SHUAA Capital : Q1 2024 Financials English

SHUAA CAPITAL PSC and its

Subsidiaries

CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

FOR THE PERIOD FROM 1 JANUARY 2024 TO 31 MARCH 2024

SHUAA CAPITAL PSC and its subsidiaries

Condensed consolidated interim financial information for the three months ended 31 March 2024

Content	Pages
Review report on condensed consolidated interim financial information	1
Condensed consolidated interim statement of profit or loss	2
Condensed consolidated interim statement of comprehensive income	3
Condensed consolidated interim statement of financial position	4
Condensed consolidated interim statement of changes in equity	5
Condensed consolidated interim statement of cash flows	6
Notes to the condensed consolidated interim financial information	7 - 21

Ref: BN/B3171/ July 2024

Report on review of the condensed consolidated interim financial information

To,

The Board of Directors,

SHUAA Capital PSC,

Dubai, United Arab Emirates

Introduction

We have reviewed the accompanying condensed consolidated interim statement of financial position of SHUAA Capital PSC (the "Company") and its subsidiaries (together the 'Group') as at March 31, 2024, and the related condensed consolidated interim statement of profit or loss and other comprehensive income, condensed consolidated interim statement of changes in equity and condensed consolidated interim statement of cash flows and notes for the three month period then ended and other explanatory notes. Management is responsible for the preparation and fair presentation of this condensed consolidated interim financial information in accordance with applicable International Accounting Standard 34, ''Interim Financial Reporting'' (''IAS-34''). Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim consolidated financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34, ''Interim Financial Reporting''.

Emphasis of Matter

We draw attention to note 2.2 to the financial information which further describes that the Group has incurred a loss of AED 95 million during the period ended March 31, 2024, and accumulated loss of AED 916 million. The Group is in breach of the covenants on its bilateral facility and as a result of which AED 228 million loan is classified as repayable within twelve months, although the Group continues to meet its repayment obligation as per schedule. The Group has also amended and extended the agreement with the bondholders until 31 March 2025 and propose to raise the equity through the issuance of proposed Mandatory Convertible Bonds ("MCB").

Other matter

The consolidated financial statements and condensed consolidated financial information for the prior year/period ended 31 December 2023 and 31 March 2023 respectively were audited/reviewed by another auditor, who expressed an unmodified opinion on those statements/information dated 28 May 2024 and 10 May 2023 respectively.

For, Crowe Mak

Basil Naser

Partner

Registered Auditor Number: 5507

Dubai, United Arab Emirates

July 16, 2024

1

SHUAA CAPITAL PSC and its subsidiaries

Condensed consolidated interim statement of profit or loss for the three months ended 31 March 2024 (unaudited)

(Currency - Thousands of U.A.E. Dirhams)

		3 months to 31	3 months to 31
		March 2024	March 2023
		Unaudited	Unaudited
	Notes
Revenue	7	30,185	59,720
Other income/(expense)	8	11,578	(6,683)
Net foreign exchange gain/(loss)		2,356	(3,107)
Change in fair value (loss)/gain from financial assets at fair
value through profit or loss (FVTPL)		(31,575)	13,218
Share of net loss of investments in associates accounted for
using the equity method	12	(62,204)	(8,201)
Loss on derivative financial liability		-	(71)
Interest income		241	-
		---------------	---------------
Total Income		(49,419)	54,876
		--------------	---------------
Staff costs		(15,930)	(7,277)
Employee carried interest		-	(3,082)
Fee and commission expense		(1,025)	(1,150)
General and administrative expenses		(8,003)	(6,522)
Depreciation and amortisation		(2,515)	(3,272)
Provision of impairment losses on financial assets		(1,757)	(145)
		---------------	---------------
Total expenses		(29,230)	(21,448)
		---------------	---------------
(Loss)/profit before impairment of intangibles and finance
costs		(78,649)	33,428
Finance cost	15.2	(13,080)	(13,755)
Other items		(4,214)	(8)
		---------------	---------------
(Loss)/profit for the period before tax		(95,943)	19,665
Income tax credit for the period		1,213	-
		---------------	---------------
(Loss)/profit for the period after tax		(94,730)	19,665
		---------------	---------------
Attributable to:
Owners of the Parent		(87,197)	14,713
Non-controlling interests		(7,533)	4,952
		---------------	---------------
		(94,730)	19,665
		---------------	---------------
Earnings per share attributable to Owners (in AED)	18	(0.03)	0.01
		---------------	---------------

The accompanying notes on pages 7 to 21 form an integral part of this condensed consolidated interim financial information.

2

SHUAA CAPITAL PSC and its subsidiaries

Condensed consolidated interim statement of comprehensive income for the three months ended 31 March 2024 (unaudited)

(Currency - Thousands of U.A.E. Dirhams)

		3 months to 31	3 months to 31
		March 2024	March 2023
		Unaudited	Unaudited
	Notes
(Loss)/profit for the period		(94,730)	19,665
Other comprehensive (loss)/ income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations	17	(12,726)	10,522
Net loss on cash flow hedges		(8,255)	(1,386)
		---------------	---------------
Other comprehensive (loss)/income for the period		(20,981)	9,136
		---------------	---------------
Total comprehensive (loss)/income for the period		(115,711)	28,801
		---------------	---------------
Attributable to:
Owners of the Parent		(105,074)	18,165
Non-controlling interests		(10,637)	10,636
		---------------	---------------
		(115,711)	28,801
		---------------	---------------

The accompanying notes on pages 7 to 21 form an integral part of this condensed consolidated interim financial information.

3

SHUAA CAPITAL PSC and its subsidiaries

Condensed consolidated interim statement of financial position at 31 March 2024 (unaudited)

(Currency - Thousands of U.A.E. Dirhams)

	Notes	31 March 2024	31 December 2023
		Unaudited	Audited
Assets
Cash and cash equivalents	9	32,994	27,343
Deposit held with bank		-	5,835
Receivables and other debit balances	10	175,646	151,408
Loans, advances and finance leases	11	106,743	108,110
Financial assets at fair value	20.1	259,914	337,813
Investments in associates	12	458,591	529,038
Property and equipment		20,084	20,515
Goodwill and other intangible assets	13	539,060	541,438
		----	----
Total assets		1,593,032	1,721,500
		---------------	---------------
Liabilities
Payables and other credit balances	14	357,744	371,661
Other financial liabilities		139,682	137,156
Borrowings	15	861,606	862,972
		----	----
Total liabilities		1,359,032	1,371,789
		----	----
Equity
Share capital	16	2,535,720	2,535,720
Share premium		52,579	52,579
Statutory reserve		49,631	49,631
Other reserves	17	(1,483,013)	(1,465,136)
Retained earnings		(915,787)	(828,590)
		----	----
Equity attributable to Owners		239,130	344,204
Non-controlling interests (NCI)		(5,130)	5,507
		----	----
Total equity		234,000	349,711
		----	----
Total equity and liabilities		1,593,032	1,721,500
		---------------	---------------

This condensed consolidated interim financial information was approved by the Board of Directors on 16 July 2024 and signed on their behalf by:

Nabil Ramadhan	Wafik Ben Mansour
Vice-Chairman	Group Chief Executive Officer

The accompanying notes on pages 7 to 21 form an integral part of this condensed consolidated interim financial information.

4

SHUAA CAPITAL PSC and its subsidiaries

Condensed consolidated interim statement of changes in equity for the three months ended 31 March 2024 (unaudited)

(Currency - Thousands of U.A.E. Dirhams)

Balance at 1 January 2023 (Audited)

Profit for the period

Other comprehensive income for the period Total comprehensive income for the period Share of buy back of treasury shares of associate Balance at 31 March 2023 (Unaudited)

Balance at 1 January 2024 (Audited) Loss for the period

Other comprehensive loss for the period Total comprehensive loss for the period

Share

capital

2,535,720

-

-

-

-

2,535,720

2,535,720

-

-

-

Share

premium

52,579

-

-

-

-

52,579

52,579

-

-

-

Statutory

reserve

49,631

-

-

-

-

49,631

49,631

-

-

-

Other

reserves

(1,467,476)

-

3,452

3,452

-

(1,464,024)

(1,465,136)

-

(17,877)

(17,877)

Retained earnings

76,579

14,713

-

14,713

(3,488)

87,804

(828,590)

(87,197)

-

(87,197)

Equity

attributable to owners of the Parent

1,247,033

14,713

3,452

18,165

(3,488)

1,261,710

344,204

(87,197)

(17,877)

(105,074)

Non -

controlling

interests

273,148

4,952

5,684

10,636

(683)

283,101

5,507

(7,533)

(3,104)

(10,637)

Total

1,520,181

19,665

9,136

28,801

(4,171)

1,544,811

349,711

(94,730)

(20,981)

(115,711)

Balance at 31 March 2024 (Unaudited)	2,535,720	52,579	49,631	(1,483,013)	(915,787)	239,130	(5,130)

The accompanying notes on pages 7 to 21 form an integral part of this condensed consolidated interim financial information.

234,000

5

SHUAA CAPITAL PSC and its subsidiaries

Condensed consolidated interim statement of cash flows

(Currency - Thousands of U.A.E. Dirhams)

		3 months to	3 months to
		31 March 2024	31 March 2023
Cash flows from operating activities		Unaudited	Unaudited
Notes	(94,730)
(Loss)/profit for the period		19,665
Adjustments:
Loss on disposal of associates	8	3,142	27,978
Foreign exchange loss/(gain)		(2,356)	3,107
Carried interest recognised - net		(10,664)	3,082
Finance cost		13,080	13,755
Net interest income		(241)	-
Fair value loss/(gain) on investments at FVTPL		31,575	(13,218)
Share of loss from investments in associates	12	62,204	8,201
Loss on revaluation of derivative financial liabilities		-	71
Employees' end of service benefit charge		795	773
Provisions for impairment losses - net		1,757	145
Depreciation and amortization		2,515	3,272
Operating cash flows before movements in working capital		-----	-----
	7,077	66,831
Decrease in deposits held with bank		5,835	-
Increase in receivables and other debit balances		(25,995)	(13,980)
Decrease in loans, advances and finance leases		1,367	6,398
Decrease in payables and other credit balances		(3,390)	(14,991)
Decrease/(increase) in other financial liabilities		351	(1,371)
Net cash (used) in / generated from operations		-----	-----
	(14,755)	42,887
Employees' end of service benefit paid		(6,442)	(7,196)
		-----	-----
Net cash (used) in / generated from operating activities		(21,197)	35,691
		-----	-----
Cash flows from investing activities
Payments for the purchase of investments		(2,129)	(16,558)
Proceeds from disposal of investments		49,397	30,010
Net interest received		241	-
Distribution from associate		2,031	5,617
Net cash generated from investing activities		------	------
	49,540	19,069
		-----	-----
Cash flows from financing activities
Repayment of borrowings		(19,924)	(11,608)
Lease rentals paid		(1,937)	(1,916)
Finance cost paid		(831)	(7,112)
Net cash used in financing activities		---------------	---------------
	(22,692)	(20,636)
Net increase in cash and cash equivalents		5,651	34,124
Cash and cash equivalents at beginning of the period	9	26,093	62,901
Cash and cash equivalents at end of the period		---------------	---------------
	31,744	97,025
		---------------	---------------

The accompanying notes on pages 7 to 21 form an integral part of this condensed consolidated interim financial information.

6

SHUAA CAPITAL PSC and its subsidiaries

Notes to the condensed consolidated interim financial information for the three months ended 31 March 2024

(Currency - Thousands of U.A.E. Dirhams)

1. LEGAL STATUS AND ACTIVITIES

SHUAA Capital P.S.C. (the "Company" or "SHUAA") is a public shareholding company established in Dubai, United Arab Emirates, pursuant to Emiri Decree No. 6 of 25 April 1979 and in accordance with the UAE Federal Law No. 8 of 1984 concerning Commercial Companies and its amendments ("Companies Law"). The registered address of the Company is P.O. Box 31045, Dubai, United Arab Emirates. The Company's shares are traded on the Dubai Financial Market in the United Arab Emirates.

These interim condensed consolidated financial information include the assets, liabilities and results of operations of the Group and its subsidiaries as disclosed in the Group's annual consolidated financial statements as at 31 December 2023.

The company is licensed by the Securities and Commodities Authority to conduct Investment Management, Financial Consulting and Financial Analysis, Promotion, Introduction and Issuance Management activities. The Company and its subsidiaries conduct a diversified range of investment and financial services activities with special emphasis on the Arab region in general, the UAE and GCC markets, and are actively involved in public and private capital markets in the region.

Changes to laws and regulations

Implementation of UAE Corporation Tax Law and application of IAS 12 Income Taxes.

On 9 December 2022, the UAE Ministry of Finance released Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the "Law") to enact a Federal corporate tax regime in the UAE. Furthermore, on 16 January 2023, a Cabinet Decision was published specifying the threshold of AED 375,000 of taxable income above which taxable entities would be subject to a 9% corporate tax rate.

The Corporate Tax regime will become effective for the accounting year beginning on or after 1 June 2023 hence for the Group it will be effective from 1 January 2024. Management acknowledges that a number of regulations with regards to the application of tax legislation are published and as such management will continue to monitor developments in order to assess the impact of corporate tax including any deferred tax implications on the Group.

2. BASIS OF PREPARATION

2.1 Basis of preparation

These condensed consolidated interim financial information and accompanying notes for the period ended 31 March 2024 have been prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting" and comply with the applicable requirements of the laws in the U.A.E. As per the requirements of IAS 34, the condensed consolidated interim financial information does not include all the information required for full annual consolidated financial information and should be read in conjunction with the Group's annual audited consolidated financial statements as at and for the year ended 31 December 2023 which have been prepared in accordance with International Financial Reporting Standards (IFRS). These condensed consolidated interim financial information of the Group are prepared under the historical cost basis except for certain financial instruments which are measured at fair value. In addition, results for the three months ended 31 March 2024 are neither audited nor are they necessarily indicative of the results that may be expected for the full financial year ending 31 December 2024.

2.2 Going concern

The Group has incurred a loss of AED 95 million (31 March 2023: Net Profit 20 million) during the three-month

period to 31 March 2024 which has resulted in accumulated losses of AED 916 million (31 December 2023: 829 million) as at that date.

In assessing the appropriateness of applying the going concern basis in the preparation of these condensed consolidated interim financial information, the Board of Directors have considered the Group's operational profitability, liquidity and forecasted cash flows, taking into account reasonably possible outcomes over a 12-month period from the date of approval of these condensed consolidated interim financial information.

Further, the Group has AED 824 million of borrowings repayable within the next twelve months from the date of approval of these condensed consolidated interim financial information, including bilateral facilities ("Term Loan") of AED 228 million due to a bank which was classified as repayable within twelve

7

SHUAA CAPITAL PSC and its subsidiaries

Notes to the condensed consolidated interim financial information for the three months ended 31 March 2024

(Currency - Thousands of U.A.E. Dirhams)

2. BASIS OF PREPARATION (continued)

2.2 Going concern (continued)

months as a result of unremediated covenant breaches. In reference to the term loan, the Group continues to make repayments on due dates including a scheduled loan amortization payment completed most recently. The Group also has a bond repayable of AED 499 million for which the Group has reached an agreement on 19 April 2024 with the bondholders for an amendment and extension for the settlement of the bonds until 31 March 2025.

The Group's management team continues to work towards executing on its plans to issue Mandatory Convertible Bonds ("MCBs") as set out in the approved annual consolidated financial statements of the Group as at 31 December 2023. Management expects that a minimum of 50% of the outstanding bonds will be converted into equity and the remaining non-converting bondholders will be settled at an 80% discount. The Group intends to raise up to AED 367 million of equity capital which will partially be utilized to repay the non- converting bondholders and expects to conclude the MCB offering before the end of 2024.

3. NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS ADOPTED BY THE GROUP

The accounting policies adopted in the preparation of this interim condensed consolidated financial information are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2023 except for the adoption of new standards effective as of 1 January 2024 where appropriate. The Group has not adopted any other standard, interpretation or amendment that has been issued that is not yet effective. Several amendments apply for the first time in 2024 and adopted by the Group. These amendments do not have significant impact on the interim condensed consolidated financial information of the Group and therefore further disclosures have not been made.

4. TAXATION

Current income tax

The taxable current liabilities for the current period are measured at expected value payable to the tax authority, using the current tax rates (and tax laws) The tax charged for the period ended 31 March 2024 is Nil as the entities would be forming a tax group for corporate tax purpose and on this basis the current estimates suggests there would be no taxable income during the year at a tax group level.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the Group's future business plans. Deferred tax assets are reassessed at each reporting date, and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are set-off only if certain conditions are met.

5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the preparation of the Group's condensed consolidated interim financial information, management has made a number of critical estimates and judgments in a manner consistent with those described in the Group's annual consolidated financial statements for the year ended 31 December 2023.

8