Management discussion and analysis for the
period ended 30 September 2024
www.wahacapital.com
Al Waha Capital PJSC ("the Company") and its subsidiaries (together referred to as "the Group") reported net profit attributable to Owners of the Company of AED 282.2 million for the nine-month period ended 30 September 2024 compared to AED 222.5 million for the corresponding period of 2023.
KEY ACTIVITIES DURING THE PERIOD
The following key activities occurred during the period:
- Public Markets (operated by Waha Investment PrJSC) total assets under management reached AED 9.9 billion (USD 2.7 billion) as of 30 September 2024 compared to AED 8.8 billion (USD 2.4 billion) as of 31 December 2023, an increase of 12.5%. Within this figure, assets under management attributable to Owners of the Company were AED 3.3 billion as of 30 September 2024 and at 31 December 2023.
- The period to date returns from funds managed by the Group were: Waha Emerging Markets Credit Fund SP 15.9% (net), Waha MENA Equity Fund SP 0.3% (net) and Waha Islamic Income Fund SP 8.0% (gross).
- Private Investment assets under management (including Waha Land) stood at AED 1.5 billion as of 30 September 2024 compared to AED 1.6 billion as of 31 December 2023.
Summary income statement for the period ended 30 September (AED '000)
YTD 2024 | YTD 2023 | Q3 2024 | Q3 2023 | ||
Revenue from sale of goods and services | 111,042 | 101,592 | 33,240 | 29,676 | |
Cost of sale of goods and services | (83,526) | (79,100) | (26,653) | (25,595) | |
Share of profit from equity-accounted associates and joint | |||||
ventures,net | 16,668 | 3,639 | 3,365 | 2,041 | |
Gain on disposal of equity-accounted associates and joint | |||||
ventures | - | 5,021 | - | - | |
Income from financial investments, net | 788,702 | 601,002 | 340,578 | 155,208 | |
Income from investment property, net | 39,670 | 32,218 | 13,078 | 8,750 | |
Other income, net | 32,679 | 15,079 | 12,366 | 9,031 |
Net operating income | 905,235 | 679,451 | 375,974 | 179,111 |
General and administrative expenses - company | (68,873) | (136,454) | (21,321) | (43,081) |
General and administrative expenses - subsidiaries | (116,184) | (42,499) | (40,713) | (15,175) |
Finance cost, net | (198,147) | (93,280) | (63,546) | (31,783) |
Total expenses | (383,204) | (272,233) | (125,580) | (90,039) |
Profit before tax | 522,031 | 407,218 | 250,394 | 89,072 |
Tax expense | (3,015) | - | (765) | - |
Profit for the period | 519,016 | 407,218 | 249,629 | 89,072 |
Non-controlling interests | (236,776) | (184,732) | (172,065) | (35,442) |
Profit attributable to owners of the Company | 282,240 | 222,486 | 77,564 | 53,630 |
Basic and diluted earnings per share (AED) | 0.152 | 0.118 | 0.041 | 0.028 |
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NET OPERATING INCOME
Nine-month period ended 30 September 2024
Net operating income of AED 905.2 million for the nine-month period ended 30 September 2024, compared to AED 679.5 million for the corresponding period of 2023, was driven by the following:
- Public Markets income of AED 753.1 million compared to AED 619.1 million in 2023 showing strong performance driven by fee income and increase in assets under management
- Private Investments income of AED 101.4 compared to AED 27.9 million in YTD 2023 mainly due:
- Gross profit from healthcare business of AED 27.5 million (YTD 2023: AED 22.5 million)
- Share of profit from equity accounted investments of AED 16.7 million (YTD 2023: AED 3.6 million)
- Gain from financial investments of AED 51.7 million (YTD 2023: loss of AED 3.8 million)
- Other income of AED 5.5 million ( YTD 2023: AED 0.5 million)
- Waha Land income of AED 39.8 million compared to AED 32.5 million in YTD 2023
- Corporate other income of AED 10.8 million from legacy investments ( YTD 2023: nil)
Three-month period ended 30 September 2024
Net operating income of AED 376.0 million for the three-month period ended 30 September 2024, compared to AED 179.1 million for the corresponding period of 2023, was driven by the following:
- Public Markets income of AED 423.9 million compared to AED 138.0 million in Q3 2023
- Private Investments loss of AED 61.1 million compared to income AED 32.3 million in Q3 2023 mainly due to loss on financial investments;and
- Waha Land income of AED 13.1 million compared to AED 8.9 million in Q3 2023
TOTAL EXPENSE ANALYSIS
Nine-month period ended 30 September 2024
Total expenses for the nine-month period ended 30 September 2024 was AED 383.2 million compared to AED 272.2 million in 2023, mainly comprised of:
- General and administrative expenses - company, amounting to AED 68.9 million compared to AED 136.5 million for the corresponding period of 2023, a decrease of AED 67.6 million mainly due to lower expenses of subsidiaries previously considered under company (2023: AED 69.9 million) and no provision for doubtul debts in current period (2023: AED 4.7 million);
- General and administrative expenses - subsidiaries, amounting to AED 116.2 million compared with AED 42.5 million for the corresponding period of 2023 million mainly due to expenses recharged from company to subsidiaries of AED 69.9 million;
- Finance costs, net - company, amounting to AED 81.6 million, compared to AED 88.2 million in the corresponding period of 2023, a decrease of AED 6.6 million mainly due to decrease in interest rates; and
- Finance costs, net - subsidiaries, amounting to AED 116.5 million compared to AED 5.1 million in the corresponding period of 2023, an increase of AED 111.4 million, mainly due to higher utilisation of repurchase liabilities for public market funds business and lower interest income.
Three-month period ended 30 September 2024
Total expenses for the three-month period ended 30 September 2024 was AED 125.0 million, compared to AED 90.0 million in 2023, mainly comprised of:
- General and administrative expenses - company, amounting to AED 21.3 million compared to AED 43.1 million for the corresponding period of 2023, a decrease of AED 21.8 million million mainly due to no expenses of subsidiaries previously considered under company (2023: AED 25.6 million) and lower staff related expenses;
- General and administrative expenses - subsidiaries, amounting to AED 40.7 million compared to AED 15.2 million for the corresponding period of 2023, an increase of AED 25.5 million mainly due to expenses recharged from company to subsidiaries of AED 25.6 million;
- Finance costs, net - company, amounting to AED 23.9 million, compared to AED 31.6 million in the corresponding period of 2023, a decrease of AED 7.7 million mainly due to decrease in interest rates; and
- Finance costs, net - subsidiaries, amounting to AED 39.6 million, compared to AED 0.2 million in the corresponding period of 2023, an increase of AED 39.4 million, mainly due to higher utilisation of repurchase liabilities for public markets business and lower interest income.
NET PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY
Nine month period ended 30 September 2024
Net profit attributable to owners of the Company of AED 282.2 million for the nine-month period ended 30 September 2024, compared to a net profit of AED 222.5 million for the corresponding period of 2023, was mainly driven by the following:
- Public Markets profit of AED 319.2 million compared to AED 397.4 million in 2023;
- Private Investments profit of AED 70.9 million compared to loss of AED 3.4 million in 2023;
- Waha Land profit of AED 24.9 million compared to AED 21.2 million in 2023; and
- Finance and other corporate costs of AED 132.7 million compared to AED 192.7 million in 2023.
Three month period ended 30 September 2024
Net profit attributable to owners of the Company of AED 77.6 million for the three-month period ended 30 September 2024, compared to AED 53.6 million for the corresponding period of 2023, was mainly driven by the following:
- Public markets profit of AED 183.9 million compared to a profit of AED 89.3 million in 2023;
- Private Investments loss of AED 69.8 million compared to a profit of AED 22.8 million in 2023;
- Waha Land Profit of AED 7.5 million compared to AED 5.2 million in 2023; and
- Finance and other corporate costs of AED 44.0 million compared to AED 63.7 million in 2023.
Net profit by segment attributable to owners of the Company (AED million)
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Summary Balance Sheet (AED '000)
As at 30-Sep-24 | As at 31-Dec-23 | ||||
Investments in equity accounted associates and joint ventures | 96,517 | 88,313 | |||
Right-of-use assets | 46,198 | 23,431 | |||
Investment property | 419,730 | 413,450 | |||
Financial investments | 9,991,947 | 8,652,900 | |||
Loan investments | 51,048 | 46,340 | |||
Other assets | 1,787,092 | 2,980,991 | |||
Cash and bank balances | 1,153,345 | 866,942 | |||
Assets Held For Sale | 468,515 | 468,515 |
Total assets | 14,014,392 | 13,540,882 | |||
Borrowings | 5,299,478 | 5,955,844 | |||
Financial liabilities | 219,795 | 218,866 | |||
Defered tax liability | 3,286 | 3,286 | |||
Lease liabilities | 47,302 | 21,420 | |||
Trade and other liabilities | 587,150 | 672,351 | |||
Total liabilities | 6,157,011 | 6,871,767 | |||
Total equity | 7,857,381 | 6,669,115 | |||
Total liabilities and equity | 14,014,392 | 13,540,882 |
Total assets composition (AED million) | |
30 Sep 2024 | 31 Dec 2023 |
Private Investments | Public Markets | Waha Land | Corporate | |||
The Group's total assets of AED 14,014.4 million as at 30 September 2024, compared to AED 13,540.9 million as at 31 December 2023, an increase of 3.5 % and mainly comprised of:
- Financial investments of AED 9,991.9 million compared to AED 8,652.9 million in 2023, an increase of AED 1,339.0 million, mainly due to net increase of AED 1,562.6 million in public market funds offset by net decrease of AED 223.6 million from private investments.
- Other assets of AED 1,787.1 million as at 30 September 2024 compared to AED 2,981.0 million as at 31 December 2023, a decrease of AED 1,193.9 mainly due to decrease in receivables of public market funds due trom brokers on settlement of trades.
- Cash and bank balances of AED 1,153.3 million compared to AED 866.9 million in 2023, an increase of AED 286.4 million mainly due to:
- Contributions from non-controlling interest holders of AED 880.8 million from new investments in Public Market funds, dividends received of AED 187.4 million, interest received of AED 215.0 million and increase in working capital of AED 1,082.7 million mainly from the trading activities in the from public market funds; offset by
- Investment into financial assets AED 950.8 million, payment of dividends AED 188.4 million, finance costs paid of AED 257.4 million and decrease in repurchase liabilities related to public market funds of AED 495.9 million and other borrowings of AED 153.3 million.
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The Group's total liabilities of AED 6,157.0 million as at 30 September 2024 compared to AED 6,871.8 million as at 31 December 2023, a decrease of AED 714.8 million, comprised of:
-
Borrowings of AED 5,299.5 million compared to AED 5,955.8 million as at 31 December 2023, a decrease of AED
656.3 million:
- Corporate: RCF outstanding stood at AED 1,143.3 million as of 30 September 2024 compared to AED 1,297.9 million as at 31 December 2023 the decrease was mainly due to repayment of AED 147.1 million
- Subsidiaries: Outstanding borrowings of AED 4,156.2 million as of 30 September 2024 compared to AED 4,657.9 million mainly represents decrease in repurchase liabilities related to public market funds.
- Trade and other liabilities of AED 587.2 million compared to AED 672.4 million as at 31 December 2023, a decrease of AED 85.2 million mainly represents decrease in payables of public market funds due to brokers on settlement of trades and decrease in interest payable accrued.
BUSINESS AND PORTFOLIO COMPANIES ANALYSIS
The Group's business comprises three primary divisions: Public Markets, Private Investments and Waha Land.
Public Markets
The Public Markets business (operated by Waha Investments PrJSC, a wholly owned subsidiary) focuses on applying rigorous analysis to emerging markets to deliver solid returns over a market cycle on behalf of the Group and external investors. All the funds under Waha Investment's management continue to perform well, despite the challenging macroeconomic conditions impacting markets around the world.
Since inception of Waha Investment's business in 2012, two flagship funds were established: the Waha Emerging Markets Credit Fund SP and the Waha MENA Equity Fund. Time, and initial seed capital of AED 368m (US$100m) in each, has been invested to build the team, infrastructure, and track record before looking to raise third party capital.
The Waha Islamic Income Fund SP with seed capital of AED 92 million (US$ 25 million) was launched in Q3 2020 to invest in Sharia compliant assets across the Sukuk and equity markets.
Total Waha Investment AUM as at 30 September 2024 stands at AED 9.9 billion (US$ 2.7 billion).
The key strategic focus of Waha Investment is to continue to actively manage client assets, while generating market leading performance and attracting third party institutional and high net worth investors.
Waha Investment's managed funds' period to date returns on invested capital were:
- Waha Emerging Markets Credit Fund SP of 15.9% (net) on a fund size of AED 3.63 billion (US$ 988.1 million)
- Waha MENA Equity Fund SP of 0.3% (net) on a fund size of AED 3.51 billion (US$ 953.3 million)
- Waha Islamic Income Fund SP of 8.0% (gross) on a fund size of AED 0.22 billion (US$ 60.3 million)
Private Investments
The Private Investments business commenced a multi-asset investment strategy in the last quarter of 2021. This included the launch of two new investment portfolios - Global Opportunities and Core.
The Global Opportunities portfolio has a broad and flexible investment mandate enabling Waha Capital to invest across geographies, industries, capital structures and asset classes, in an opportunistic manner. This diversified portfolio, which was launched in November 2021, targets investments in the alternatives space with high risk-adjusted returns. The net carrying value of the Global opportunities portfolio as at 30 September 2024 was AED 385 million.
The Core portfolio seeks to take controlling or significant minority stakes in businesses in the MENA region with established track records, strong management teams and robust governance frameworks. Such companies would typically demonstrate stable capital growth prospects, whilst providing recurrent and reliable cash yields.
The Legacy portfolio consists of the Company's existing mature investments with the goal of assessing potential monetisation options. In 2023, the business commenced the implementation of the multi-year strategy to maximize shareholder value across this portfolio. During the period, the company successfully divested its holding in Despegar.com. The net carrying value of the legacy portfolio as at 30 September 2024 was AED 231 million.
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