduction in staff numbers from 322 to 201, year-on-year. This achievement will start to show more clearly in the Q3 results when the full impact of the restructuring measures flow through. Together with non-staff cost savings SHUAA should achieve an annualised cost reduction of more than AED 60 million. At the half-year stage, general and administrative expenses have reduced significantly with the largest component being compensation and benefits down to AED 61.2 million from AED 77.2 million. Monthly operating expenditure has been reduced down to AED4.2 million from over AED10 million during the year 2011. It is expected that with the final rightsizing measures in Q2 working through the system and planned operational streamlining, this will reduce further to an operational run rate of around AED3.0 million per month. This reduced cost base will ensure Shuaa reaches its target of improving operating expenditure by over 70 percent and put the business on a solid foundation to capitalise on the expected increase in revenues. – SG
